Deciding on prices...

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Hairyloon

Joined: 20 Nov 2008
Posts: 15425
Location: Today I are mostly being in Yorkshire.

Posted: Thu Feb 13, 14 1:29 am Post subject: Deciding on prices...
How do people decide what to charge for products? There have been a couple of threads here about charging a proper price for craft items, but I'm not asking about craft, simply processing a raw material into product(s). An obvious starting point is the price of similar products in the local supermarket, but how much do you knock off for a wholesale price?

Rob R

Joined: 28 Oct 2004
Posts: 31902
Location: York

Posted: Thu Feb 13, 14 1:35 am Post subject:
Depends on the terms & margin, but 20%? The best thing to do is to work out the costs associated with selling retail, add on the costs for selling wholesale and then decide if your wholesale volume to achieve the same margin is a) achieveable and b) beneficial.

Hairyloon

Joined: 20 Nov 2008
Posts: 15425
Location: Today I are mostly being in Yorkshire.

Posted: Thu Feb 13, 14 8:51 am Post subject:

Rob R wrote:

then decide if your wholesale volume to achieve the same margin is a) achieveable...

It is going to be a long time before the rate of production becomes the bottle-neck, and based upon what I've learned in troubleshooting the problems, if I ever reach that point, then I'll just build another press...

vegplot

Joined: 19 Apr 2007
Posts: 21301
Location: Bethesda, Gwynedd

Posted: Thu Feb 13, 14 9:36 am Post subject:
Work out all your costs including time and add profit margin. Look at competition compare pricing if yours is higher find a USP to justify the higher price. Market heavily. Discover there is no market for your product or product returns or support costs are too high. Crash. Start again.

Hairyloon

Joined: 20 Nov 2008
Posts: 15425
Location: Today I are mostly being in Yorkshire.

Posted: Thu Feb 13, 14 10:12 am Post subject:

vegplot wrote:

Work out all your costs including time and add profit margin.

At this point, most of the time is likely to be spent on marketing, so how do you work that one out?

RichardW

Joined: 24 Aug 2006
Posts: 8443
Location: Llyn Peninsular North Wales

Posted: Thu Feb 13, 14 10:36 am Post subject:
If you are really stuck find other peoples products & average all the prices.

Rob R

Joined: 28 Oct 2004
Posts: 31902
Location: York

Posted: Thu Feb 13, 14 11:04 am Post subject:

Hairyloon wrote:

vegplot wrote:

Work out all your costs including time and add profit margin.

At this point, most of the time is likely to be spent on marketing, so how do you work that one out?

Well you have 168 hours every week. Work out how many of those are spent working. Presumably you have a target income to make each week or month. Subtract any other work from that figure and divide that by the total time spent on oil related activities. If that's lower than the wage you'd have to pay someone else to do it, add a bit on (you don't want to have to up the price in order to employ extra help in the future). It doesn't matter if you're marketing, producing or delivering, it's all costing you the same amount of time on it.

Hairyloon

Joined: 20 Nov 2008
Posts: 15425
Location: Today I are mostly being in Yorkshire.

Posted: Thu Feb 13, 14 4:38 pm Post subject:

RichardW wrote:

If you are really stuck find other peoples products & average all the prices.

Tesco's range of direct competition costs from �6-10 per litre.

sean
Downsizer Moderator

Joined: 28 Oct 2004
Posts: 42219
Location: North Devon

Posted: Thu Feb 13, 14 4:48 pm Post subject:
Price yours at or above the top end. Cutting prices is easy, raising them tends to meet with more resistance.

Hairyloon

Joined: 20 Nov 2008
Posts: 15425
Location: Today I are mostly being in Yorkshire.

Posted: Thu Feb 13, 14 5:06 pm Post subject:

sean wrote:

Price yours at or above the top end...

Think I need to find an answer to this before I can do that...

Falstaff

Joined: 27 May 2009
Posts: 1014

Posted: Sun Feb 23, 14 10:53 am Post subject:

I think the "right price" - is the maximum the punters will pay without feeling "ripped off"

This depends really whether it's a load of produce you are "stuck with" and need to get rid of - or whether it's a life passion.

Your "extra virgin "thread seems to say - it's just a "label" and nobody really is very interested in checking it ! (good information for use "later" ?)

I'd say if you are wanting to sell to "tesco" - you'd need to be �3-4 a litre to give them a nice profit (don't worry too much - they'll soon enough tell You what they're paying !) - If you're selling "Farm Shop" then their price could be �12 - which you could sell into (different label) at say �8.

You might want to think about selling relatively cheap to start with - then introducing a "premium - extra virgin - 100% grown in the uk" brand later - when you have got your feet under the table ?

Hairyloon

Joined: 20 Nov 2008
Posts: 15425
Location: Today I are mostly being in Yorkshire.

Posted: Tue Feb 25, 14 2:15 pm Post subject:

Falstaff wrote:

I think the "right price" - is the maximum the punters will pay without feeling "ripped off"

Or maybe the maximum before I feel that I'm ripping them off...

Quote:

This depends really whether it's a load of produce you are "stuck with" and need to get rid of - or whether it's a life passion.

If I was stuck with it, I could either make it into diesel or sell it to the chippy... seems a bit wasteful though.

Quote:

Your "extra virgin "thread seems to say - it's just a "label" and nobody really is very interested in checking it ! (good information for use "later" ?)

I'm thinking that if I sell any directly (eg a market stall), then I might put up a sign saying "Ask about our Extra Virgin Oil", and then ask them what they think it means...

Quote:

I'd say if you are wanting to sell to "tesco" - you'd need to be �3-4 a litre to give them a nice profit...

I'm not planning to get big enough to be supplying any supermarkets, but �4/litre sounds like a good wholesale price.

Quote:

If you're selling "Farm Shop" then their price could be �12 - which you could sell into (different label) at say �8.

You might want to think about selling relatively cheap to start with - then introducing a "premium - extra virgin - 100% grown in the uk" brand later - when you have got your feet under the table ?

Unless I do something to degrade my initial product, I don't see how I can improve it any to introduce a premium label.
I may be making a second grade of oil though: I'm going for Rob's idea of turning the residue into an alternative solid fuel, and it looks like I'll be getting some more oil out in the process... that stuff might just go for frying chips though.

Nick

Joined: 02 Nov 2004
Posts: 34535
Location: Hereford

Posted: Tue Feb 25, 14 10:17 pm Post subject:

Hairyloon wrote:

I'm thinking that if I sell any directly (eg a market stall), then I might put up a sign saying "Ask about our Extra Virgin Oil", and then ask them what they think it means...

Unless I do something to degrade my initial product, I don't see how I can improve it any to introduce a premium label.
I may be making a second grade of oil though: I'm going for Rob's idea of turning the residue into an alternative solid fuel, and it looks like I'll be getting some more oil out in the process... that stuff might just go for frying chips though.

You know how you like to argue the toss with people, just for the sake of it, sometimes? Try not to do this with the people buying on your market stall.

And as for making your product premium, stick a better quality label on it, in a better bottle and treble the price. It's suddenly loads better.

dpack

Joined: 02 Jul 2005
Posts: 46233
Location: yes

Posted: Tue Feb 25, 14 11:37 pm Post subject:
pitch high as your product deserves a premium over the industrial and your per unit overheads will be higher if it too high to sell enough go for the buy three get one free type of option ?

Hairyloon

Joined: 20 Nov 2008
Posts: 15425
Location: Today I are mostly being in Yorkshire.

Posted: Wed Feb 26, 14 12:38 am Post subject:

Nick wrote:

Hairyloon wrote:

I'm thinking that if I sell any directly (eg a market stall), then I might put up a sign saying "Ask about our Extra Virgin Oil", and then ask them what they think it means...

You know how you like to argue the toss with people, just for the sake of it, sometimes? Try not to do this with the people buying on your market stall.

You must be thinking of somebody else...

But I wasn't thinking to be arguing with the customers, but engaging in a bit of market research: what do people think the "extra" actually means?
If it means to them something that my oil is, then I can tell them it is so. If it starts causing rows, then I can just take the sign down, but I think it more likely to give me the opportunity for a show of honesty: I've tried, but I cannot find what it actually means.
Or I could say that it has been thoroughly screwed, but it is still technically virgin...

Most people I have spoken to think "extra virgin" just means "from the first pressing", which makes no sense to me: if on the first press we exert a pressure of 11MPa at 500�C, then that is still a first press...

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