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Hairyloon

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

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

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

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

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

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

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

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

Price yours at or above the top end. Cutting prices is easy, raising them tends to meet with more resistance. Hairyloon

Price yours at or above the top end...
Think I need to find an answer to this before I can do that...
Falstaff

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

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... Embarassed
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


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. Wink

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

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


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. Wink
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...
Wink

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 500C, then that is still a first press...
Hairyloon

if it too high to sell enough go for the buy three get one free type of option ?
I don't think it is the kind of product that most people would buy a lot of at once.
dpack

ok you might be right but the market you are aiming at is about top quality so pitch high and go for folk where price is not the first thing they think about ,if the price is too high even for those seeking a top end product either reduce the price so long as you still make it worth your efforts or seek a better sort of customer

thinking to compete with tescopolis etc might not be as good as finding a niche market of your own

sending a few samples to top end restaurants ,delis etc (with explanations of origin etc and availability ,prices etc )is an option i would try with hand made oil Wink

the amount one chap and a press can make is limited so maximise the price on a low volume product as best you can .

dont compete ,swerve and use what is best and different about your product

i need to take my own advise with this years moo crop Laughing Laughing Laughing
Hairyloon

the amount one chap and a press can make is limited so maximise the price on a low volume product as best you can .
One good thing about the teething troubles that I've been having is that working my way through them has put me in a position where I can relatively easily build another press, should the rate of pressing ever become the limiting factor...
Mistress Rose

I would still agree with Dpack; don't try to compete with the supermarkets on price. You are offering a hand made product which hopefully will be good quality. This is what you are selling; hand made, quality, personal service and local(?).
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