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Product pricing help... continued

Matt McSpadden

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To all the business people and philosophical theoreticians...

Question
Should I lower the price on my products if I can?

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I started a thread a while back on what people might pay for some dried herbs I was creating. https://permies.com/t/262691/Market-Research-pay-organic-local What I took away from it was that my prices were probably high, but start there, and you can always lower prices later.

Other brands are selling the same size container for $8 or $9 that contains organic dried herbs (this is reasonably good stuff... store brands are cheaper). People tell me that with my product, they have been able to use 1/2 or 1/3 of what the recipe calls for and still maintain the flavor profile. So when I sell my products for $17 per jar, and that product can flavor 2 to 3 times as many dishes as the competitors can... it seems fairly priced.

While I have sold some... I really haven't sold all that many. Some of that is because I am a new company just getting my name out there. Some of it probably is because of the price. Here I am in the next season, and after a season of experience as well as a consultation... I predict that I should be able to cut my costs by as much as $2 per bottle.

On the one hand, I could pass those savings on to the customers, and maybe more people would buy. On the other hand, maybe I keep them where they are, hope sales increase, and I can become profitable just a little sooner.

What would you do?

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Visit https://themaineingredient.com for organic, premium dried culinary herbs that are grown, processed, and packaged in the USA.

Pearl Sutton

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I'd say take the middle, cut prices by 1$. bank 1$ Win for everyone.

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Christopher Weeks

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I'd keep the first bottle someone buys at the same price but every other bottle they buy at the same time is $2 less. And remind people that they make great gifts all year long, so stocking up now to take advantage of the deal is smart.

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Carla Burke

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I agree with Pearl - partly because it also works with Christopher's idea. My personal thought was that difference buys you some wiggle room, to hold promos & sales.

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my experience is in the crafts market but I think it would relate to your product that is very much handcrafted itself.

We were urged to 'tell our story' above all else as a marketing tool.
Your comments about the intensity of your herbs is a big plus...lasting longer than the equivalent amount of other brands.

Pricing was always difficult for us...there were a lot of weavers and woodworkers in our area so also a range of pricing...folks who appreciated hand tools and basic methods appreciated our work but not everyone could see the difference without the story...I was using organic warps with recycled natural fiber rag wefts for production items, placemats and table runners, that were important to my customers but narrowed my sales because my labor costs raised my prices above the norm...same with Steve and his 'start with a tree' woodworking...he started putting the number of hours it took to make a bucket on his tags along with the price

.

all I know is that pricing and marketing are the hardest part of a home based craft business. Yours is pretty new so there's lots of opportunity to adjust marketing strategies without compromising quality.

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Anne Miller

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What platform are you using to sell your product? Farmers market? Etsy?

When I was a eBay seller, I looked at what other folks were selling their product for, including shipping.

I price my product lower than the going rate.

I buy a lot of dried fruit off eBay, I buy what I can get cheapest and with no shipping.

I hate to pay shipping.

One method some folks use to get repeat customers is to undercut everyone else's price and then they cut their price to rock bottom. Maybe so low the price only reflects shipping and other outright expenses.

Later when these folks have a customer base the prices are slowly raised until they make a small profit. Later they can increase the profit margin.

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Matt McSpadden

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I am currently selling on my website (see my signature), on Public Square, and in a couple local stores.

You can read the other thread for more details... but there are no other products like this.... which is why I had so much trouble pricing them in the first place.

I understand that strategy, but I feel like it is most effective with companies even smaller than me or else very large.

Anne Miller

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Matt McSpadden wrote:but there are no other products like this.... which is why I had so much trouble pricing them in the first place.

I don't understand this? What makes your product unique?

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Nancy Reading

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A slightly different take on this...

I heard a story once about a new cleaning product, I forget what, packed in (say) 1 litre bottles. Initial sales were reasonable, then dropped sharply. The product was dropped from the shelves. Then people started asking for it, saying it was really good and they wanted to buy it again....Turns out that the cleaning product was quite concentrated, so a little went a long way. The bottle lasted people a long time so they didn't need to buy another bottle for a long time. The solution was to pack in smaller bottles to keep people coming back. The price could be higher per volume, so the company made more money and everyone was happy.

If your herbs go further, then you could consider packing in smaller bottles, making them cheaper to the customer (although keeping your current margins). You would then get repeat custom more quickly and still maintain your current profit margin.

I don't know whether this may work for you; just a thought.

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Judith Browning

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Matt McSpadden wrote:I am currently selling on my website (see my signature), on Public Square, and in a couple local stores.

Because you have an unique high end product I think it might require selling in high end markets?

Again, relating to my only experience marketing, my customers were not 'me' 😏
They were from a whole different level of income and priorities...yes, they appreciated 'organic' and 'hand crafted' but also had enough disposable income to afford the cost of 'unique' where as my peers and most folks local to me, either appreciated but could not afford to buy or clearly did not appreciate the difference when they could buy it at a big box store for much less and (to them) at what to them was an affordable price.

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Jennie Little

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When I had the bookstore, I used a formula someone gave me: 1/3 product cost + 1/3 stocking/storage/promotion (overhead) + 1/3 profit. I paid, on average $1 a book so my retail price was $3 and up.

What I found was that I usually forgot a chunk of my overhead: cost of gas getting to/from sales events (although I'd routinely remember the rent, I'd forget gas, parking, how many miles I'd traveled). Also, being empathetic caused me to frequently give away my profit, which is (likely) a large part of the reason my business closed.

10% of your customers will (usually) provide 90% of your business. And, the corallary: an unhappy customer tells 10 people, where a happy customer will tell only 4.

Reward your return customers. The first month I was open I had a box of promo bags from an author's book. For the remaining time I had the store, when a customer brought one of those bags, I'd give them 10% off any full priced books. So make the discounted price targeted to those people who are already supporting you. I had 1 customer who would bring that bag, after 7 years.

So, give a discount if your customer will bring the old bottle back? Or, offer to refill it at the discounted price maybe? Less garbage too. Use it as a promotion?

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Matt McSpadden

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Anne Miller wrote:I don't understand this? What makes your product unique?

There are a couple reasons we are unique. First, we start with a quality organic product. This sets us apart from most store brands. This product is grown in the USA (actually just down the road here in the state of Maine), which makes it much more unique and sets us apart from most organic brands you can find in stores. Finally we use time tested techniques from the medicinal herb industry to dry the product slower and cooler than any other herb company I have been able to find. The end result is a local, organic product that actually has color and flavor... and I just haven't been able to find anyone else anywhere near me that can say that.

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Judith Browning wrote:Because you have an unique high end product I think it might require selling in high end markets?

I think you are absolutely correct. I have been targeting specialty food stores that specialize in local, organic, higher end foods. Because it is a high end product... I hesitate to drop the price too much, because I don't want to and can't compete with those $5 huge containers of dried herbs/spices that seem to be in every convenience store.

Matt McSpadden

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Jennie Little wrote:Reward your return customers. The first month I was open I had a box of promo bags from an author's book. For the remaining time I had the store, when a customer brought one of those bags, I'd give them 10% off any full priced books. So make the discounted price targeted to those people who are already supporting you. I had 1 customer who would bring that bag, after 7 years.

So, give a discount if your customer will bring the old bottle back? Or, offer to refill it at the discounted price maybe? Less garbage too. Use it as a promotion?

I have been looking into offering refills as an option. Essentially selling the herbs in a paper bag in order to refill the glass bottle. But I like the idea of offering a discount to returning customers. I'm going to see what I can work up.

Anne Miller

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Matt McSpadden wrote:

Anne Miller wrote:I don't understand this? What makes your product unique?

There are a couple reasons we are unique. First, we start with a quality organic product. This sets us apart from most store brands. This product is grown in the USA (actually just down the road here in the state of Maine), which makes it much more unique and sets us apart from most organic brands you can find in stores. Finally we use time tested techniques from the medicinal herb industry to dry the product slower and cooler than any other herb company I have been able to find. The end result is a local, organic product that actually has color and flavor... and I just haven't been able to find anyone else anywhere near me that can say that.

There are other folks selling organic herbs in jars. Maybe they don't come from the state of Maine, though they are grown in the usa.

When you go to the store to buy an herb what makes you pick a particular product? And what are you willing to pay?

Invasive plants are Earth's way of insisting we notice her medicines. Stephen Herrod Buhner
Everyone learns what works by learning what doesn't work. Stephen Herrod Buhner

Matt McSpadden

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Anne Miller wrote:There are other folks selling organic herbs in jars. Maybe they don't come from the state of Maine, though they are grown in the usa.

I'm sure they exist, but I have not been able to find any in my area.

Anne Miller wrote:When you go to the store to buy an herb what makes you pick a particular product? And what are you willing to pay?

I look for local and organic things first. If there are more than one option in that category, then I look for quality differences and how far they are from where I live.

Trace Oswald

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Christopher Weeks wrote:I'd keep the first bottle someone buys at the same price but every other bottle they buy at the same time is $2 less. And remind people that they make great gifts all year long, so stocking up now to take advantage of the deal is smart.

This is the route I would take. If you just lower your prices, I don't think you will accomplish what you are looking for. You can't lower enough to compete with the discount brands, so all you are doing is cutting into your profit margin without lowering the price enough to appeal to the people that are just looking for the cheapest organic they can find. Emphasizing the reasons your product is higher priced and more exclusive may be the better bet.

Nancy Reading wrote: If your herbs go further, then you could consider packing in smaller bottles, making them cheaper to the customer (although keeping your current margins). You would then get repeat custom more quickly and still maintain your current profit margin.

This is an excellent idea as well.

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Jennie Little

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I'm really fussy when I buy herbs because I find they're almost the most expensive thing, per pound, that I'm likely to buy... Our personal yardstick here is more about spending less than getting organic, premium products. I buy unorganic, waxed apples, for example, rather than paying 3x the price for organic unwaxed fruit.... I prefer organic, small producers, but cost ultimately is what drives my decisions.

I do vigorous comparison shopping with herbs because of this. I also make up many blends too (curry powder, Italian seasoning, garlic salt) and rarely, if ever, buy things like camp mix, a local herb mix. I just figure it's going to be too expensive and I can probably DIY if I need to.

I also dry my own parsley because I can't stand how straw-like the commercial stuff is.

That said, I'm likely to be your worst customer? What would get me to try your mix? How about samples at a farmer's market and free tiny samples? If it makes great dip with yogurt say and you give me a cracker with dip and a tablespoon or 2 to take home, the next time I'm at the farmer's market, I might look you up!

I'm not trying to be negative or dismissive, but that's our reality. Unless I'm hooked on something, I'm probably going to go by, like I do all the preserves and baked products...

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Tereza Okava

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it sounds like you need to focus on reaching the clients who:
-prize traceability
-value locally grown products
-value high-quality organic
-are fine with paying a bit more
-will be able to discern the higher quality of your product
this to me seems to scream farmer's market and foodies.

The online cheap-at-all-costs market offers you nothing. There is always someone selling cheaper. I personally could not afford what you're charging for herbs, when I'm buying in dollars I go for price, and beggars can't be choosers. But I know every time I see a recall warning for lead in cinnamon or turmeric that's half cornmeal or whatever the plague of the day is, I have no idea where my cheapo spices come from, and the containers do not make it easy to know (most don't say), which is why I grow my own.
I always seem to come back to recommending slow food, cooking schools, and farmers markets that restauranteurs frequent, but it might be worth some online research and maybe even a trip down to wherever in Boston foodies like to buy their ingredients (i'm thinking Chelsea Market in New York, or the Saturday Union Square greenmarket that a friend of mine sells her produce at). Finding your product's fanbase is the key to survival.

Jennie Little

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In Boston, the premium farmer's market is probably Copley Square... not sure about Maine? NH from what I've seen it's likely the Concord market.

ConcordFarmersMarket.com

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Matt McSpadden

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Portland, ME is our foodie area. It's a couple hours south of me. At one point it had more restaurants per capita than any other place in the US. Not sure if that is still true.

Jennie Little

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Matt McSpadden wrote:Portland, ME is our foodie area. It's a couple hours south of me. At one point it had more restaurants per capita than any other place in the US. Not sure if that is still true.

Are there restaurants in Portland you could get hooked on your herbs? I'm sure you've probably already thought of this...

One thing I remember decades later is a dip that was available at a pier/fish restaurant near where I grew up. Decades later, I still try periodically to recreate it and haven't. That's why I used dip as my example.

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Tereza Okava

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I want to add something else about prices. I'm participating in what's known as a Mastermind group in my professional area, it's like a peer support group for "experienced professionals" - we don't have noob questions, we have a lot of combined experience, but working alone as individuals running businesses in which we not only do all the work but also all the marketing, customer relations, planning, etc we don't have a good place to bounce ideas off each other. I lead a group every year and it's a great thing.

Last month someone said something that stuck in my head about pricing, which was that she had done some coaching and the coach asked her why she was giving people discounts who didn't even ask for them, she was essentially taking money out of her own wallet for no reason at all. In our line of work we deal with individuals who may or may not offer return business, and often have a lot of colleagues undercutting us or even stealing out clients. I will offer discounts for longer delivery times when I'm busy (or charge more for jobs that need to be delivered faster), but where in the past I might have almost automatically offered a discount without thinking -- maybe under the mistaken justification that "everyone loves a discount-- I'm trying to not do so. It's harder than it seems!!
But if you've looked at how much your competition costs, and you're in the ballpark, maybe consider that discounting a buck or two might not do much other than just take money out of your pocket.

One exception, which may suit your market, is for new clients- a new client may get a special deal, if you're trying to catch that client. I might also give someone a thank-you deal if they refer new people to me. That for you might be a coupon code for their next purchase, for example.

Matt McSpadden

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There are some nuance here. While the pricing is in the same range as other products that are decent... it doesn't seem like it, so I need to educate customers. That education is a whole different discussion.

@Trace and @Tereza
I think you both hit on an interesting point. Will the $2 matter? Will the foodie care about that extra couple bucks? Maybe, maybe not. Will discounting it $2 bring it within reach of people who are looking for a deal? Probably not.

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Hi Matt,

How much in terms of dollars and time do you have invested in each bottle? Consider the costs of obtaining the bottle, advertising, storage, etc.

Can you provide a picture of a bottle as the customer will receive it.

Some people age like fine wine. I aged like milk … sour and chunky.

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At my scale, the bottles and labels cost me $2.09. My highest cost is labor, and that is what I have been able to get more efficient with. My second highest is the herbs themselves, as I don't have room to grow enough, so I buy from organic farms.

See attachments for an example of one of the products.

TMI-MapleSugar-Back-sm.jpg

TMI-MapleSugar-Front-sm.jpg

Mark Reed

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I've been following this a little bit and checked your website. I'm curious why herbs, with no affiliation that I know of with Maine and with no real reason to believe they are any better than those from anywhere else are priced at what I think are absurdly high prices.

On the other hand, maple sugar, which is strongly affiliated with that area of the globe, and which is, by comparison vastly more difficult and expensive to produce, is offered at what I would consider an absurdly low price.

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Matt McSpadden wrote:I'm sure they exist, but I have not been able to find any in my area.

Do you only want live sells/buy live?

They are on Etsy, Amazon, etc.

USDA Organic label then check to make sure the origin is in the USA. A few:

https://www.ebay.com/sch/i.html?_nkw=usda+organic+herbs&_sacat=0&_from=R40&_trksid=p2553889.m570.l1313

https://www.starwest-botanicals.com/
https://mountainroseherbs.com/catalog/herbs-spices/bulk

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There are the "made in america" stores. Like this one"
https://madeinamericastore.com/nutmeg-spice-co/

Or this one:

https://madeinusa.com/search?keyword=spices&page=1&subcat_1=Spices+and+Seasonings&subcat_2=

But you might do better to go thru Maine's organic farmer program...

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Matt McSpadden

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@Mark, I think those are valid questions.

Mark Reed wrote:I've been following this a little bit and checked your website. I'm curious why herbs, with no affiliation that I know of with Maine and with no real reason to believe they are any better than those from anywhere else are priced at what I think are absurdly high prices.

To answer your question "why herbs?" ...Because I couldn't find them. I would go into stores in my area. Natural food stores, organic coops, and check farmer's markets. I couldn't find any dried herbs that were not not imported or from companies who did not share where their product came from. Meat, dairy, veggies, fresh herbs, were all to be had without problem, but everywhere I asked... the herbs were imported. The business model of being able to do the work in batches and sell over a long period of time fit with my schedule.

Again, I think the prices are high. They are high because I have to buy in my herbs instead of growing them, because they are organic, and because I'm still learning to be more efficient with my time. It takes a decent amount of time to go pick up the herbs, spread them on racks, keep them from getting too hot, collect them, garble them, weigh them, and bottle them. I am also working to make deals with farmers to get things for less. Then I am back to my original question, if I can drop my prices some... should I?

Mark Reed wrote:On the other hand, maple sugar, which is strongly affiliated with that area of the globe, and which is, by comparison vastly more difficult and expensive to produce, is offered at what I would consider an absurdly low price.

It might surprise you that growing organic herbs is actually more work than producing maple syrup and maple sugar. Maple sugar is cheaper to buy than herbs, and requires less work to bottle... so that comes out in the price.

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Anne Miller wrote:

Matt McSpadden wrote:I'm sure they exist, but I have not been able to find any in my area.

Do you only want live sells/buy live?

They are on Etsy, Amazon, etc.

USDA Organic label then check to make sure the origin is in the USA. A few:

https://www.ebay.com/sch/i.html?_nkw=usda+organic+herbs&_sacat=0&_from=R40&_trksid=p2553889.m570.l1313

https://www.starwest-botanicals.com/
https://mountainroseherbs.com/catalog/herbs-spices/bulk

I think those are great examples... unfortunately they make my point :)

Ebay - the first brand says imported from India and packaged in USA. I try searching for USDA organic basil... and can't find any from the US (different from holy basil).
Starwest - says they import from around the world.
Mountain Rose Herbs - says they have farm operations around the world.

Matt McSpadden

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Jennie Little wrote:There are the "made in america" stores. Like this one"
https://madeinamericastore.com/nutmeg-spice-co/

Or this one:

https://madeinusa.com/search?keyword=spices&page=1&subcat_1=Spices+and+Seasonings&subcat_2=

But you might do better to go thru Maine's organic farmer program...

I may check out the MadeInUSA store to sell my product

, thanks I was not familiar with the site... however, the Nutmeg Spice Co listed there, provides products made in the USA, but their website says from ingredients they import from around the world.

Matt McSpadden

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Aha! I found some. Some dried rosemary from California for $13.50 on ebay. Mine sells for $20. See the pictures below. It is a product of the USA... but then I ask, which has better color? Better color almost always comes with better flavor. What is the better flavor worth? Maybe not $6.50. Maybe $4.50? Maybe not. That is what this discussion is about.

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Mark Reed

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Interesting, the difference between locations I suppose. It might be a bit of exaggeration, but where I live, I'll guess I could fill my truck with delicious organic dry herbs (I do have space to grow my own) with about the same effort it would take me to fill a cup with real maple sugar.

If herbs are hard to come by or difficult to produce in your location, you might try focusing your marketing efforts there locally, in some of the ways others have already mentioned and keep your price high enough to turn a nice profit. If you have to keep it so high that someone like me considers it shocking, in order to compensate for low production, then do so as long as local folks are willing to pay it. I won't buy it because I have all the free herbs I want.

Maple sugar on the other hand is scarce as hen's teeth here. I've never even seen it for sale in a store or at a market locally. Maple syrup that is actually reduced to syrup instead of thick water and that hasn't been cut with cane sugar is even hard to find any more for less than $15 a pint. Along with olive oil it is one of the most counterfeited foods out there. I've only ever had real maple sugar because friends in Ontario sent it to me. I'd focus my internet efforts on that, and at a minimum triple the price.

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Jennie Little

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The only herb I have not been able to find is chervil. I finally got some out of date seeds from a farm store, but that's it. I have a pathetic 2 stalk plant I'm trying to grow...

Do you grow it? If so, I'm interested, but I bet I'm not the only one!

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Matt McSpadden

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Mark Reed wrote:Interesting, the difference between locations I suppose.

You are spot on. Lobster are quite cheap here in Maine. Try buying one at a restaurant in Virginia... way more expensive :)

Jennie Little wrote:The only herb I have not been able to find is chervil.

I do not have chervil... I am not familiar with it. Though google says it has some mild licorice flavor, which also comes out in tarragon. And we can grow tarragon here. I actually have some in the dry room right now.

Jennie Little

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I have tarragon in the yard. Tarragon chicken is a fave of my husband...

Forgot! Try hawking your goods to spice stores? The only one I know in NH is in Claremont. Last time I was there it had just been sold by the original owner, who I'd gotten to know. They still exist acc. to the internet, but I can't give you a recent appraisal of the store because I haven't been there in a long time....

https://claremontspice.com/

Finished 2 life quests (well... almost). Wondering what to do next? Zone 5b

Matt McSpadden

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I thank you all for your input. Even though it is not enough to attract people looking for a deal, I am lowering my prices (except maple sugar) by $2, because I think it is a more fair price.

This is in anticipation of the savings I will have with a single dedicated space (rather than two spaces), and the savings I will get with some new equipment that should be arriving shortly.

There will also be a pie member discount on top of that at some point in the not too distant future.

Jolene Csakany

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I'm not selling anything at the moment, but contemplating starting a business making dog treats that I currently make for my own dogs. I know figuring out a price will be a struggle for me, because I've been on the poor end most of my life, and so have always been looking for the deal and want to have whatever I produce be available to the less affluent. I also have friends and acquaintances who are crafters or have some sort of cottage industry and so I also understand the time and resources that go into some high priced items, and am happy to see these small sellers do well. I want to support local and small businesses, but most of my life I've made minimum wage or not much more despite college and paying off the debt of a useless education.

I think it's admirable that you want to pass down the $2 savings to your customers, but I don't know if that difference will bring in the comparison shoppers like me- people who don't shop a lot, and tend to make due with lesser quality even if they appreciate the difference a seller like you brings to the product. My sister, who has done much better than me financially, wouldn't care a bit if your product was $2 less. She knows what she wants and she just buys it. Some people who are financially comfortable will even assume that the more expensive product is better and choose it.

I think what might bring you in maximum income and give your product greatest availability to people of different levels of income is having a cheaper one time price available for first time buyers who sign up for a bimonthly newsletter. This price should be as low as you can manage without losing profit to get the attention of us cheapskates. A special smaller sized bottle- maybe only have it available to first time buyers if it's more of a pain in the ass to produce smaller size stuff. This gives savvy shoppers a chance to experience the difference in quality you offer. The newsletter can share your story and give the information about why your product is superior in more detail than a label, and is conveniently in the customer's inbox so they don't have to find your website for it; and it can offer smaller discount codes to the loyal customers. People with money to burn can just buy your product at the higher price and many don't care what your story is or want to hear the details of why it's superior. So, it's a little more work for you to set up but it keeps the price high for those who can afford it and may hook people who wouldn't have otherwise tried it.

edit- I say bimonthly newsletter because I feel flooded with emails from businesses that I signed up with to get an initial discount or digital freebie. I think a lot of people get themselves into digital overwhelm this way, not thinking to unsubscribe or being annoyed that they have to. Less frequent makes it feel more special.

I saw another commenter mention they hated paying shipping, and I think this is a common thing. You're adding stuff up in your head, deciding how much you can spend and then bam, it's more than you realized and while total cost may ultimately be the same, it changes the shopping experience for people. My ex had an etsy business and he toyed around with including shipping and raising the price, or keeping prices lower and charging for shipping, with no increase for multiple items so it was generally cheaper when shipping was an extra. He found it best to incorporate the shipping price into the item's price and not charge separately for it. It seems like a lot of people get themselves ready to let go of a certain amount of money when looking at the item, and then when shipping is added at the end they balk.

Oh sure, it's a tiny ad, but under the right circumstances, it gets bigger.

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