Agricultural microeconomics lesson 2 pricing and revenue considerations
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Agricultural microeconomics lesson 2 pricing and revenue considerations

Agricultural MicroeconomicsLesson 2: Pricing and Revenue Considerations

This course developed by The Environmental Finance Center at UNC Chapel Hill for The North Carolina School of Science and Math and NCDPI is licensed under a Creative Commons Attribution-NonCommercial-ShareAlike 3.0 Unported License


Revenue and pricing

Revenue and Pricing

Revenue =

Price per unit x Number of units sold

Profit =

Revenue - Costs


The price is right

The Price is Right

How much would YOU charge

for your product?


Variations in pricing

Variations in Pricing

  • Cost to produce product

  • Competition

  • Demand for product exceeds amount of supply

  • Quality of product

  • Reputation of farmer

  • Product marketing

  • Transportation costs


Piedmont farm revenue

Piedmont Farm Revenue

Revenue from sale of 30 head of grass fed beef (total of 10,800 pounds):


Important steps in setting price

Important steps in setting price

  • Know your costs

  • Know your customer

  • Assess your competition

  • Review your pricing continuously


Know your customer

Know Your Customer

What does your customer “want?”

  • Are they searching for the best price?

  • Do they want to develop a trusted relationship with you?

  • Do they depend on you for a high quality product?

  • Are they willing to pay more for a high quality product?


Price sensitivity

Price Sensitivity

Scenario 1: Customers are VERY price sensitive

Scenario 2: Customers are NOT price sensitive


Assess your competition

Assess Your Competition

How can you differentiate yourself from others:

  • Do you offer a higher quality product?

  • Do you offer something that no one else offers?

  • How many other farmers offer the same (or similar) product?

  • How can you be a price maker and not a price taker?


Optional exercise

Optional Exercise

How much would you PAY?


Next class cost and expense considerations

Next Class: Cost and Expense Considerations

This course developed by The Environmental Finance Center at UNC Chapel Hill for The North Carolina School of Science and Math and NCDPI is licensed under a Creative Commons Attribution-NonCommercial-ShareAlike 3.0 Unported License


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