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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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