Do you struggle with pricing your food products?
Do your customers often tell you that your products are too expensive?
When you’re working out your pricing, do you get that sinking feeling in the pit of your stomach because YOU think your prices are too high?
Are you struggling to get your pricing to work for you for retail, wholesale and working with distributors / intermediaries?
If this sounds like you then this blog post will help. In this post I will cover the 3 biggest mistakes that food business make with their pricing.
1. The Maths
The first mistake that many food businesses make with their pricing is with the maths. There is a simple formula for calculating prices of your food products but part of the issue arises with pricing because food entrepreneurs don’t add in all the costs they need to. As they start to fill in their spreadsheet they make a judgement call about how those price are going to be received (my prices are too expensive).
And to make their prices seem more “reasonable” they start to ignore / hide/ disregard certain costs. They set their pricing on a “just for now” basis. ie I’ll just use these prices for now and change them later
The problem with this approach is that you are building up problems for the future because once you start down this road it’s very easy to keep hiding or ignoring costs. While you are based at home or just starting out and it’s just you, you can get away with it.
But there will come a time when you start to scale that you will need to re invest in order to fund your growth. You might need to employ staff, buy equipment, or start working with intermediaries like distributors and wholesalers. You’re business won’t grow/flourish if you’re just covering your costs and have no slack in your pricing to cover the
You have to get comfortable with including ALL your costings and not cherry picking particular ones to make your pricing “look right.” Once you have worked out your pricing including all the costs then this a really opportunity to look at what the pricing is telling and you if needed, go back to the drawing board and see if you can find more cost effective options for your packaging or new suppliers for your ingredients for example.
Related: 5 Steps to Pricing Your Products for a Profitable Food Business
The second mistake that many food businesses make with their pricing is with the mindset. Many small food producers struggle with mindset around pricing. It can be hard to feel comfortable presenting, talking about and pitching your products if at a fundamental level, you believe your prices are too high (or too low).
In order to be able to sell your products confidently you have - at a very basic level - to believe in your brand and products and be able to articulate your brand proposition in an unwavering and unapologetic way.
If any point your customers pick up any vibes from you that your products are not worth the prices you are charging, then they will not buy.
The third mistake that many food businesses make with their pricing is with the marketing.
Some small producers struggle in the area of pricing because their pricing strategy is not aligned with their marketing strategy.
They are not super clear on who their ideal customer is, so they struggle to speak to and resonate with these customers through their marketing. So they struggle to attract enough of the right sorts of customers - those customers who will love their products, rave about their products and go on to become life long fans.
As a small producer are you doing the work to understand who your customers are and then making sure that your press / PR, the events that you attend, the collaborations you do - does this all align and in the customers mind make you unmistakably the brand that they must buy? So that when it comes to buying your products they don’t even quibble over price.
And to do this well, particularly in a fine food environment you need to almost become “marmite” Your marketing needs to attract your ideal customer and repel those customers who are not your ideal customers. Those customers who don’t understand the value proposition of your brand and are never going to become your customers.
Don’t worry about turning these customers away. Don’t focus your energy, budget and time trying to convince these people o buy from you. Stay strong hold fast to your vision of your business and concentrate on giving your ideal customers, the people who do buy from a fantastic, unforgettable experience, and they’ll come back time and time again.
Related: 25 Great Places to Sell Your Food Products Checklist
So there you have it, the top 3 mistakes that food businesses make with their pricing. It’s amazing how once you get clear on who your ideal clients is, and learn how to communicate with them and turn them into customers and get a steady stream of them coming to your door, all of a sudden you no longer have a pricing problem.
Has this blog post helped you to rethink your approach to pricing. How will you use some of the points I've raised in the next few weeks to change things up in your business? Leave me a comment below, I'd love to hear from you ❤️
Til the next time
Other blog posts you might like to read:
Hey I'm Nila. I make beautiful iced biscuits and I'd like to help you launch or scale your baking business. Welcome to my blog.