Pricing The Product

Document Sample
Pricing The Product Powered By Docstoc
					Pricing The Product

Virginia Ag Summit
October 2006



BME Consulting
Alan Teel
Do Your Homework
    Construct a business plan
       What are you going to do
       Timeline for all segments
       Marketing
       Production
       Finance
       legal
Do Your Homework
    Is there an established market

    What is the competition
Do Your Homework
    Who is the customer
       Demographics
       Values
       Wants and needs
       Financial ability
       Age
       Soc/eco status
       Others specific to your product or service
How Will You Market
     Direct
         Farmers market
         Farm to consumer
         Community shared agriculture (CSA)
         Mail order
         Food service or door to door
How Will You Market
     Indirect
         Wholesale
         Retailer
         Institutional (school, restaurant)
         Broker
Production Cost
     Variable cost
        Cost of creating the goods or service
        Shipping or delivering
        Materials and supplies
        Selling cost
Production Cost
     Fixed
         Building or land
         Interest
         Insurance
         Management
         Labor
         Utilities
         Equipment
Break-even Price

  variable cost per unit +
                                         fixed cost
                                 projected unit sales


       Factors affecting break-even price
             Volume discount buying on supplies
             Number of units sold
             Changing fixed cost
Summary
   Costs and Profit Objectives

   Customers (demand)

   Competition