When Should I Price My Farm Products by Weight?
Many Foods are commonly sold by weight. In-person at your Farm store or at the market, it is easy to do with the Barn2Door point-of-sale (POS) to charge for your Products by weight. However, when you're servicing a wider buyer audience online, selling everything by weight can take more time and negatively impact your profit margin for low-value products.
Given the demands on your time, it’s important to know when your Farm can skip the scales, save time, and sell at a flat rate (and improve your margins). This blog walks through several considerations when deciding if you should sell at a flat rate or weigh your products purchased online.
What’s your Cost of Goods Sold (COGs)?
When looking at the finances of your Farm, it’s important to break down the costs of goods sold (COGs) to understand the gross margin on your products. This will help you determine if there is a possibility of actually making a profit or if a given product is simply a “loss leader” to entice additional purchases. For instance, buyers may be committed to purchasing Eggs every week from your Farm (at a low margin), but you may actually earn all your money from the Breakfast Bundle Box they pick up monthly (at a high margin).
What’s your Cost of Labor?
Too often, Farmers fail to account for the value of their time when calculating COGs. At a minimum, Farmers should assume a living wage (e.g., $20/h+ at a bare minimum) if they actually want to be profitable. As a result, every 1 minute of your time is worth at least $0.33. Note, this doesn’t even factor in taxes (business, unemployment, income).
As such, every minute of your time counts when it comes to growing, harvesting, packaging, and collecting payment for your Farm products.
Is It Worth a Few Cents?
Often, anything less than $25-$50 is not worth your time to weigh after factoring in the cost of labor. Instead, either pick a median price point or price your products per unit to save time, sell more, and move more inventory.
For example, a 25-pound Bundle Box might vary slightly in weight with each box. However, no need to weigh the exact amount. Specifying the box to the ounce won’t do much other than add a few cents, to ensure each box is exactly 25 pounds. It’s not worth the additional labor costs.
When selling online, avoid selling any individual specialty products that are less than $25 in value by weight. With respect to Proteins, set a flat rate price for products based on a range of sizes. For instance, whole chickens could be sold as small (4 to 4.5 lbs), medium (4.5 to 5.0 lbs), large (5.0 to 5.5 lbs), and extra-large (5.5lbs+). The same is true for other staple proteins. And the good news is that buyer conversion actually increases online when simplifying the purchase experience.
For products less than $25 in value, always consider bundling products in larger quantities (e.g., 4 chicken breasts, 3 packs of bacon, 2 heads of lettuce). Our most successful Farmers often move 75%+ of their products in Bundle Boxes.
When Farmers Should Price Products by Weight
Farm Products that are valued in excess of $50, may be worthwhile to weigh and charge to the ounce (depending on your packaging and purchase experience). It’s best to keep things simple, only weighing products when it’s absolutely necessary.
For instance, when prices can vary drastically by a few ounces or a few pounds, it’s best to weigh certain products to maximize profits (e.g., heritage turkeys, tomahawk steaks, prosciutto). Collect an upfront deposit to secure the buyer’s commitment, and then reconcile the final amount when you’re ready to fulfill the order.
When selling large animals (e.g., quarters, halves, or wholes), then definitely collect a deposit and reconcile the final amount by weight after harvesting. This is an ideal use case for spending your time to maximize your gross income and your margins.
Pricing products by weight when it’s not necessary can take up time and cut into your net profits - especially when factoring in your labor costs. To save time and money, be selective when pricing your products by weight unless it’s a significant boost to your overall profit margin.
Barn2Door provides an all-in-one solution to grow and manage your Farm business. If you’re curious to learn why successful Farms run on Barn2Door, watch this 5-minute video.