| | At a January 28 workshop held in Grande Prairie, rural entrepreneurs learned how. Here are some basics:
For many rural entrepreneurs, setting a price for what you’re selling is one of the trickiest parts of the business. Price too high and you’ll deter customers from buying your terrific product. Price too low and you could lose money and eventually put yourself out of business. But how high is too high? How low is too low?
A workshop held January 28 in Grande Prairie offered proven answers to these important questions. Called Setting a Profitable Price, this one-day event featured entrepreneur coach Natalie Gibson.
According to Elaine Stenbraaten, Fairview-based New Venture Business Specialist with Alberta Agriculture and Rural Development (ARD), Setting a Profitable Price gave entrepreneurs the skills to take some of the emotion out of pricing.
“Many entrepreneurs tend to fall in love with their product and they are passionate about getting it out to the marketplace,” says Stenbraaten. “But they often don’t take sufficient account of all the costs that go into their product, including a number of potentially hidden costs, or know how to use that information to set a price.”
A profitable price includes a combination of hard-and-soft factors. New Venture Business Specialist Elaine Stenbraaten says information from the Setting a Profitable Price workshop will be available online.
Cost, value and break-even
As Gibson outlined to the workshop, there is no all-purpose formula that allows for profitable price-setting. Rather, a profitable price is determined by a combination of hard-and-soft factors such as cost of production, value to the buyer, breakeven points and profit margin. Stenbraaten notes that the entrepreneurs who attended the event found value in receiving an accompanying workbook they could take home and work through.
Organic meat producer Jerry Kitt attended the workshop. What he learned was a continuation of his personal journey, after 14 years in business, to a pricing model that works for his business.
“I started raising wild turkeys and I sold them at a price that was suggested as the going rate,” says Kitt. “After the first season, I started penciling out my costs and I had to double my original price in order to get my costs covered.” Today, he uses Excel spreadsheets to input all his costs, to make sure they’re reflected in the price of his product.
Stenbraaten held more Setting a Profitable Price workshops during 2009, including March 3 in Airdrie and March 5 in Leduc. ARD will also make pricing information available online.
For more information, please contact Elaine Stenbraaten at 780-835-7531 (dial)310-0000 for toll free) or email elaine.stenbraaten@gov.ab.ca. |
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