Pricing Farmstand Items: Don’t Sell Yourself Short

Pricing items can be such a challenge. It involves much more than the direct costs of the products you sell. It also involves your mindset around money. Let’s dive into both areas.

Money, Mindset & Self-Worth

It’s natural to go into a farmstand business thinking about things besides the actual money to be made. I was excited about creating a gathering place for community and an outlet for my creative spirit.

As you create your farmstand, it’s easy to focus on the image of what you want your farmstand reality to look like, rather than the concrete numbers on a spreadsheet. If you have a scarcity mindset, meaning you tend to assume you should give more than you get, you’ll automatically be thinking about how to price items so that you keep everyone happy.

You might also be nervous about looking too big for your britches.  In other words, thinking a fair price, at which you are fairly compensated, means you’ve already “arrived” and don’t have to put in your dues as a new business owner.  You might automatically price items low because you are accustomed to dimming your light. See more here on Scarcity Mindset.

So, mindset must be considered. You must recognize that you are worthy of shining and creating a business that not only gives to your community, but in turn, gives back to you. A farmstand reflects your identity. You absolutely should shine. And if you are shining? Guess what? So will your pocketbook.

I will also add this – if you don’t consider your mindset, it is highly probable that down the road you will begin to feel resentment as you realize you are working for free. Your beliefs about your worth are completely connected to your monetary profit at the farmstand. Your emotional “profit” is also paramount.  You want to feel good about your farmstand success internally and externally!

Now, let’s talk about the logistics of pricing and what you should keep in mind.

Direct Costs

Direct costs include everything you had to buy that was directly used to create the product you are selling.

In my case my direct costs include:

• Soil, fertilizer, and compost
• Seeds & plants
• Packaging for all products
• Water (our irrigation water shares plus our city water)
• Ingredients for all baked goods

Indirect Costs

My indirect costs include:

• Equipment
• Infrastructure (water lines, farmstand structure, greenhouse, etc.)
• Utilities
• Website & Marketing
• Insurance
• Accounting software

Taxes

• You will need to contact your state, county and/or city to determine whether sales tax must be collected and remitted.
• Be certain your pricing accounts for any taxes you must pay!

Labor

Labor can be a direct or indirect cost. Direct labor is the time spent making, growing, harvesting, or packaging a product. Indirect labor is the time spent running the business.

My labor costs are many – I’m not sure I’ve got them all listed here but this list should give you some ideas to consider.

Hours spent:

• Planting & harvesting
• Washing & packing produce
• Making food items & packaging food items
• Marketing

Now, I share all of that because it’s important to always consider the bigger picture. It will allow you to see your self-worth and your value to the community as a farmstand owner.

That being said,

A simple way to determine the cost of an item is to consider:

Ingredients + Labor + Overhead/Indirect costs + Profit = Selling Price

If you skip any of these categories, you may accidentally end up working for less than minimum wage.

CakeCost App

I use the CakeCost app to take the headache out of this process. I use the free version. It is a simple way to keep track of your pricing as well as your recipes, if you choose to do so.

It will save all your information, and if the following year you find that inflation has increased your prices, you can easily use CakeCost to readjust your numbers.

You can determine your pricing for one serving or for an entire batch of a product.

CakeCost will take your numbers for ingredient cost, labor, overhead, & profit to determine a final price.

But let’s talk about profit, because this varies based on your situation.

What Does Your Product Cost at the Store?

I tried to sell granola at my farmstand (it was unsuccessful).  I discovered that the costs to create this organic gluten-free granola wouldn’t be profitable, simply because the store sold a similar product at a lower cost.

Always check what a similar product to yours sells for in your local store or bakery.

What is Your Target Profit?

Many small businesses start with a target profit; you may decide you want to make 10% profit, or perhaps 30% profit.

If there is a high demand for your product and no one else sells it, you can often price it fairly for yourself and for your customers.

Have You Accounted for Growth?

You also need to consider profit in terms of what you absolutely must make in order to grow. Over time you will have equipment that wears down. You may have a bad crop season in which you lose all your squash due to squash bugs. Plan to create a buffer to handle these unexpected expenses and future expansions to your farmstand business.

What About Marketing & Education?

In my case with the granola, I could promote my granola by marketing the fact that it is gluten-free, organic and free of processed sugar. I could get a higher price for my granola if I could explain how it is truly more valuable than the highly processed granola in the store. I could definitely create a demand for it if I tried.

Currently I don’t have the time or energy to do that, so I’m not selling it at this point. I am focusing on the items that sell well and I’m going to stick to that for this second season with my farmstand.

Be sure you don’t spread yourself too thin. It’s important to enjoy your farmstand while also receiving a fair profit in return.

I hope this helps. See my article for information on opening a farmstand. Please feel free to leave comments if you have further questions. I wish you so much success with your farmstand and I also hope you enjoy this creative work which will become such a beautiful part of your community’s life.