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Pricing Strategies for Scaling Your Farm
279 Plays3 days ago
Learn how Shenk Family Farm transitioned from a hobby to a thriving six-figure business by mastering production costs and strategic product packaging. Rachel Shenk shares actionable insights on how to price for sustainability, move the whole animal, and build a loyal customer base through convenience and transparency.
For more Farm resources, visit: barn2door.com/resources
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Transcript
Introduction to the Independent Farmer Podcast
00:00:09
Speaker
Hello and welcome to the Independent Farmer podcast, the go-to podcast for do-it-yourself farmers who are taking control of their own business, skipping the middleman, and selling direct to local consumer and wholesale buyers.
00:00:20
Speaker
This
Introducing Barn to Door
00:00:21
Speaker
podcast is hosted by Barn to Door, the number one business tool for independent farmers to manage their business, promote their brand, and sell online and in person. Let's dive in to today's Independent Farmer podcast.
Interview with Janelle, CEO of Barn to Door
00:00:42
Speaker
Welcome to the Independent Farmer Podcast. I am Janelle, CEO of Barn to Door and your host for today's episode. As many folks might be aware, Barn to Door builds software for independent farmers all across the country.
00:00:53
Speaker
By getting a system in place to sell direct, market to local buyers and manage orders, farmers can skip the middleman and build a strong business with recurring sales. Barn to Door is built for farmers, which means we build what farmers need to easily sell online and in person to wholesale and retail customers and including tracking real-time inventory, and we just debuted helping farmers with local delivery. So very excited about that.
00:01:18
Speaker
In today's conversation, we plan to dig into pricing your farm products. Actually, all things money, really. The goal is to get well acquainted with what you're selling, to understand costs, to evaluate fired man, to pricing items individually, or packaging them in new ways. All of this is important to give you controls to move product while also ensuring profit margin.
00:01:41
Speaker
Whew,
Insights from Schenck Family Farm
00:01:42
Speaker
that's a tall order. Today I welcome Rachel, who is part of our Farm Advisor Network and has worked with us for a number of years. Welcome. Thank you Thank you, John, for having me. Very excited. Okay. Really, before we get started, we need to learn all about Schenck Family Farm because it's nice for folks listening to know what is your experience, what kind of farm you have, how long you've been doing it, etc. So they can most appreciate all of your feedback and learnings. So maybe just a quick summary of your farm, what it is that you sell, where you're located, kind of the basics.
00:02:13
Speaker
Yeah, absolutely. So we're Shank Family Farm. We are in Newport, North Carolina. So it's about half an hour from the beach. And we've been farming about nine years. It's my husband and I and our three kiddos. We do have some help with sales and we have somebody that can help with farm tours around the town. But we're still getting into the whole employee side of things because we're going to need some help. But we do chicken turkey, beef. eggs, pork, and then some tallow and lard-based skincare items. And we sell all direct to consumer through subscriptions, through the farmer's market, and our mobile farm store that we set up in weekly locations. And yeah, yeah, I'm excited to share it today.
00:02:49
Speaker
You say you live how close to the beach? That's all I heard was, I'm going to the beach. We live half hour from the beach, but we didn't even go to the beach once last year. So that's a goal this year. that's a great goal. I feel like that happens, doesn't it? Yeah, you just get in the groove and you forget that the beach is right there to enjoy.
00:03:08
Speaker
i love it. and I loved how you're like, we're starting to get employees. It sounds like some good growth. We call that a good problem to have, but it's still growth, right? It's still growing pain. Yep. Yep. You got to get out of your comfort zone.
00:03:21
Speaker
Oh my goodness. And do you sell a subscription to all of your products? so chicken, pork, beef? Yes. So we have a 12 pound and a 24 pound box chicken, pork and beef, and then they can add on eggs. We also do a 10 pound chicken only. That's just cuts. And then also a whole chicken subscription. So they can get anywhere from one to as many whole chickens they want a month. So yeah, but the most popular is the 12 and 24 pound chicken, pork and beef. Is it actually a combo of the proteins? Or is it like 12 and 24 of each chicken and pork and beef?
00:03:53
Speaker
It's a combo. So the 12 pounds is roughly four pounds chicken, four pounds pork, four pounds beef. Got it. Oh, fun. Yeah. Nice. How lucky for all the folks living near you. Okay.
Business Strategies for Farmers
00:04:05
Speaker
We're going to go general, go wide first, and then we'll start to get into the dirty details, but... Really, we just want to talk about money because farmers not only run a farm, they run a business. You know, it is what it is. And we know that that's double the work in some ways. And of course, why we're passionate here Brunch Doors, because we like to be the business system and help that side run smoothly. That's just the whole goal. And so money matters, right? When you're running a business. And I know you've been at this for years. Actually, how many years?
00:04:32
Speaker
Nine years. Nine years. Okay. And did you start pretty small? Tell people really quick that that trajectory so that we can know where to dig in as well. So we started in our backyard with 40 meat chickens and five laying hens. And that was kind of a test round. And then that next year where we really established the business and got our sales and use tax ID and all that, I think we did 500 broilers and about 50 laying hens. And then we've just kind of grown from there. So we're on track to do around 3,000 broilers this year. Sorry, more like 4,000. 3,000 was last year. 4,000 this year. And then about 300 laying hens. Oh, yeah. And pork. About 60 pigs. About 20 cows. 300 turkeys. Yep.
00:05:12
Speaker
Oh, turkeys too. 60 pigs, 300 turkeys. How many? About 20 head of beef. Wow. Nicely done. It's true. Chickens are the gateway drug, aren't they? Yep. They suck you in.
00:05:26
Speaker
it's a good quick turnaround, right? In terms of ROI too, which is neat. It probably does help you get your business systems in place. Yes. And a lot less investment on the front end. Yes. Up front. Yeah. And people all literally eat chicken every single week, multiple times a week, typically. So yeah, it's a good mod.
00:05:42
Speaker
Okay, so that's all great to know. and What is your general thinking on how to price products? Yeah, we did not do this well from the beginning. We didn't really start tracking our expenses well, probably until year two or three, which we regret. If anyone out there is starting fresh, just have a good system in place. Don't think, oh, I'm gonna start and then I'll figure out my system. Like no, like sit down and really think through a good system now, whether you have a bookkeeper or you do Google sheets or QuickBooks or whatever you're doing, have a system in place to track every single expense, which enterprise it goes to, track all your sales and revenue, and make sure you're keeping it with the farm enterprise. And then also your general farm expenses, tractor, electricity, gas, so that you can assign a percentage of those to each enterprise as well. So yeah, we have our general farm expenses, farm operations expenses, but we also have general expenses for our sales business. So we've separated our farm um into two businesses based off of the mentorship of other farms. So like we have our grower operation where we produce the finished live animals and then we sell those live animals to our sales business. So we just to keep it separate. So like if we aren't making money, we can look and be like, okay, which business do we need to focus on growing the animal or processing and selling the animal?
00:06:59
Speaker
Where's the cinch point there? it Just kind of help have a good, good accountability. I love that. So two things. One, you mentioned the word setting up different enterprises. I'm going to be so bold as to say you probably mean like tracking by chicken, by cows, by pork. Yeah, we have our broiler operation, which is the meat chickens, the pork operation, the cattle, turkeys, and eggs. And then we just have general farm expenses. So then we kind of split that up. So say our eggs is 20% of our overall revenue. We're going to make sure that the egg operation is carrying 20% of our farm overall expenses. Because in the beginning, we didn't make each enterprise also carry that, which was a mistake of ours. You don't get into farming because you want to do numbers, you know, but you have to. It's a
Pricing and Cost Management
00:07:45
Speaker
non-negotiable. And if we could start over, we would be really diligent with numbers from the beginning. I almost feel like you should repeat that. I know it's so true, though. So many, even if you're like a chef at a restaurant or even a hairdresser, like anybody who owns their literally their own enterprising business in whatever area of passion they have, which is amazing. But at the end of the day, I mean, if you want to keep doing your passion as your livelihood, you have to remember that you're a business and in some cases a business first, which is, you know,
00:08:14
Speaker
pull your hair out a little bit of that thought. But that's, again, that's why I wake up every day is to help farmers with the business side so that they can do that really turnkey and hopefully with the maximum profit, right? And so that's why it's so important to learn about all these things. So I love that you've set up each enterprise and that you actually map the cost to the revenue expectation or what they should be carrying per enterprise. Just explain that one little piece though, which you said really quickly, which was you set up your general farm, expenses and then it sounds like you sell it to the enterprise because you mentioned the chicken.
00:08:49
Speaker
Yeah. So, so just for an example with chickens, cause that's the easiest to wrap your head around it. but You can customize it to your farm, but we track all of our expenses all year for the chicken enterprise. And then we look at how many chickens we actually produced. So yeah, we take all of the enterprise expenses, the percentage of the general farm expenses, and then we add a 5% loss and profit margin. So that's our like wholesale price that we're selling that live chicken to our sales business for. So for us, that's $19. And for anyone that's a chicken farmer out there, I heard this really, really wise piece of advice. They said, you want your boneless, skinless chicken breasts to cover the cost of that live bird. So our boneless, skinless chicken breasts are $19 a pound. So we sell that $19 chicken. to the sales side. And so for us, we we process our own chickens. So our sales business carries the processing costs plus marketing, our barn to door costs, our mobile farm store costs, labor, anyone that's helping us with markets, freezers, all of that stuff is added in. And then we do a 20% profit margin on that. And then that's our retail costs. So for us, that comes out to about, let's see, $42 a bird with our average weight being around five and a half pounds. So that comes out to about $7.50 per pound
00:10:04
Speaker
We add a dollar per pound when we cut them up. So then that's $47 a bird for our cut up chickens. So the breasts, the tenders, the thighs, the wings, drumsticks have to add up to $47 per bird, not including the backs and the necks, the chicken frames, because those don't sell consistently. So we don't even include that in our in our pricing. And yeah, this has taken years and years and years for us to figure out years of like, oh my gosh, we worked 100 hours a week and we didn't even pay ourselves. so Yeah, the number feels high, but our customers want us be farming for decades to come so they can rely on good food that that they can count on for years to come. And so we had to make the hard decision to raise our prices, but none of our customers were upset about that. They were like, we're happy for you. Like we will pay whatever you need to charge so that you can be farmers for a long time.
00:10:52
Speaker
I love that. And also... Thank you. Like how lovely that you're so willing to share that because again, you went through so many hoops and learnings to figure that out kind of the hard way, but so neat that you have literally built a model with, again, when you're doing kind of loss plus profit in there.
00:11:12
Speaker
Very important. I feel like I shouldn't ask you on the spot, but I feel like we need to do webinar where farmers can show up and actually give you their costs like have you almost do it in front of other people because you know they're going to replay that last five minutes multiple times i guarantee it because it's just so rich in terms of them being successful to your point right but you don't want to wake up and realize you worked 100 hours and didn't get paid or you know i know i've had many conversations with farmers where like the day they woke up and realized that they were paying to be a farmer is not a good morning We'll talk later, but I did say it here first, so we're probably going to have to hold to it, which is great.
00:11:46
Speaker
But I do think that would be neat. Hands-on walk people through it. Yeah. And we only were able to come up with like our pricing sheets and all that because of other farmers that literally sent us their sheets. And they were like, this is what we use. Here it is. I just love the community of farmers. Like they're just so willing to be generous with their time and their resources so that they see other farmers succeed. I love it.
00:12:08
Speaker
I do too. i do too. It's literally what you're doing right now. So great example for sure. Thank you. Okay. That's awesome. That just blows up into a whole nother conversation later, which is amazing. But of course, there's so much more to learn today. Okay. Best moving products and why? Yeah. Eggs, boneless, skinless chicken breasts, pork chop, filet mignons, rib eyes, basically the stuff that is quick to thaw, easy to prepare, you know, like the popular stuff, drumsticks, roasts, bones, that kind of thing is a little bit harder to sell.
00:12:38
Speaker
Yeah, I appreciate that. And easy to thaw. I love that. I don't know if I had heard that before, but yeah, that's very telling, isn't it? That's, you know, people, your buyers like that convenience. So that is why, love that. Anything else to that add from that? That's just the buyer demand, isn't it? Speaking.
00:12:54
Speaker
Yeah, yeah. And I realized because like for us, I try and plan a whole week's worth of meals. i've I've tried to like walk people through like how we do it. And for most people, that seems really overwhelming. They're thinking one to two meals at a time. So the smaller cut or even like hamburger patties, they can literally cook those from frozen. We just realized, especially just in the busy, fast paced world, those things that they can prepare quickly without having to plan ahead are definitely the easier to sell things.
00:13:20
Speaker
Yeah, I love that. That is so insightful in terms of who your buyer is. We talk a lot about that Barn to Door. Can we just click real quick on the Tallow products? You added those pretty recently.
00:13:31
Speaker
Yes, last year we started doing whipped tallow and then we added right before Christmas tallow beeswax candles because we had all these tubs of tallow in the freezer and some people were buying it to cook with, but it's definitely been a slower growing product to sell because people aren't used to, you know, people do like the olive oil, coconut oil, but tallow is a little bit different. So it takes some our education. So it's going to take some time. So we were like, what do we do with all this tallow? And I had a local business, friend who does soaps and tallow and stuff. So she offered to turn our fat into a a value added product that people would love. So it's been great.
00:14:09
Speaker
I love that. Yeah, it's it's good to pay attention to there is demand, but all products do not move at the same rate, right? And so can you turn that into something different or diversify? I have made beeswax candles at home. I didn't realize you can make tallow beeswax, which is very fun. I love to play around. I make tallow soap and lotion and shampoo bars and whatnot, too. And we just love them.
00:14:29
Speaker
We use the lard for soap just because we also have a lot of lard. So we do lard goat milk soap and then the whipped tallow and then the tallow beeswax candles. We've tried the lard beeswax, but they just melt so much quicker. Tallow is a lot harder at room temperature. So that worked better for
Product Diversification and Packaging
00:14:43
Speaker
the candles. It makes them last longer.
00:14:45
Speaker
That's great to hear. I use tallow. Well, obviously I use the tallow to make things like that, but I also use it as my neutral oil, right? I feel like lard is when you're cooking with it is so flavorful. When I do Asian cooking and whatnot, I always use tallow just because you want a neutral oil, which is really neat. Yeah, that's awesome.
00:15:02
Speaker
And truly you're an entrepreneur, right? You're running your own business and you're always paying attention to figure, trying different things, figuring out how to move product. Okay. Let's see. How do you think about pricing and profit margin and packaging for, boy, that was threefold. That's not fair. How do you think about pricing and profit margin? We'll start there. But packaging, if you hit on it, for your most popular, like eggs or filet mignon, for example, like how do you think about pricing, again, profit margin and packaging? I always love the three-prong question. People are like, what? What?
00:15:33
Speaker
All right, there you go. I'll repeat it if I need to. So obviously pricing those items are going to be your higher end of the pricing. And so like chicken breast, tenders, filet, like those are always the highest price item because they sell really fast. And so the demand is high and usually the volume is low. You can't get a whole chicken just in chicken breast. That'd be awesome. ah Yeah, so you've got these other cuts too. So sometimes the profit margin of your higher end items kind of carry the profit margin of the lower end items. So yeah, we always just make sure those prices are high enough so that we're we're selling everything at a whole animal rate. That's the goal. Like we don't want to have all of these chicken drumsticks left and be sold out of chicken breasts for like three months, you know. So we kind of want everything to go at the same rate. So usually that means upping the price for those and then lowering the price for the other things.
00:16:23
Speaker
I appreciate that. So one key takeaway is actually pricing your most popular items, pushing the ah envelope on how high that is. So they literally actually move at the same rate as items that are less demand. So you also have room to lower those prices.
00:16:39
Speaker
That's brilliant. And it's good too, because then your customers that are on a budget, like there's going to be items that are going to be within their budget. There's something for everybody. You don't have to be rich to get local food. You know, you just might have to get a little bit more creative. And I wanted to say too, like we try and package those items in smaller quantities. So like I always would just do two boneless, skinless chicken breasts in a pack. I don't do any more than that. And in fillets, we package one per pack. And then for like drumsticks, we do an eight in a pack. So that also helps things to kind of move at the same rate as well.
00:17:11
Speaker
I love that. Okay. Just again, packaging also part of the strategy, right? The chicken breast, the highest price item you sell them by themselves. I mean, to be fair, if I'm buying wings or drums, you know, of course I want a big package of them.
00:17:25
Speaker
Right. You need multiple ones for a serving, you know, two or three drumsticks as a serving, whereas one chicken breast technically could be two servings, but yeah. Oh yeah, it is in my world. That's for sure. Okay. That's great. And then you also mentioned, let's talk about eggs just while we're on this from a packaging perspective, because, um, for many of the farms we work with, not all, just depends on every situation, but for many farms, eggs are in super high ultra demand. And you mentioned that as an add on item. Is there a strategy to that? Yeah, it's an add on to their monthly subscription. But we also just sell eggs either through the online store for weekly pickup or at the market we sell anybody can get eggs. We also do a weekly subscription for the eggs as well. I'm like, you can buy the monthly they'll be fresh, you know, two or three months, but in people's head, they like it every week because it feels the most fresh. But yeah, I think a lot of farmers, or at least I've heard from a lot of farmers, they kind of say, you know, we don't make any money on our eggs. It's just kind of like the gateway. If people buy eggs, they're going to buy the other stuff. We have not found that to be true. i would just really encourage you to charge the price you need to charge for eggs. Don't have a whole enterprise that you're just barely breaking even just to kind of get people in the door. Because in our experience, we found that that hasn't really worked. And then you're basically offering this product for free. Free. You're not actually paying yourself to do that. So, and you're going to get burned out of that. So charge a price that's fair to you. So we do $9 a dozen for our eggs. We started at five, but that was like nine years ago. And so we just, you know, every couple of years we increased by a dollar.
00:18:50
Speaker
We pay ourselves for eggs, which is great. But you also have to scale. You know, if you're only doing 50 hens, you might have to charge a little bit more. But for us with 300, we're able to charge a little bit less because we're at scale. of the labor is spread across all of those birds. And so it makes it a little bit more efficient.
00:19:05
Speaker
Oh, that's such good advice. it It is good to think about what stage you're in, right? If you're just small and starting out and just building your customer base versus If you're scaling up and you have a larger amount, it's almost like you have more wiggle room in terms of that. I have another farmer that I talked to recently who says in terms of pricing, especially those really high value products that need to help carry other products, what is the highest price you can push?
00:19:30
Speaker
And he always says, if you're selling out, your price is too low. which I thought was a good piece of wisdom because so many farms are very gracious with big hearts and, you know, they're afraid to push that price higher. In many cases, the demand is there depending on what metropolitan you're serving. But, you know, that's a good litmus, I feel like. Okay, let's keep bringing out all this wisdom. I just love it. Let's see. If you were to tell somebody to start with a specific enterprise or two that would bring back the highest margin, what would you recommend?
00:20:01
Speaker
Do you know what I'm saying? Yes. Yes. So like, cause I've heard flowers are a good example of that's a really great margin revenue stream. Yeah. Yeah. For us, probably beef just because that is growing in popularity, especially like the grass fed grass finished because you know, chickens eat grain, but people, they love just the grass that feels healthier for people. And it's just eating nature. And so the the beef enterprise has really grown a lot. And so it is higher investment, lot slower turnaround, but I think it is the most profitable for sure.
00:20:31
Speaker
Yeah, I appreciate that. We already talked about how various ways to package those and then slow-moving products. Yeah, for us, that is all bones. Chicken bones, pork neck bones, beef bones, the fat, which is why we started doing the value-added skincare stuff. And then chicken drumsticks and probably roasts as well. just because they're so big, they take a long time to thaw. Unless you're a big family, you're going to have lots of leftovers. So those, and those feel like more work. and a longer cooking time. So unless you plan ahead, like, you know, you need to put the roast in the crock pot in the morning, you can't just wait to cook it in the evening, or you'll be waiting an hour or two. So that's probably the slowest moving things for us.
00:21:12
Speaker
Yeah, I appreciate that. And then you can move those in your bundle boxes, right? I guess I'm sort of leading with that is you want to keep thinking about moving products, right? So maybe talk a little bit to how you do that, move those slow-movie products that people, it doesn't thaw as quick or it seems like more work, right? Yeah, I think a big part for us has been just the education, making sure that you have clear, simple recipes that you're talking about all the time. You know, don't just send it out once a year. Have it printed out at your market booth and include it in your email newsletters. Talk about it all the time. Video yourself making bone broth and and then put that in your on your Instagram. So chicken feet, for example, i think we sold three packs the first year. And now we're probably selling like 150 to 200 packs a year. So we're still not selling all of the feet, but we're selling more because we're telling people about the collagen and the droiden. Like all the vitamins and minerals and the glucosamine, like all those things that are good for your hair and your skin and your immune system. And yeah, I'm like, don't make bone broth without chicken feet. So we even started doing like a bone broth kit. We still do the chicken bones by themselves with because some people are freaked out by the feet. But we have a bone broth kit with three to four pounds of chicken bones, four chicken feet. And then it actually has a recipe sticker on it. Not just a card, because sometimes the card gets lost, like it's on the package. So you lose it. And that's especially helpful for people that have never made it before. You know, once you get started making it, it's kind of like you don't even have to think about it
Adjusting to Market and Cost Changes
00:22:40
Speaker
anymore. It becomes sick of nature. But for those people that are just starting out, having everything you need and you have the recipe and it makes a gallon of broth, There's no excuse. You know, just throw the crock pot. You can even throw it in frozen. You just need to cook it a little longer. And just, yeah, the education and and talking about it all the time and being excited about it, talking about how you use your bone broth. You know, you don't just drink it. You can cook your rice in it. You can use it as a base for soups. There's so many things that you can do. You can give it to friends that are sick to care for your people. You know, like there's so much you can do with it.
00:23:10
Speaker
It's better than a get well card. Yes, yes. I know. I actually have a love affair at chicken feet because I think it's literally the best broth that you can ever make.
00:23:21
Speaker
And the viscosity is just gorgeous. This is me geeking out, but it is the coolest. Yeah, don't be surprised if you do chicken feet broth. I used to name it after what, you know, thing anyway. But yes, you make the viscosity is gorgeous. It's jello-y.
00:23:36
Speaker
And it's just like broth gold. You can't ever go back to grocery store. I hope people don't use grocery store broth. I'm just saying, ew. But like just the broth that you can make. it yeah I make it so much. So like my daughter-in-law was over last night and she went home with four or five quarts of broth. She's like, do you have a lot of extra? I'm like, go please take some broth. I make too much of it. But it is amazing. And it does go into everything. And i I hear the passion and I love that people are adopting it more and more. That's so exciting and so healthy.
00:24:05
Speaker
Yeah, we try and keep the price low for those and we try and tell our butcher to do at least four pounds in a pack. It doesn't really make sense to sell one or two pound packs of bones because then they're not going to be able to to make a whole batch of broth with that. if you want to fill a crock pot, you need at least four pounds. So we try and do those packages bigger and keeping the price low as well.
00:24:23
Speaker
I love that you put the chicken broth recipe right on the package. That's like the cookies, the cookie recipes on the back. It's awesome. Oh, I love it. That is so brilliant. Okay. Nitty gritty then is just rising costs. How do you think about costs, which to be fair, fluctuate, right? Sometimes they're up, sometimes they're down, but what is most...
00:24:44
Speaker
impactful is when they rise, right? And of course, this is at the input stage. And I suspect both for your sort of farm general fund, if you will, or operating costs, as well as per enterprise, how do you think about integrating or assimilating or accommodating for those rising costs or input? say Or maybe you should tell people when I say the word inputs, what actually comes to your brain?
00:25:07
Speaker
When I think of input, the biggest ones are feed and processing and labor. um But it's not like your labor is really going to go. You're not. That's something that you set the rate of that. But we try and like, you know, with inflation, make sure we're giving ourselves or our people raises.
00:25:24
Speaker
um But the biggest inputs for us is feed and processing. So like if we get a notification that our feed or our processing is going up, we immediately go back to the numbers, plug in those new costs and see if we need to adjust prices. And if We don't get those notifications at least once a year, if not twice a year. We're just looking at our numbers and making sure we're still on track. Like if gas goes up 50 cents, it's not going to be a huge make it or break it because that's not a huge part of our expenses, at least for us. But the feed and the butcher cost is, it's a huge part. So those are the two that if those go up, we got to raise prices.
00:25:57
Speaker
Okay. Yeah. So you're on it at least twice a year that you're reviewing those numbers and making necessary adjustments. Got it. Yeah. That's really smart. Do you have essentially a big, beautiful Excel spreadsheet where you sort this out?
00:26:09
Speaker
Yep. Yep. My husband is the spreadsheet guru. He has built so many spreadsheets. I just maintain them. We always do it where you have all the fixed costs are like in black and all the, do you do this? He probably does this too. But yeah, you put anything that you need to change or adjust to see how it impacts the entire model or outcomes or outputs are like a different color, like in blue.
00:26:33
Speaker
Yeah. So if a cost goes up, it actually will then, of course, calculate the price change as well. That's pretty neat. Of course, now I don't mean to overwhelm listeners with you have to be an Excel spreadsheet guru. Yeah.
00:26:44
Speaker
No, it can be, it can be pretty simple. It can be pretty simple. Yeah. Just start right now. Or if you have a friend that's really good at it, ask for help or hire a bookkeeper. I mean, yeah.
00:26:56
Speaker
Give them steak and eggs, right? Like give them steak and eggs or give them a farm box subscription money, you know, whatever makes sense for the amount of hours that they're contributing. But yeah, find your accountant nerd friend who is so important and valuable. I do trade if that's what, you know, to get you started even. All right. And then have you successfully changed buyer demand for items?
00:27:16
Speaker
And you did just give us an example of chicken feet. Yeah. Chicken thighs was another one that wasn't very popular for us in the beginning, but just, I mean, that's honestly our favorite cut. So we're always talking about that. We always have recipes at the market. We're always sending out recipes, talking about them. So now sometimes we sell out of thighs before breasts, even, which is crazy. And then one other thing I wanted to say too, with like the price increase, usually When that happens, I'm really just increasing our chicken breast, chicken tender, and and thigh price. Usually the wings and the drumsticks stay around the same, unless we're selling out of those two. But usually we're just selling out of the other ones. So I'm usually just increasing those prices and leaving the other ones the same.
00:27:54
Speaker
Okay, all over good indicator. If you're selling out, there's probably wiggle room. Yeah, I appreciate that. Okay, and you also mentioned bones earlier. Do you feel like you've been able to increase the price in bones? Or is that not a priority?
00:28:06
Speaker
So it's not really a priority for us to increase the price. It's more of just I can't stand throwing bones away. Like I know farmers that don't even get their bones back from the butcher because they're just so hard to sell. So they just build their price around all the other stuff and don't worry about the bones. That just didn't sit well with me. We still raise our price off the other stuff, but I just, I couldn't stomach that. So I'm like, we're going to just get them and we're going to figure out how to use them. And if we don't sell them, we usually just give them to our dogs and they love them. But I can't waste anything. I, yes, I am the same way. it kind of breaks my heart. Like a little crack in your heart every time when you hear about all the things, the bones and everything else that are so valuable.
00:28:44
Speaker
I had a thought. So we, cause we butcher our own chickens. It's not USDA. But if you are using USDA processor for chicken, and then obviously for pork and beef, most people are using USDA or state
Innovative Marketing and Partnerships
00:28:55
Speaker
inspected. There are companies out there that will make bone broth for you. I don't know if you ship the bones there, you have to take it there, like I know farm broth in Georgia, and I'm sure there's other ones. But if you can find a place like that, where you can save up hundreds of pounds of bones to make it worth it, and you send it to them, and they send you the broth that comes prepackaged, it's frozen. So it kind of just fits right into your business model already. Like I would say 100% go for that. We're still figuring out what that looks like for us. Like legally, I can't even have a chef make it for us locally and sell because like he would to sell it from his restaurant. The regulations are a little fuzzy. So for us right now, we're focusing on customer education, but if you can get it pre-made, you can 100% charge a premium for that and cover like all the costs for your bones because people love the convenience of that. So yeah, if you can figure that out from the farm, do that.
00:29:43
Speaker
I love that. And it's ah you said a couple of things. Chef's great target, right? Restaurants tend to make broth at higher rates and volumes, especially any chef-owned restaurants. You know, if they're going to get quote-unquote thrown away anyway, give it to them very on the cheap just to get them using that as a habit or as a routine of like, hey, for the first year, I'll give it to you at this rate.
00:30:07
Speaker
And then we can talk about after that, but if that rate continues to make sense or if we need to put it up a little, just so that it's not going to waste, but it's actually nourishing as it should be. And also those restaurants, especially the chef-owned ones or individual owners, just like farmers are, you know, they have pretty thin margins too. And so that can be like a double win, especially in your own community. And then of course, they'll no doubt share about your farm as well. So... I think that's a really good call out just in terms of the bone broth. It's, you know, I have to say one other thing when you were talking about bones, I love to get bone marrow because, you know, it's so, it's so easy to cook in your oven. People don't realize you just literally put it in the oven until it's cooked and you're done. But it was so funny because I went to a farm online store and marrow bones were marketed as pet bones. And I was like, wait, is it still the marrow bone that, you know, like put the same picture and do one as pet bones and the other one is human delicacy, right? And I'm like, I know it's the same thing, but market it both ways. Just make sure you do both so that both pet owners and, you know, the food geeks, if you will, everybody knows.
00:31:12
Speaker
That it actually can cut both ways, if you know what I mean. Yeah, yeah, that's great. Yeah, so it's good. I mean, I think when we talk about packaging in our podcasts or ebooks or with farmers like you, it's sometimes naming it matters, right? Like this is, you know, here's the sticker on it in terms of how to cook your marrow, you know, essentially your...
00:31:31
Speaker
Beautiful beef butter is what it is. And then, you know, on another set, it's pet bones and you'll have loyal pets forever because it's amazing. But it's literally the same product packaged two different ways. And that just opened you up to basically two different to like customer groups that don't always even overlap, like, or maybe they do. But the point is, is you're reaching more customers simply by packaging and knowing pleasure. So we talked a little bit about trying to have help people adopt. I think the interesting part about that is through the enthusiasm and education, they're adopting a product, like you were saying, like chicken feed or chicken thighs. But you also spoke about moving products and building demand by changing products, like not just doing tallow, you know, soap or cream, but then also making candles. So your other option is actually to reshape the item. Is there anything else that comes to mind in terms of how you've sort of either diversified a product or, you know what I mean?
00:32:30
Speaker
Yeah. So like we always make sure in the summer that we're getting more of our roasts into ground beef because people are doing burgers. In the winter, we do more roasts because people are doing more roasts and they want the cozy meal and the crock pot meal. Yeah, definitely keeping in mind like what season it is is helpful too.
Bulk Sales and Customer Incentives
00:32:47
Speaker
Can i ask a practical question on that? How much do you shift it and when do you shift it? On that one example of what was it? Did you say ground beef versus roasts? Probably like 30, 40%. The summer, sometimes I don't get chuck roast at all. Like I just get it all boneless stew meat or ground beef. And then usually like August, September, I'll start building up our roasts. I try and keep at least like 20 to 30 roasts on hand during the summer just in case. But then in August, September, I'll really start building up that inventory again. As long as we have a good supply of ground beef. You never want to run out of ground beef. Yeah. And then I'll start getting the first few cows I'll do all into the roast. And then I'll kind of see where our inventory is at and go from there.
00:33:29
Speaker
That is very smart. I appreciate that. That's great insight. Okay. couple more. I know we're like running up against time a little bit, but bulk pricing, if you want to move large quantities,
00:33:40
Speaker
We do a half pig, like a standard half pig. So it's not necessarily all from the same pig, but it's like a certain amount of pork chops, ribs, sausage, bacon. And then we also do whole pigs where they can get them custom cut. That's just because that's what our butcher does. Our butcher will not do a custom cut half pig. They just do the custom cut whole pig. So we do that first on hanging weight. And then the standard pig, we just, it's flat 945, believe. And that's roughly like a 10% discount. So I know other farms sometimes do 20%, but for us and our numbers, 10% was what made sense. Our butcher is like an hour and a half away. So we have to still account for all of that. And then we also do ah ah the standard quarter cow package or a custom cut half or whole, which is the more they get, the the more they're saving. And yeah, and we obviously like everything comes with that. So for our subscriptions, we don't include organ meat, bones. Sometimes I will like gift the bones like above and beyond the subscription, but we don't account for that in there just because we know not everybody uses them. But for the half big quarter cow, we always include the bones. Now, if someone says they don't want them, they're still going to pay the same price, but we won't include them if they say they're not going to use them. So I love doing the bulk because it's like, it's guaranteed everything is moving out of of your freezer at the same time. And it's wonderful. I will say to our half pig, we always give them a large soap for the quarter cow. We always do whip tallow and then all of our bulk people get free tickets to our farm tour. So we do a farm tour every spring and every fall of one in each season and they get to come for free, which is really great for customer loyalty and retention. And it's just like an extra perk. Like, yeah, we might not be giving you 20% off, but you're getting these other perks. You're getting this gift when you pick up and you're getting a free farm tour. That was a value for us. It makes them feel extra special at pickup.
00:35:24
Speaker
I love that. That is so neat. And then I have to look back here and see how many of you have of the cows and pigs, but do you do... Do you take deposits ahead of time? Like how do you do that piece?
00:35:34
Speaker
but We do deposits ahead of time. So they pay 250 for the half pig or quarter cow or 500 for half cow. And then they pay the remaining balance at pickup. So I'll like the week before I'll send them the final invoice and just a reminder like, Hey, this is your pickup time. This is how it comes. It's vacuum sealed and frozen in a cardboard box. You don't have to bring a cooler and just kind of give them all of that information that they would need. i did That's included in the email from the beginning, but I always give it to him again via text. So it's right in front of them because people, especially people that have never done that before, purchasing involved is different and they're freaking out. They're like, wait, how much space does this take? Do I need a cooler? So we tell them exactly how much space it takes. We have a whole page on a website that has all the information, frequently asked questions. And that was huge for us because before that it was just, you know, I'd be on the phone answering all the questions for every person. then that was not efficient.
00:36:25
Speaker
I know. You're like, wait, I need to figure out a way to get them information and not repeat the same information for each customer. That's a lot of how at we look at Barn to Door when we're like, okay, how what is it that farmers are doing in the back office that they do 40, 50, 100 times, but it's literally the same thing per customer. And how do we give them that time back? So that's a good example of it. This is, of course, chatting our own horn, but Barn to Door is platform does is it helps farmers take the deposits months and months and months and months in advance and even line it up to butcher dates and then makes it really easy to once you have the final wait to invoice and or even charge and send the receipt directly to those buyers so we're proud of that because it's patented and you know it's One of the first things that we really built early on at Barnes & Door, because we're like, farmers need this. But moving the whole cow, the whole hog is kind of a beautiful thing for all the reasons that you've listed. And the extra tallow and the extra tickets are brilliant, right? um It's a great way to say thank you, but also it's just such a win-win.
00:37:23
Speaker
Okay. Sell by weight versus pricing. Do you think about that when you're pricing your products? Yeah. Yeah. I think most protein people do sell by weight because every animal is different. Every cut is different. So that makes the most sense. so that was actually one of the huge appeals for us for Barn to Door, being able to take that deposit and then doing the final charges based off of the actual weight that they get. That's huge. You got to be able to sell by weight with me. I know some farmers that have somehow figured out how to do the flat pricing And I do not know how they do that that. sounds like a miracle. So the selling by weight is huge to make sure people are paying for exactly what they're getting.
Subscription Models for Revenue Stability
00:37:59
Speaker
Yeah.
00:37:59
Speaker
And do you have anything that you do flat price? Eggs, our our bone broth kits are flat. Our chicken feet is just 10 in a pack. So we do that flat and ground beef, you know, the things that are like one pound packs, but everything else we do by by weight.
00:38:13
Speaker
Yep, absolutely. Appreciate that. And you can really map it to the detail, right? From a cost structure perspective. That's great. Bundle boxes. Yeah, so we we don't do a ton of these. Our main focus is subscription. So actually we use our bundle box to kind of give people a preview of subscriptions. So whenever they get a bundle, it's basically a 12 pound or a 24 pound and we call it our farm sampler. So when they get it, I tell them this is a good example of what you'd receive in your monthly subscription. But it's also a good way for people to try a variety of products, figure out what they like, what they don't like. And if they like everything, then I'm like, hey, subscriptions might be really a really good option for you. if You save a little bit of money, you make the decision once, you can count on it every month. You don't have to keep buying, decide what cuts you're getting. So for us, we do a farmer's choice. It just keeps everything very simple. But that was another huge thing that drew us to you guys originally. Because from the beginning, we have done subscriptions. In the beginning, it was just
00:39:05
Speaker
How many whole chickens do you want? And how many dozen eggs do you want? And we've kind of built the subscriptions from there. It's always been the backbone of what we did, but it got very labor intensive. It was very hard to scale. The more we sold, the more admin headache it was. But with Barnador, it was kind of like once you had everything set up and you had your loyal subscription-based customers, it just takes care of itself. It's basically no admin anymore. It's on our pick and pack list every month at the same time. They get a reminder email and then we just, we try and plan our,
00:39:34
Speaker
boxes for like the whole year at once. And so it's really low admin. So just the most labor is just actually packing the meat, which is built into our cost anyway. So Barnador really helped us scale and streamline our subscriptions in a way that we weren't able to before, which is why we were able to go full time that first year we signed up with Barnador because we had 30% of our income was counted on every single month. We knew we had that money coming in and we could count on that. And that was huge for us when we finally made the decision, the farm has to pay for itself. So yeah, that was that was huge for us.
00:40:07
Speaker
Yeah, I mean, we all have monthly bills, right? You kind of need that recurring revenue and that confidence. And thank you for all the kind words. I love that you got to get rid of admin. We always, like are one of our mantras here is helping farmers ditch the office work. And so anytime you can get time back and have things just be simple and build that recurring revenue base. What would you say your current percentage of across the board of subscriptions is? And what would you say is ideal?
00:40:33
Speaker
Yeah. So we were at 30 or 35% of our monthly revenue as subscriptions. We'd love to get to 50%. Yeah. That's our goal. It's just interesting, right? Because it tends to be a range for folks of like, do you want it to be 30, 50, 70%, right? It's nice to have, you know, still have that a la carte option. And also you never know what's going to happen. Can't always bank on a hundred percent because things happen, but there's a certain percent in terms of covering certain hurdles from an operating expense perspective and just having the piece of that is quite
Promotions and Collaborations
00:41:04
Speaker
powerful. I love that.
00:41:05
Speaker
Also, I love that you do bundle box, just a shout out for any farm listening, because seeing a new farm like in my area that i want to buy from, I absolutely love the idea of trying to bundle box, especially a mixed one where you get to try all the different parts and you get to figure out your favorite things. And then I might subscribe because of course I want consistent But I also might find some favorite items that I might want to also buy all the cart, right? So it's just kind of a neat versus jumping right into a subscription. It's like this kind of low hanging, no commitment, but try it first. And of course, you're going fall in love because if all they've had up to that point is grocery store, it's a game changer, right? But I love that you said that out loud. That was great.
00:41:43
Speaker
Okay, so we talked about subscriptions. One last little thing before we go is increasing the order size. Just speak a little bit to its pricing, its packaging, but then it's also like, hey, every time a customer shows up to buy, we want them to buy as much as possible, right? And we want to replace the the grocery cart.
00:42:00
Speaker
What is this? Like grocery cart replacement therapy. Get it all from your farm, people. So how do you think about that in terms of, we call it AOV, which is average order value, sort of the techie, funny word for it, but it's really at the end of the day, bigger carts.
00:42:14
Speaker
Yeah. Yeah. I think it's a lot easier to increase your average order value than buying new customers because the customers you already have already are loyal to you. And so for us, that meant the first beef we've had from our farm is this year. Yeah. But for three years before that, we were partnering with another beef farm and we are going to continue to do that because we won't be able to raise all of our buyer demand just from our farm. And then we also partner with a farm for lamb. We tried lamb on our farm. It did not work in our system. We couldn't do the two separate grazing animals, how we're spotting within the amount of land we have. So we found another farmer that we know and trust. His values are just the same. And so we carry his product. And actually right now we don't carry it in our mobile farm store, just online, just to keep it simple because... We only have so many freezers in our mobile farm store, but just being able to offer that in addition to our meat for the online orders, our average order volume has gone up. The only labor really is picking up one more thing from the butcher, but then it's in our freezer. It's easy to throw in a couple more items into an order, and then you've got easily another 20% onto your order volume. And I know a lot of other farmers are We're not set up to have lots of fridge space, but if you do, like you could partner with a milk or dairy for cheese and that kind of thing, or sourdough bread, whatever space you have, if you can add product offerings, that is huge.
00:43:33
Speaker
I love that. It's like, think about if you have fridge or freezer space, both actually fridge and or freezer. Definitely will impact what value added products you can offer, right? Because if you have a fridge, maybe you're going to partner with people with flowers or we've seen coffee beans. We've seen bread. That's a great one. But if you have freezer space, to your point, that's a whole different set of items to add from a value perspective.
00:43:54
Speaker
I love what you said at the beginning. That's going to be a quote somewhere that we're going to use, but you know, you can make more money off existing loyal customers than going to find that new. Both are important, but it's neat to realize that you kind of the bird in hand, right? You have folks that are eager for more goodness. Especially if they're already showing up or having that delivered or however they're getting the food is amazing. So I love that.
00:44:17
Speaker
Good to think about how to expand those products. And LAM, is that kind of a bigger deal around the Easter holiday? Do you guys promote that differently? That is to be determined. we We didn't have it last year at Easter. I did get some leg of lamb roasts, but I think last time I got it all into ground lamb, but I did some leg of lamb, some boneless and bone in the hopes that we'll be able to sell some at Easter. So my plan and is to make sure people know way ahead of time that we have that if they want an alternative to ham. Obviously I'm going to push hams the most because that's what we have the most of as an an alternative, the leg of lamb. So I need to find recipes. I need to try them out and then yeah, be able to market that well. Cause that's, that's a new thing. I've never cooked one. I'll send you a recipe. It's a simple one. It's a leg of lamb and it's got like tons of garlic and rosemary in it. We're going to get hungry because we're talking around lunch. That's just mean of me. I would love one more question because again, this is just advice giving and life enriching or business enriching for farmers listening.
00:45:10
Speaker
You've done it with beef for three years where you worked with another farm. Now you're doing a glam. People can do it with a variety of things. First of all, I love that you said that they have your same values because they will reflect your brand as well.
00:45:21
Speaker
But what I would be curious is how do you go into that? Like how do you quote unquote negotiate? Because there's like a who drops or do you pick up? And then what is their price versus what you price it at How do you work that into your model to have it make sure that you're getting the profit margin that makes sense. And of course, that the other farmers happy.
00:45:41
Speaker
So we, the way we do it is we have those farms drop off their live animals at our butcher. And we pay them a hanging weight cost per pound. So we pay them for the live animal. And then we go and we pick it up. We pay the butcher. I'm the one that's talking with the butcher, doing all the cuts. The reason we do it that way is because we wanted to purchase the whole animal. Like, I don't want them to take it to the butcher then bring it home and us to just buy some cuts because I don't think that's fair to them. We wanted to purchase the whole thing. And we wanted to take on the responsibility of selling the whole animal. kind of the same because we purchase our own live animals. And so we just plug that into our sales business sheet then and put in the processing costs, we put in the labor, the freezer costs, the marketing costs, all of that. And then we add a 20% profit margin at the end of all that. So we make sure we're covering all of our costs and we have a healthy profit margin. That's how we do it.
00:46:33
Speaker
Thank you for that. That's awesome. And so you were buying whole cows too, then that's how you did it before. So much great wisdom and really specific takeaways for farmers in terms of pricing and packaging and how to move products at a pace that you want or that makes sense for your farm. So thank you for all of the above and for your time today. Is there any last tidbits, like if I forgot to ask something or last little bits of wisdom? I know we've covered so much, but I always like to give folks like, hey, what's the question I didn't ask?
00:47:00
Speaker
Yeah. So the first thing that comes to my mind is I've heard from other farmers saying it's a good thing to be sold out. That means customers are going to be excited for when it comes back in stock. But I want to caution you, if you're going to be out of stock for longer than a few months, they're going to miss that product and they're going to probably try and find it somewhere else. And so you might lose customers if you don't have products on a regular basis. So like for instance, we only raise chickens April through November because they don't do well in the winter. And so if we know we're going to be sold out in the winter,
00:47:30
Speaker
we go ahead and find a partner that aligns with our values and we start the relationship and the conversations and we have that ready and lined up for the winter so that we are never sold out for more than a few weeks because it's more important for us to meet the demands than to have it all be met just from us. i mean, That is a value knowing where your food comes from. You know, like if it's from a farm, they don't have relationship with, but we're always transparent about it. We're like, everything's labeled differently. This is where the farm comes from. I can give you the farmer's number if you want to ask them questions. You know, it's more valuable for us to to not run out of things because my costs are the same setting up at the market, setting up our mobile farm store. All those fixed costs are the same. So if I am out of chicken and like my sales go down 30% for three or four months because I'm out of something, that's a hit to our numbers. And it's very inefficient. So we try not to be sold out of things for more than a few weeks. That's just what one thing we've we've tried to do. So we know we're going sign up. We plan ahead for that.
Maintaining Customer Engagement Year-Round
00:48:26
Speaker
And obviously we're always trying to meet the demand ourselves, but we realize that's a goal, whole but it might not be realistic all the time. So we we try and plan ahead for those gaps.
00:48:35
Speaker
It's interesting. That reminds me of a few conversations we've had recently. One farmer was like, our customers love us during the farmer market. And then when that's over, they forget about us. But we still are a farm. We still need to make money. And, you know, the conversation actually ended up being around subscriptions, right? And or if you keep delivering through those months, you can still be bringing that same product to the same customer. And even if it's a pickup location, you know, where they can all come grab it. But I love that The lens on that is keeping them fed literally, but also relying on you for the feeding and not giving a gap for that experience for your buyers. It's neat because that really kind of extends the lens on customer loyalty, not giving them an opportunity to go find it somewhere else. And then with subscriptions, I know another farmer I talked to recently who literally her freezers during the winter are full of chickens for the ongoing subscriptions, right? So she's continues to service those customers year round. So she has to hold back chickens. But to your point, as long as you have those freezers, you'll be in a good spot to keep fulfilling those year round. And it's more than to your point, just getting it done during a season than it is maintaining, being the person who feeds those customers year round. Really great, great insight. Yeah. Cause people don't stop eating just because the farmer's market is on a break. Yeah.
00:49:54
Speaker
Yeah, we we deliver a weekly still to farmer's market location. We only set up for like half an hour and most of it is pre-orders. But yeah, we just we wanted to to stay in the top of people's minds and we wanted to continue to feed them through the winter because that was a value for us because people, they eat all year long. So if we're providing food, we want to try and do it year long on a consistent basis as well.
00:50:16
Speaker
Yeah. Thank you. Thank
Conclusion and Resources
00:50:18
Speaker
you so much for joining today. Thank your mom for helping with the kids too. That was really kind of her. It's just lucky us, right? I appreciate it. Awesome. I just wanted to say thank you to Rachel for joining us on this week's podcast episode. Please check out and follow Rachel on Instagram at SchinkFamilyFarm.
00:50:36
Speaker
S-H-E-N-K, family farm on Instagram. Check it out. At Barn to Door, we're humbled to support thousands of independent farmers across the country. We're delighted offer services and tools to help farmers make more money, ditch the office work, and look like a pro. We literally talk all day, every day to farmers and farmers working with Barn to Door can go to office hours daily or schedule one-on-one meetings with team members for consulting on their business.
00:50:57
Speaker
We exist to support farmers like yours. If you're an independent farmer just getting started or interested in selling direct, or if you want to simplify your business or build up your loyal customer base, visit barnsador.com backslash learn more. Thank you for tuning in today. We look forward to joining you next time on the Independent Farmer Podcast.
00:51:25
Speaker
Thank you for joining us on the Independent Farmer Podcast. At Barn to Door, we are passionate about empowering independent farmers to build a thriving business. To all the farmers out there, thank you for all you do to grow amazing food, care for the soil, and serve your local communities. You are the backbone of our country.
00:51:42
Speaker
For free farm resources or to listen to prior podcasts, go to barntodore.com backslash resources. We hope you join us again and subscribe to the Independent Farmer Podcast wherever you stream your podcasts. Until next time.