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Price for Profit: How Smart Packaging & Pricing Boost Farm Sales
399 Plays23 days ago
Are you leaving money on the table with your farm products? In this week's episode, James sits down with Account Manager Ryan to dive deep into the pricing and packaging strategies that successful farmers use to increase their average order value and improve profit margins.
For more Farm resources, visit: barn2door.com/resources
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Transcript
Introduction to the Podcast
00:00:10
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 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.
00:00:42
Speaker
Welcome to the Independent Farmer Podcast. I'm James, the Chief Operating Officer of Barn-to-Door, your host for today's episode.
Pricing and Packaging Overview
00:00:48
Speaker
As many of our listeners may be aware, Barn-to-Door is built for farmers who want to cut out the middleman and maximize outcomes for their business. We help farmers make more money, ditch the boring office work, and look like a pro.
00:01:00
Speaker
In today's conversation, we'll be getting into pricing and packaging best practices for your farm products. With more than a quarter billion in farm sales and more than one million buyers, we have a lot of data and experience.
Guest Introduction: Ryan Grace
00:01:11
Speaker
Today, I'm happy to welcome back Ryan Grace, an account manager on our success team. Ryan works with farms all across the country to ensure they maintain and build successful business practices to spur their growth while streamlining their operations.
00:01:24
Speaker
I'm excited to talk with Ryan today about pricing and packaging. to help farmers increase their average order value and improve their profit margins and move more product. Welcome back, Ryan. Great to see you. Thanks, James. It's great to be here.
00:01:34
Speaker
Well, for those listeners who may not be familiar with you and may have not listened to you on our prior podcast, can you share a little bit more about what you were doing before you came to Barnador?
Ryan's Background and Fit with Barn-to-Door
00:01:44
Speaker
little bit more worry about your background.
00:01:46
Speaker
Yeah, definitely. I spent a few years working for other tech companies like Apple and my most recent role before switching to Barnador, I was working at Toast where i was helping restaurants get implemented with their new POS systems. So very familiar with getting people used to using a new system, educating them, training them on best practices there. And so when I heard about Barnador, it was really just a natural fit with my skillset in an area that I'm a lot more passionate about.
00:02:10
Speaker
We had a little 24 acre farm growing up. So being able to jump back into that world has been a blast and working with these farmers is really rewarding. Yeah. You can really appreciate their day
Strategies for Farm Store Success
00:02:21
Speaker
to day, right? Can you elaborate for the farmers who are listening, what your oral world looks like day to day as an accountant manager?
00:02:27
Speaker
Yeah, as an account manager, we're meeting on a very consistent basis with our farms, going over best practices, sharing some of the tips and tricks we get to learn with the farms that we meet on a ah daily basis here, and just going through like a store audit.
00:02:40
Speaker
So making sure that their store is set up to be successful, going through their pricing, their branding strategy, how are they marketing themselves? And so really from a holistic lens, just taking the best business practices that we've seen be successful and guiding these farms on how to implement those themselves.
00:02:56
Speaker
I really love it. Listening to you and the other account managers talking about farms, just given we have so much experience and so much data, you guys do such a great job not telling farmers what to do, but sharing with them, hey, here's what we see. Here's what the the data tells us. Now you make the business decision about what's best for your farm, right? Because ultimately no two farms are exactly the same.
00:03:13
Speaker
Let's dive into some of these best practices
Impact of Quality Packaging
00:03:16
Speaker
that you've seen. We certainly know that packaging quality can significantly impact a buyer's decision to return to a farm. Some studies showing more than 60% of consumers won't purchase if they're unsatisfied just with the packaging of a product.
00:03:29
Speaker
How can a farmer leverage good packaging materials and design beyond just protecting the products to actually strengthen their farm brand and secure that next repurchase? Yeah, I mean, branding is huge. Packaging is huge. You can think about a time when you've received an item from a business and when you're unveiling that package and it's nice and put together well just how much more you appreciate the quality of the products that are inside i know apple when i worked with them they took that very seriously so same thing with our farms right you want to think about who you're trying to market to who is the customer that you're presenting this box or this bundle in front of and what do you want their experience to be so i think when you can start with that in mind of who am i trying to sell to who's my ideal customer and what would that customer want to experience And then going above and beyond, I have a farm who individually wraps all of their meat in their bundle box with butcher paper that they have stamped with their logo on it because it kind of gives people that old school butcher feel. It's really nice and neat inside the box.
00:04:26
Speaker
So taking that little bit of intentionality has made a big difference for him and his customer base. And he gets a lot of compliments on doing that. You also
Packaging as a Marketing Tool
00:04:33
Speaker
want to make sure that when you're putting things in the box that you're giving plenty of opportunity to re-engage with that customer. You want to give links to your store, throw in a QR code, throw in a farm sticker, and a nice thank you to your customers for supporting your business.
00:04:46
Speaker
Those little things go a long way with your customer base and make a big difference. Well, those are great suggestions. I know for myself too, I get five different farm subscriptions that are delivered to my door or available for pickup.
00:04:59
Speaker
And I know that sometimes, like you said, it doesn't even have to be super detailed, like, you know, individually wrapping items. Sometimes it can just be really good tape on the box that has their farm brand on the tape. It's a pretty low cost thing to do. You can still use a brown box, but the tape looks fantastic, right?
00:05:14
Speaker
And oftentimes, too, I'll see people just either put a stamp or have a sticker for a QR code. And I know I've had several neighbors just off of seeing the packaging on my doorstep sign up to buy from a farm that they see delivered to my door. And so it's not just about my experience necessarily, too. Sometimes it's about even an avenue to capture more customers as well. Have you seen those tactics work out as well? Absolutely. Yeah. Especially with some of those totes when you're thinking about dropping those off and then that customer is walking around using it for various other things that they're doing throughout their week. They see their friends and family. I think it might've been Bennett Farms that was telling the story of how he was at his daughter's soccer game and one of her teammates had one of his farm bags and she was using for her cleats.
00:05:55
Speaker
And you just thought that was so cool because this was years after they were sending those out and being able to see that it's still working. That's still advertising. that's still getting his brand in front of
Product Bundling Insights
00:06:03
Speaker
people. Great, great point. Well, let's turn to another another piece of data that we see is key when it comes to selling out and offering more convenience tailored to different household sizes.
00:06:13
Speaker
Now, I understand that about a third of Americans live with just one person. They live alone. About another third of Americans live with two people. And the remaining third of people live with three or more people. What is your best advice for farms when it comes to simplifying your inventory to appeal to a diverse range of buyers and household sizes?
00:06:31
Speaker
Yeah, it's really important to take this piece into consideration when you're setting your store up to be successful. Because as you mentioned, beyond just the one third of different household styles there are, you also have people who maybe can't afford to do a quarter, half a whole, don't have the freezer space to fit that in there. And so being able to offer bundles and boxes that are a lot more digestible to those family groups that are your couples, your parents,
00:06:54
Speaker
Larger families, I grew up with a pretty big family and we could go through a 20 pound box pretty fast. So you want to be able to give a couple of different options for people to pick and choose based off of their household needs. And that's going to help open up who you're marketing to. So now you're not just marketing to 3% of the people that have the freezer space and cashflow to buy in that large bulk.
00:07:12
Speaker
You're opening your doors to people who want convenience and you're making a very convenient for them by putting together a nice box with products that they can use throughout the month. That's a great piece of feedback. I too grew up with a big family, but now I'm an empty nester. I live with just one other person.
00:07:27
Speaker
And so while I know I get just a 20 pound box once a month for my pasture proteins, one of the other guys in my men's group, he's got six kids at home still and they get a 50 pound box once a month. But we both have recurring commitments and the farmer wins in both cases, right? Neither of us are buying a quarter half or whole, but we are just buying a large format of beef and it's just moving a lot more product more consistently.
00:07:49
Speaker
Does this same type of tactic also ring true when you start thinking about other types
Benefits of Product Bundling
00:07:54
Speaker
of items? How would that apply, for instance, for like a dairy operation or produce operation as they think about different formats or sizes of grouping or assembling bundle boxes?
00:08:03
Speaker
Yeah. I mean, and when you're putting together these boxes, really what you're trying to do is you're trying to become the one-stop shop for your consumer who wants local products. So if you're doing dairy, putting together a couple options, whether that be a gallon or two gallon, and maybe partnering with another business to be able to offer in some fresh sourdough or some eggs, putting a breakfast bundle together. And now you're just taking this one product and you're really diversifying yourself and able to add a lot more value-added items that increase your average order size, which is what we're trying to do here.
00:08:34
Speaker
Great example. I know we see a lot of farmers have a great deal success with that and also can then raise up the total value of not just the total sale, but even the purchase value of individual items since they're not itemized, right? I know some of the dairy farms we see end up getting, if you were to itemize it, like north of $20 a gallon on milk, which people have a hard time believing. But if you're selling a hundred dollar breakfast box once a month or twice a month, whatever it may be, like you said, a couple gallons of milk, some eggs, some yogurt, some sourdough for a hundred bucks for delivery on your doorstep. That sounds like a good deal. If you were to itemize it, would they have ever purchased those individually? Probably not.
00:09:09
Speaker
But when you offer something convenient that meets a specific demand, makes a lot of sense. So let's shift gears and talk a little bit about subscriptions because we know this is a really powerful tool for generating recurring cash flow in buyers like myself who keep consuming
Subscription Box Pricing Strategies
00:09:22
Speaker
like we all do. We all have to keep eating, right?
00:09:24
Speaker
But I also know i love just the convenience of having food show up on my doorstep. So when successfully pivoting to some sort of subscription model, how should a farmer accurately price that box, whether it's monthly or biweekly, to ensure that they're getting healthy margins while locking in a stable price point for their loyal customers?
00:09:43
Speaker
Yeah, I think a misconception i see a lot is farmers thinking they need to heavily discount these subscription boxes. And I would actually encourage them on the other side of that, the flip side, what you're putting together with a subscription not only helps you move the whole animal that you're trying to move and and all of the products that you have available, It also takes away the decision fatigue for the buyer.
00:10:03
Speaker
You're making it as easy as possible for them. You're basically becoming a trusted source for that buyer who wants to be told what are the best products that are in season? What do you have available? I'm going to you because you are my local producer and I want to trust what you're going to provide and I'll pay that on a monthly basis. I think the average consumer has seven to eight subscriptions. So it's not a foreign concept. It's something that we want to have a set it and forget it model.
00:10:26
Speaker
And that just helps the farmers know
Increasing Consumer Budget Share
00:10:28
Speaker
like, hey, I can bank on once a month. I know I'm getting these orders in So for consistency and cash flow and just for the ability again, you can piggyback off some of your really popular items like your ground beef, which we see a lot of people being able to move very easily. Your milk, if you're a dairy producer, eggs, use those that you're selling out of consistently to build a box behind. So then you can add in a couple other cuts in addition to that consistent ground beef, which helps you move products way you need to.
00:10:55
Speaker
I think it's a really great piece of feedback too. And I know many people just think about the price of their own products versus thinking about the available wallet that they have to sell to, right? The average American per person spends about $500 per month. And so if you have a one-person household, they've got a $500 a month grocery budget, two-person household spending $1,000, right?
00:11:14
Speaker
And so if you're selling proteins into that household, you should be able to capture upwards of 30 to 40% of that budget. And if it's produce, maybe it's another 20 to 30%. Whatever it may be, don't be afraid of trying to capture more of that available wallet because if they don't spend it with your farm, they're going to spend it somewhere else. I also really love your point about decision fatigue. Like you said, it's never fun to have to go through and assemble 20 items in your cart if you're trying to check out from Whole Foods online. It takes a lot of time. If I can just go and like you said, just give me a breakfast box or a dinner box or a gorilla box and give me all the things I need.
00:11:46
Speaker
Wow, you just saved me at a ton of time and reduced the amount of decisions because I trust you. Has that helped also? what are some of the things that you see beyond those core products that you've seen farmers use to dramatically increase their average order value that are kind of complimentary value to products when thinking about moving these types of products into market?
Partnering with Local Businesses
00:12:03
Speaker
Should they be assembling all these themselves or should they look to create partnerships or what do you suggest?
00:12:08
Speaker
Yeah. I mean, again, if you want to be the local producer, you want to be the person that your community is going to, because you either have the product or you know somebody who has a product that they're looking for. So when you think about who your ideal customer is, just like you said, on what they're spending their money on, you want to think about what other businesses are also servicing that type of customer.
00:12:27
Speaker
So someone who's going to be buying locally from you is probably going to be supporting a local coffee shop as well. So if you have, let's say bacon and eggs, maybe you partner with the local coffee shop to bring in some of their coffee beans to add into your breakfast bundle.
00:12:41
Speaker
So now you have some great cross-marketing opportunities because you're promoting that coffee company. They're going to be giving you a shout out as well. And you're just helping expand your market with complimentary goods.
00:12:52
Speaker
So that's what I would be looking for when I'm trying to set up these partnerships is who else is providing a good that I can add into my box that complements the products that i already have. and then marking those up you want to get paid for those yeah i absolutely love that idea especially like you said it's an avenue of even for some joint marketing or some joint posts together on facebook or instagram right and so all of a sudden you're expanding your reach that coffee company gets access to your customers and you're getting access to the coffee company customers right it's a win-win and yet you're raising the overall value for the buyer by again providing it all in one rather than making have to go make multiple stops love that
00:13:27
Speaker
Tell me a little bit more about this debate that we see going on amongst farmers, particularly among produce folks who always are gauging, should I offer a buyer's choice CSA or a farmer's choice CSA?
Benefits of Farmer's Choice CSAs
00:13:38
Speaker
Obviously, there's the data. If you want to streamline your operations, clearly looks more towards a farmer's choice model. Can you explain a little bit more about that and how a farmer's choice model helps a farmer reduce their operating costs and ensure all the inventory is moving more efficiently?
00:13:52
Speaker
Yeah. I mean, even beyond helping the farmer. So from that standpoint, it's going to allow you move your products the way you need to. Because as you know, not every cut in a cow is the exact same. Not every cut, your chicken's the exact same. Not every season that you're harvesting is going to be the exact same.
00:14:07
Speaker
So you need to be able to have some flexibility to move products the way that you need to. But even for the buyers, 90 to 95% of buyers are willing to take the recommendations from the farmers. I know when I go even to a local restaurant,
00:14:19
Speaker
I want to ask the waiter what they would recommend, right? I want to be informed. I want to be educated on what's the best thing to get. And so farmers get to do the same thing when they're doing these farmer's choice, produce boxes, bundles, when they're sending them to their customers, be that resource.
00:14:34
Speaker
If you're putting in a cut that may not be as familiar, Put a recipe in there, share your favorite way to cook it. This is how you use our whole bird. If you're putting a whole bird in there, talk about using the bones for stock or the feet to build a good stock that you can put in your freezer and keep for the whole winter.
00:14:49
Speaker
So really being not just a place where they can get goods, but being an educational platform for your customer base is crucial. And I love your point about the restaurant. I do the same thing. I always want to know what's fresh, what's in season, what's rotating on the menu. Cause that's, what's the most interesting as a consumer, right? And it's also healthier for you to actually diversify what you're eating. And I think people who want to buy from local farms, are looking not only for the farmer's recommendations, but they're also looking for healthier alternatives. And so that's where I think, again, I've seen too often sometimes farmers get a little dissuaded about this because they might have a few very loud, picky buyers.
00:15:27
Speaker
What's your recommendation for the farmer who has those few loud, picky buyers who just want what they want? Yeah, I mean, it's always important to know that not everybody's going to be your ideal customer. So always keep that in mind. But if they want to pick and choose, that's where the shopping cart comes into play. They can add all the a la carte stuff they want. Offering the farmer's choice subscription, again, puts you into a position where you can move products the way that you need to. For those picky people, they can go and they can individually select all the items they want and build the cart themselves.
00:15:56
Speaker
Love that. Great, great feedback and great recommendation. So let's talk a little bit about some of those less familiar cuts or secondary products that sometimes might even get
Creative Rebranding Tips
00:16:05
Speaker
dispelled. There's a lot of beef byproducts, things that people may not be familiar cooking with, or new products like microgreens that they've heard about, but they may not necessarily understand what to do with them. What innovative branding and packaging tactics can farms employ to either rename or sell these products or repackage these products to make them more highly valuable or more high demand?
00:16:26
Speaker
Yeah, I think there's a lot of great ways you can do this. Going back to your first question about the box, when you're unpacking that box, if you're adding in unique cut, um something that you're trying to move that may be a little unfamiliar, you always want to add in some kind of recipe card or informational piece. Maybe even just educate them on that cut. Here's how you cook it.
00:16:45
Speaker
I thought I hated pork chops my whole life because I always overcooked them and they were dried and it was just me not understanding how to do that cut. And having a roommate who's a chef who really got to show me, you just need to cook this cut of meat differently.
00:16:57
Speaker
And now it's one of my favorite things to make. So lean into that, educate your your buyers on what products you're putting in and even the why behind it too. like This is why we include these items. We have diverse product mix. We want to be good stewards of the animals that we have. And we want to make sure that we're getting the most out of those and not wasting anything. And then there's some awesome creative things you can do with like your heart, your liver.
00:17:18
Speaker
We have a lot of farms that will blend that into what we would call like a carnivore mix or a primal blend. and You can see even those at some fine grocery stores. Those sell at a premium. So now you get to move a lot your organ meat. If you're struggling to move those, throw it in with some ground. You do 90% ground, 10% of that organ meat and sell it. Mark it up. Mark it up two bucks. And now you can sell that at $14.99 pound instead your $12.99. I've even seen a lot of farms recently using some of these products for animal treats. So you can use your freeze dried or dehydrated chicken feet, make great dog treats, chicken necks, another one that I've seen. I just bought a bag of duck feet for my dog as healthy natural dog treats, and they were $14.99 for a pound of duck feet. So that's a product that you're not moving or just going to waste, there are creative ways that you can continue to maximize your earning potential just by offering some creative products.
Seasonal Rebranding Example
00:18:10
Speaker
And what about like rebranding some things, just a different name? I know you've seen some things too, where they'll take a cut of meat that doesn't sound very enticing and give it a different name. And it's, well, that's kind of creative. Yeah, I know ah perfect example of this. A lot of times you'll see farms who get stuck with a lot of their stew meat in the summertime because a stew meat doesn't sound very appealing when it's 98 degrees outside. But being able to rebrand that as kebabs, it's the same cut.
00:18:33
Speaker
You're just giving it a different name. And now you're you're putting that into your grilling bundle where you have some of your short ribs, you have the kebab cuts, you have some burgers. But it just helps you, again, maximize all the earning potential you can have within your products.
00:18:47
Speaker
Great, great suggestions. And I really love the stewardship angle all this too, which is use every part of the animal. And what better and more healthy alternatives, even for your pets too, like you said, even with the chicken feed or the duck feed.
Volume Pricing and Thresholds
00:18:59
Speaker
That's awesome.
00:18:59
Speaker
Now, buyers expect convenience when it comes to paying a premium for good products. How can a farmer strategically use bulk or volume pricing or minimum purchase thresholds in order to simultaneously incentivize customers to spend more, right, or increase the average order value and simplify the transaction?
00:19:17
Speaker
Yeah, that's one of the things that we make really easy within our platform. When you think about order reminders to those people who are bought into subscriptions, on average, people who are paying for the subscription will spend 75% more.
00:19:29
Speaker
So they will do those add ons. So that's one great way to help grow that. And the other one is just the incentivizing. So maybe you have a 10 pound ground beef bundle that's discounted where they get a pound for free if they're ordering that 10 pounds.
00:19:43
Speaker
So there are ways you can do it to try to increase the bulk. And some of it too is just rewarding those loyal buyers who are buying into a subscription. So giving them some exclusive offers, giving them some private store access where they can get some of those ah real high-end cuts to add into their orders on a weekly or monthly basis.
00:20:01
Speaker
Yeah, I know we have some farms too who are like, hey, every you know pork subscription includes bacon because everyone wants bacon. But if you're a pork farmer and you put up bacon for sale, you'll sell out of bacon, you'll be left with everything else. So I love that idea, which is reward and incentivize people to buy a larger format or buy subscriptions to get access to those high demand
Enhancing Brand Connection with Events
00:20:20
Speaker
products. I've also seen a few farmers do the same thing too with on-farm, farm-to-table chef dinners. Like, hey, if you're a member of our subscription base, guess what? We do ah once a once-a-quarter or semi-annual chef farm-to-table dinner. and know, and everyone loves the iconic look at the lights outside and sitting out on the farm, and that's really special. People are willing to pay a premium to get access to those types of experiences, right?
00:20:42
Speaker
Yeah, I have a few farms that even do for every subscriber, you get ah a free farm tour and they'll tell you that those people that show up for the farm tour are buyers for life. They don't ever shop anywhere else. So that's another great way to one showcase. And those people that do go there too, they're to be telling their friends about it. They're going be telling their family about it because it's a cool experience. It's something that they want to share.
00:21:03
Speaker
I know that is absolutely true for myself when it comes to the whiskey tours I've gone on. Like once I've gone to the distillery, we're not too far from Bardstown for those people who are listening to us. Nashville's just about two hours south. But once you've gone to one of those distilleries, like, hey, I'm going to be a buyer for life now. I've learned the family history behind this, et cetera. No different with food and much healthier for you too, right? yeah We eat three times a day. I certainly don't need whiskey three times a day. But youre your point about the brand affinity is key. And I think, you know, if any farmer who's listening to this doesn't look at their jacket or their boots and think, okay, I'm wearing Carhartt or I'm wearing a pair of Red Wings, et cetera, like the value of that brand, it's a big deal, right? Because people stay low to that brand and they keep coming back because they trust the quality of your products.
00:21:46
Speaker
Any last tips, Brian, before we sign off? You've given us a ton of fodder for our listeners today in terms of things they could be doing to increasing their packaging and pricing best practices. Yeah, I think one of the biggest things, and we talk about this a lot in account management, you really have to know your
Sustainable Pricing and Cost Understanding
00:22:01
Speaker
pricing. So know what your costs are.
00:22:03
Speaker
I think it's really important to to build out an Excel sheet early on and just get a breakdown of what your costs, including your labor, your time, your effort, all that you're putting into the product to know what you need to be able to make. Because once you know what your costs are, then you can start looking at, okay, well, what do I want to make?
00:22:18
Speaker
to make this business sustainable to continue to be this resource to my community and look at those profit margins that you're trying to target once you have that stuff in place and then you start looking into all right well who am i trying to sell to who is this ideal customer and it's really gonna form how you build everything out as far as your pickup locations you're delivering to where you're marketing what businesses you're partnering with so the sooner you can get grasp on those things knowing, again, your cost, what you want to make, and who you want to sell to, that's really going to set you up for success. And it's going to, again, dictate a lot of how you're building this stuff out.
00:22:53
Speaker
Well, great feedback, Ryan. Thank you so much for joining me today on the Independent Farmer Podcast. Farms working with Barnador can actually join he and his team anytime for hands-on assistance during Barnador office hours, Monday through Friday. Here at Barnador, we are humbled to support thousands of farms all across the country and delighted to offer software and services to help your a farm make more money, ditch the boring office work, and look like a pro. If you're an independent farmer who is just getting started or transitioning to SoundDirect, please visit barnador.com backslash learn more. Thank you for tuning in today. We look forward to joining you next time on the Independent Farmer Podcast.
00:23:38
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.
00:23:53
Speaker
You are the backbone of our country. 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.