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Pricing Isn’t Math — It’s Notetaking and Psychology
28 Plays1 hour ago
This week on Hort Culture, Alexis and Brett take a deep dive into one of the most confusing — and emotional — topics in horticulture businesses: pricing. From credit card fees to bouquet tiers, they unpack how pricing isn’t just about math… it’s about psychology.
The episode starts with the foundation every grower needs to hear: know your cost of production. If you don’t know what it costs you to produce a cucumber, a bouquet, or a pint of blueberries, you can’t build a sustainable business. Pricing below your costs simply isn’t a long-term strategy for small farms and floral businesses.
From there, the conversation shifts into smart pricing strategies that growers can actually use:
- Loss leaders – Like the classic $5 rotisserie chicken at the grocery store, certain products can bring customers in while higher-margin items carry the profitability.
- Anchoring & price framing – The order in which customers see prices matters. Showing a premium option first can make the mid-tier feel more reasonable.
- The “middle option” effect – When given three choices (basic, premium, deluxe), most customers gravitate toward the middle. That’s often where you want your strongest margins.
- Decoy pricing – Introducing a strategically priced option can steer buyers toward the size or bundle you actually want to sell.
- Bundling – Salad kits, dinner boxes, or bouquet add-ons increase perceived value and simplify decisions for customers.
- Value naming – Words like “chef’s blend,” “deluxe,” or “seasonal” elevate perceived value without changing your actual product.
Throughout the episode, Alexis brings practical examples from the flower world—especially holiday bouquet pricing—while Brett connects the dots to ag economics principles and behavioral psychology.
The big takeaway?
Customers judge prices relatively, not absolutely. Thoughtful pricing structure can increase revenue without undercutting your value — and without sacrificing your margins.
If you’ve ever wondered why customers hesitate at checkout, why bundles work so well, or how to stop underpricing your products, this episode will help you rethink how you present value.
University of Kentucky Center for Crop Diversification
Center for Crop Diversification Price Reports
Questions/Comments/Feedback/Suggestions for Topics: hortculturepodcast@gmail.com
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Transcript
Embracing Positivity and Simple Joys
00:00:16
Alexis
Hello, everybody. i hope wherever you are, it's in a beam of sunshine right now because I think we all need a little bit of sunshine in the winter.
00:00:25
Plant People
Beam of sunshine.
00:00:26
Alexis
beam of Be the beam of sunshine. Also, just embrace the beam of sunshine. Yes.
00:00:31
Plant People
Beam of sunshine. Shine bright like a diamond.
00:00:35
Alexis
set Or shine bright like a diamond. Yes, absolutely. Enjoy it.
00:00:39
Plant People
And a beam. Like the diamond is in a beam.
00:00:41
Alexis
In a beam. Be the diamond in the beam of sunshine. Love it.
00:00:44
Plant People
And it's producing a spectrum.
00:00:44
Alexis
Love it.
00:00:45
Plant People
Roy G. Biv.
00:00:47
Alexis
You're just refracting that light onto other people so that they can bask in you in your sunlight.
00:00:47
Plant People
Roy G.
00:00:53
Alexis
Love it. Don't
00:00:56
Plant People
Yeah. or what What's your, what's been your beat beam of light?
00:00:57
Alexis
go wrong.
00:01:01
Alexis
Oh, what's been my, beam you know what? My beam of light has been when that the soil is not currently frozen and I can weed a little bit and just kind of get into the vibe and just enjoy some of that ah warm sunshine and just weeding the things and getting my hands dirty and having to like scrub my nails at the end of the day.
00:01:24
Alexis
That's been my little beam of sunshine lately. How about you?
00:01:27
Plant People
I like that. Oh, I'm just in complete darkness, Alexis. No, just kidding.
00:01:33
Alexis
That's not true. The bones have to be like showing some buds out there.
00:01:35
Plant People
Just kidding.
00:01:38
Plant People
Yeah, we're we're getting ready to pop off out there with the plants ah this week in particular. So I made um made some cookies, just some chocolate chip, you know, scratch cookies with a recipe that i i really i honed it over COVID.
00:01:48
Alexis
Yeah.
00:01:54
Plant People
um And i I remembered there was been one tweak to it that I didn't do this time. They were still very good, but I used to do where I would I would make a batch and then I would ball them and freeze them.
00:02:07
Plant People
be able to pull it out and and do two in the toaster oven or whatever for a little little plus up.
00:02:10
Alexis
eleven
00:02:13
Plant People
And that is equal parts fun and dangerous.
00:02:18
Alexis
Yeah, i don't I can't be trusted with something like that.
00:02:18
Plant People
Like delicious, amazing, fresh baked cookie on demand, 15 minutes start to finish.
00:02:25
Alexis
yeah
00:02:28
Alexis
I have also been baking a little bit more lately, mostly because I have so many lemons. I've got to do something with them. But I have been enjoying getting back into the baking. We made some scratch cookies over Christmas, and it's been a long time since I made some scratch cookies. And we just used, like, didn't have enough of one type of chocolate, so we were just using all these different ones and throwing them in there, and it was...
00:02:53
Alexis
delicious so uh yeah I can't be trusted with freezer freezer fresh big no they'd be gone and self-control mm-hmm
00:02:59
Plant People
just pull it out, pull it out. And, and you know, you gotta, if anybody's trying to play along at home, you just make your normal cookie recipe, put them onto, I just use a sheet pan like I would if I was going to bake them, but ball them out and let them freeze independently, separately.
00:03:15
Plant People
And that way you can then p pop and then, and then take them and combine them into a bag and you can store them that way.
00:03:21
Alexis
mm-hmm
00:03:21
Plant People
So it's, I mean, it's basically just DIY version of the whatever cut and bake or take and bake or whatever they call the cookies that you, you get.
00:03:29
Alexis
Yeah, but yours don't have like little snowmen on them. So, I mean.
00:03:33
Plant People
You don't know that. You're right, but you don't know that.
00:03:38
Alexis
i have a hunch that they are not the ones with the pumpkins on the top.
00:03:42
Plant People
and they're not They are not cross-s section cross-section pumpkin cookies, sadly.
00:03:46
Alexis
Listen, you're having a bad day. you're the kind of person who likes to snack when you're having a bad day, go to the store, get you little cut ones that don't have the eggs in them, and you just eat cookie dough. And that is such a vibe. Yes.
00:04:03
Alexis
but such a vibe
00:04:03
Plant People
And now that Alexis has spoken to that cross-section, I'll speak to the cross-section. If you like to snack when you're having a good day, go to the section, get the ones that don't have eggs on them, eat the cookie dough. So either way, I think that's a Venn diagram representing 100% of the population.
00:04:20
Plant People
Some people like to eat snack when they're having a bad or a good day. ah
00:04:25
Alexis
honestly, I'm never going to turn down a good snack. I just, i'm not. So it doesn't matter.
00:04:29
Plant People
That's right.
Understanding Pricing Strategies in Business
00:04:30
Plant People
to Cookie dough can be the beam of light regardless of where you are coming from and in the first place.
00:04:33
Alexis
I hope cookie dough is everyone's beam of light that can eat cookie dough. Cause you know, so sorry for your loss, gluten, gluten people.
00:04:38
Plant People
Yeah. oo Ooh.
00:04:44
Alexis
Ah,
00:04:44
Plant People
I feel like cook to me, cookies are one are like the they are one of the things that is least negatively impacted by... or like negative like the the gluten-free version is...
00:04:57
Plant People
is less of a step down than others because cookies, you know, they aren't as reliant on the, the glutinousness of it, but even so, so still, still, sorry for your loss, but.
00:05:00
Alexis
Yeah.
00:05:04
Alexis
True. True. I have a friend who Yeah, still sorry for your loss. I have a friend who can't do gluten, butter, or eggs. So she got some vegan cookies that my other friend makes. She makes a big box of cookies for Christmas. And so she got all vegan cookies. And ah my friend Victoria was pretty proud of herself. She's like pretty much nailed vegan cookies. And I was like, I don't, I'm curious on what those taste like, but I trust you.
00:05:29
Alexis
I trust you. I'm excited for you.
00:05:31
Plant People
Yeah. I mean, the, the,
00:05:32
Alexis
I'm gonna eat it. I'm gonna eat it. ah
00:05:35
Plant People
yeah, we, we, once upon a time, Annie and I were ah engaged in a, in a vegan diet and, uh, it's amazing because you know what? Sugar is vegan.
00:05:46
Plant People
So
00:05:47
Alexis
Very true. You're like, you know, it's not that that bad
00:05:51
Plant People
it's, you know, i mean, sugar and salt always been vegan.
00:05:54
Alexis
bad. True. And if you're not gluten-free, then flour is also fine, I'm assuming.
00:05:56
Plant People
Uh, Yeah. And, and, and like fat, there's a lot of fat that doesn't come from animals that is beautiful.
00:05:59
Alexis
Yeah.
00:06:05
Alexis
Love it.
00:06:05
Plant People
So anyway, um, nor are we steamrolling Ray and Jessica who are sitting in the wings.
00:06:08
Alexis
We're not here to talk about cookies, or at least not...
00:06:15
Plant People
It's actually just the two of us, which is perhaps a great decision or a terrible mistake. We'll let, we'll figure it out by the end of the episode.
00:06:22
Alexis
You can decide how many stars we give get on this episode.
00:06:24
Plant People
Um,
00:06:27
Plant People
And Alexis was saying it's because people who work in the counties are really lazy before we got on. And I just wanted to give you a chance, give you the floor to clarify that, clarify what you meant.
00:06:37
Alexis
Yeah, they just, yeah, they basically never do anything. they're not They're not constantly answering phone calls or answering questions if people walk in. They're just sitting around, you know, she says with satire, for those of you who don't know me.
00:06:44
Plant People
Yeah.
00:06:47
Plant People
And... i thought I thought that you were saying that it was like It goes deeper than that to like their their character. You were questioning their character. And if you wanted to expand on that.
00:06:57
Alexis
Just in general, there are people who don't like to work, Jessica and Rae, just hate.
00:06:59
Plant People
No. No, poor Jessica and Ray are dealing with some other things. And we had a window to to sneak in a podcast episode here and wanted to. um And what are we going to... What do we want to talk about, Alexis? Alexis?
00:07:13
Alexis
oh the good old fashioned question talking about pricing because it's important and it's confusing. So we thought we'd maybe hopefully clear some things up for you guys.
00:07:24
Plant People
Yeah, so we we talked a couple weeks ago um about the credit card fees thing. And we said, even if your customer understands that the fees have gone up or they understand that you need to recoup that or whatever, they still may in fact just get mad at you if you charge them a surprise credit card fee when you go to checkout.
00:07:29
Alexis
Mm-hmm.
00:07:45
Plant People
And that's psychology. That's ah you know interpersonal communication. that's it it shows the fact that not all considerations, but maybe even most considerations of things like math and economics and other things are not necessarily always logical or rational.
00:08:05
Plant People
And they may, it may take emotion or just simple parlor tricks in, you know, like here, I'm going to give you a cash discount.
00:08:09
Alexis
Yeah. yeah Now you see it. Now you don't.
00:08:14
Plant People
Now you feel good. The net overall effect to my business for that versus the a credit card fee is the same, but you walk away feeling good.
00:08:21
Alexis
Right. That's the goal, man. Mm-hmm.
00:08:25
Plant People
And so that's that's kind of the the spirit, a little bit of the spirit of what we're going to talk about. And so as the person who hangs his hat, coat, something else in the ag economics department, I'm going to kind of lead us through the conversation, but Alexis has a lot of experience and thoughts on this as well.
00:08:44
Plant People
and The thing I want to start with, this is something we talk about in extension a lot. We talk about any sort of business, anything is going to start with this idea that like, You need to understand as a business what it costs you to get a good, a product or whatever to market.
00:09:03
Alexis
Amen, brother.
00:09:06
Plant People
If you don't understand that, if you don't know what that is or approximately what that is, what can end up happening is that you're you're selling it to someone else for less money than it costs you to make.
00:09:19
Plant People
And in the long in their midterm, short term even sometimes, that as a business Decision is not going to be sustainable unless you have a ton of money.
00:09:30
Plant People
um So like if you are Spotify,
00:09:32
Alexis
Then why are you going to into business for yourself? It's hard.
00:09:35
Plant People
Right. if you're If you're Spotify or if you're Amazon and you have this constant you know influx of capital and there's all these other complex things happening, you may have heard you know Spotify doesn't turn a profit or Amazon didn't turn a profit for a bajillion years.
00:09:36
Alexis
do it.
00:09:48
Plant People
And that can be true. But in your smaller business, you that's not a good strategy.
00:09:51
Alexis
Okay.
00:09:52
Plant People
so So we're not suggesting that all math should be thrown out in terms of you know setting prices. um But as we talk about you know setting some prices and thinking but about these different strategies that I think show examples of of some of the ah the psychology behind pricing, keep in mind that at every stage there is an implicit message of yeah as long as the price that you're charging is makes sense and is more than what it's costing you to sell it for.
00:10:18
Alexis
Yes.
00:10:21
Plant People
um Or as part of your overall product mix, you're making more money than you would otherwise.
00:10:21
Alexis
Right.
00:10:27
Plant People
Or sorry, you're making more money than you are putting in to the products.
00:10:27
Alexis
Yeah.
00:10:30
Alexis
Yeah. Yeah. There's the, you know, The idea sometimes you hear about it in groceries a lot, especially with flowers is like there's, I forget what they're called, like lead is it a leader loss or ah you know, there's some loss leader.
00:10:42
Plant People
Loss leader.
00:10:43
Alexis
Thank you. I wasn't too far off. Just switch them around. The, you know, that.
00:10:47
Plant People
beat or come a loss in the ah in the in the index.
00:10:49
Alexis
Yeah. Yeah. And I think for small business, you know, i would say that I get that, you know, sometimes you're trying to bring people to your booth. So you want to, you know, advertise something low, but I hope that you're never actually losing money at a bare minimum, you know, that ah loss leader that you might have is at least going to pay for itself is sort of the way I like to think about it. And again, this is just probably a little more personal than it is statistics saying that, but
00:11:20
Alexis
If that's something that you want to try, and and I say that as someone who's, for example, doing tulips in the winter, because I'm trying to keep my customer base around a little longer, I'm not going to make a ton of money on that, but it keeps my customers involved with me.
00:11:36
Alexis
So it's, again, that kind of psychology going back to the price, but I certainly would never want to lose money on something in order to keep a customer, you know, customers around or something along those lines.
00:11:47
Alexis
So so yeah, but the biggest question is what is your cost to produce that? Anytime you ask a ah a ask someone, especially the CCD, what you should be pricing something at, we're gonna ask you how much does it cost you to produce it?
00:12:03
Alexis
And that's the first one, but we'll get through that.
00:12:05
Plant People
Yeah.
00:12:05
Alexis
You all know that.
00:12:06
Plant People
Well, that loss leader thing is an interesting part of it's a good, good entree into this discussion of psychology. And just for those who aren't familiar, it's this idea that you may sell a product for either less profit or no profit.
00:12:19
Alexis
Mm-hmm.
00:12:20
Plant People
for some other advantage to your overall product mix. And so like in a grocery store, some of the classic examples are like those $5 rotisserie chickens that you get at whatever place.
00:12:23
Alexis
Mm-hmm.
00:12:29
Alexis
Mm-hmm.
00:12:31
Plant People
And you ask yourself, how on earth could they produce a rotisserie chicken and sell it at a profit for $5? Well, in many cases they aren't, but very few people go in, just get their rotisserie chicken and roll out.
00:12:44
Plant People
Now, if you do that, huge props to you.
00:12:45
Alexis
yeah
00:12:47
Plant People
Okay.
00:12:48
Alexis
And then you eat it in the parking lot?
00:12:48
Plant People
Respect, Yeah.
00:12:50
Alexis
What?
00:12:50
Plant People
ah Yeah. It's gone by the time you get to your car. um And then another, another example, just to stay in the the poultry universe, the, the, the Turkey that you buy for Thanksgiving may, they may have a great price on it.
00:13:02
Alexis
Mm-hmm.
00:13:05
Plant People
That's like crazy good price, but their understanding with that is that they're going to get you into the store and you're going to buy all the other things where their, their margin is higher.
00:13:08
Alexis
Mm-hmm.
00:13:14
Alexis
The
00:13:15
Plant People
The amount of money they make off each of those processed things or stuffing or,
00:13:17
Alexis
Right.
00:13:20
Plant People
cranberry sauce or drink that you buy because you need a caffeine pick me up as you step, you know, as you are in line on the way out or the toys that your kids beg you for.
00:13:30
Alexis
The add-ons.
00:13:30
Plant People
And you, you know, all of those things that, so you could have a loss leader to to get people in. An example of this from the, um the like more farmers marketing world is you might have your tomatoes that you sell at a, like the the amount, the difference between the price you charge and how much it costs you.
00:13:39
Alexis
Promise not to be.
00:13:51
Plant People
to produce might be smaller. You know, you may only have a 10% markup on your tomatoes, but you have signage, you have other things supporting the idea of, doesn't a nice fresh salad sound really good tonight?
00:14:03
Alexis
Right.
00:14:03
Plant People
And you have lettuce and your markup on the lettuce is 40%.
00:14:07
Alexis
you supporting
00:14:08
Plant People
and So you get people in to buy the tomatoes, you make a little less money on the tomatoes, and then the lettuce, your your markup on that is a little bit higher. And so you end up on the total purchase making more money and and you have captured a customer who wouldn't have bought from you unless they could get a decent deal on tomatoes in the first place. So that's the loss leader concept in this in this space. And as you can see,
00:14:31
Plant People
That's not really, it's not like a super rational thing. That's saying like this person, going to get this person to buy from me. Well, if ah so a rational person would go and find the absolute best price,
00:14:44
Plant People
on tomatoes and then they would go to the next person and find the best price on lettuce and the next person and find the best price on their bacon they're going to chop up make bacon bits with.
00:14:46
Alexis
Okay.
00:14:52
Plant People
and And if you can kind of package things, which is something we'll talk about here in a little bit, um that's the type of strategy that you can use in your sales and your pricing to to offset stuff.
00:15:03
Plant People
So another one here, um this is something I know Alexis and I have talked about actually recently. is ah people tend to have a really, sh that we we we tend to hat to to ah take a lot from our first impressions of things.
00:15:20
Alexis
Kobe beef.
00:15:21
Plant People
And so if the first price that you hear is for you know for a given product, that's kind of, we tend to anchor on that point. So like, let's say I've got a,
00:15:34
Plant People
ah ground beef for $4.99, I got ribeyes for $21.99, and I got extra premium um um we're horticulture.
00:15:43
Alexis
be
00:15:44
Plant People
We're talking horticulture here. Sorry, I need to back off the meat.
00:15:46
Alexis
Yeah, I know. What's with your like poultry, like, rein it in there.
00:15:48
Plant People
Sorry.
00:15:50
Alexis
Mm-hmm.
00:15:51
Plant People
So if i if I tell you I've got tomatoes for $4 a pound or I've got premium heirloom tomatoes for $6 a pound, just simply reversing the order of that,
00:15:58
Alexis
Mm-hmm.
00:16:02
Plant People
gives a different impression. So when the first price you hear is $4 and so that that's the baseline.
00:16:07
Alexis
Mm-hmm.
00:16:07
Plant People
And then the next thing that you heard was more expensive than that. So you now you're thinking, okay, well that's really expensive. If I start it in the opposite direction, I've got premium alem tomatoes for $6. Then I have standard slicers, still homegrown, still vine ripened for $4 a pound.
00:16:21
Plant People
Suddenly the $4 sounds more affordable than it did before. um In a product mix, the the ordering is part of it, but the product mix is also part of it know you've talked about that Alexis with like bouquets for instance.
00:16:24
Alexis
Right.
00:16:30
Alexis
Yeah, i I tend to um kind of tell people in the way of if there is something you really need to sell. So, you know, maybe you have a bajillion standard slicers this week and you really are trying to to move them, then, you know, that you're going to set those as the ideal price.
00:16:47
Alexis
I also tend to think of like, what do I want to create?
00:16:50
Plant People
Thank
00:16:51
Alexis
You know, what do I want to sell? What or what is even my my goal price point? Um, because in flowers, you know, we, we do a lot of like holidays and, you know, there's planning the the number of stems that goes into it, blah, blah, blah, all this, all this other math that goes into flowers.
00:17:07
Alexis
But, you know, saying like my ideal price point is, you know, $30, then i'm going to do one more deluxe, ah you know, bouquet or whatever that is that might be $55.
00:17:19
Alexis
And so then people are more interested in that $30 one, which is actually my ideal price point.
00:17:26
Plant People
Thank you.
00:17:26
Alexis
um So I kind of tend to think of it, it's exactly the same general concept, but I think about it a little bit of a different way um with, you know, a luxury item, so to speak. But for sure, I mean, you think about when you, you know, are told prices just on anything,
00:17:43
Alexis
That high price first, yes, it's you know maybe a higher quality product or whatever. You're getting what you pay for there. no one's cheating you out of that ah you know product. But that second price sounds really good when you realize how cheap something could be. And then if not, then you get to sell your heirloom tomatoes for higher price. right So it's kind of a win-win either way if you if you frame it correctly.
00:18:06
Plant People
And as far as like where where you might implement this, you could do it on your signage. You could do it on if you had to advertisements of some sort, promotions of some sort, email lists, um that sort of thing.
00:18:18
Plant People
It's just thinking about having a reference point rather than my single product costs this much, um having some sort of a counterpoint.
00:18:25
Alexis
Yeah.
00:18:27
Plant People
um It's getting to the point where. even some grocery store prices are comparable to what I see people charging at farmers markets. And so you may take it take a quick trip by the grocery store and see what the price is for some of the products that you're selling and even put a side-by-side comparison of like grocery store price was this, here's this, and here's why this is, you know, this is better, but it gives at least a reference point that people aren't going to think in their mind.
00:18:46
Alexis
yeah
00:18:54
Plant People
This is way more expensive than the grocery store.
00:18:54
Alexis
That sounds expensive. Yeah.
00:18:57
Plant People
Well, actually it's not, you know, remember that time when you checked out with 10 items in your, what, with the like 10 items in your cart and it was a hundred dollars. um I do.
00:19:05
Alexis
We actually did that ah during COVID.
00:19:05
Plant People
Cause it happens to me all the time. Yeah.
00:19:08
Alexis
I helped with aggregate a bunch of farmers into one CSA. And of course it was COVID. We know prices were higher, but we're seeing prices climb again. And so we actually did, you know, take a standard CSA box that we had done previously, you know, for standard month and compared it to prices at the time as best you could, right?
00:19:26
Alexis
Like a lot of the time, you know, the box stores are not going to have really great heirloom tomatoes or something, but as close as you can.
00:19:27
Plant People
Sure.
00:19:33
Alexis
And it was shocking to put those side by side and to see like, yeah, well, we're you could not go shopping and just pick all these things out. And so that's a really good point. You also like in kind of in notes as we were planning for this,
00:19:46
Alexis
Brett put put something down and I think it's really awesome to, I love thinking about it this way, but that ah this works because people judge prices relatively, not absolutely, right?
00:19:57
Alexis
And so that's why we're saying put multiple price points in one spot where they can be seen or heard all at one time because it's that absolute or that relatively speaking thing.
00:19:57
Plant People
Yeah.
00:20:09
Alexis
And I was like, that just hits home so hard for me.
00:20:12
Plant People
Yeah, we always are. it's ah it's a recent There's recency to it. There's irrelevance.
00:20:16
Alexis
Mm-hmm. Mm-hmm. Mm-hmm.
00:20:17
Plant People
You know, that sometimes I've heard ah like um people who are like not nonprofits who are looking for a donation, they'll always put it in terms of like $4.
00:20:29
Plant People
We want you to commit to $4 a week or $4 a month contributing to our campaign or to you know to our general fund or whatever. that's like less than the cup of one, you know, mocha at Starbucks or something like that.
00:20:42
Alexis
okay
00:20:42
Plant People
And it, it gives you that reference point of saying, Oh, okay, well that I, and I know what that is. I know how much that costs, how much that impacts my budget, et cetera.
00:20:48
Alexis
Right.
00:20:50
Alexis
Yeah, I'm willing to you know give that up or have and you know have another one type thing. Yeah, for sure.
00:20:56
Plant People
Yeah. Um, I think another one, um, and it's a little, I'm going a little out of, out of
Adapting to Market Changes and Challenges
00:21:03
Plant People
order on what we had sketched out, but it seems like a good, um, spot for this is that I think one of the things with pricing sometimes is that people are looking to be just straight competitive in economic number terms.
00:21:16
Alexis
Mm-hmm.
00:21:17
Plant People
In the local food space, especially when we're direct marketing, we tend to want to encourage people to be competitive based on the differentiation and the specialness of their product.
00:21:28
Plant People
So what I mean by that is, yeah, you may, you're not trying to compete with the grocery store. If you happen to be competitive with the grocery store, that's a crazy thing to to to tell people about.
00:21:36
Alexis
Bonus.
00:21:39
Plant People
um But in general, we're trying to tell us, tell our customers why something is special, why it's unique, why it might cost more. um And in some cases you may change the perceived value of that product based on that. And so if I put out a very simple little handwritten, you know,
00:21:56
Plant People
brown sign that says lettuce $3 or I take and maybe I mix and match a couple of lettuces or maybe I just have ah a unique thing that I've grown and I market that as like ah a salad mix or like a premium salad mix or a chef's blend or something like that.
00:22:12
Alexis
Mm-hmm.
00:22:15
Plant People
I may be able to charge five bucks for it because I've I have value added in the sense of the the mind and the perception of the consumer. It has higher value than it did as just here's commodity lettuce that you have to turn into something special.
00:22:29
Plant People
Here's something that's already special.
00:22:31
Alexis
Mm-hmm. It's the the experience. you're You're selling that, oh, the chef's blend, right? like It's like being at a restaurant, right? It's the experience of going to a restaurant. And it kind of seems silly when you first say it. You're like, no one thinks that they're like, gum but it is. It's like this behind, you know, somewhere deep in your brain where that just sounds better. And I think we can all probably point to a time where that's that's happened. Yeah.
00:22:57
Alexis
You know, even some calling something, you know, the deluxe or you know, adding those little words to it, I think can be really, can really push people to be like, well, I want deluxe. i'm a I'm worth deluxe.
00:23:11
Alexis
Treat yourself. Treat yourself to the chef's blend.
00:23:12
Plant People
I'm a, I'm a deluxe caliber individual.
00:23:15
Alexis
Correct. yeah ah Yeah, for sure. Just those little, the little naming of it. It's just something simple, you know, and you're not really changing anything other than what you're writing down on your brown sign. Yeah.
00:23:27
Plant People
Yeah. Well, have, I have a couple, two strategies I want talk about maybe together.
00:23:31
Alexis
Okay.
00:23:31
Plant People
um One you might think of as, as putting in a, what would be called a decoy price. And then the other might be that you kind of, you you start to,
00:23:42
Plant People
you play on the fact that people find ah whatever sch medium option, whatever medium option to be reasonable.
00:23:48
Alexis
Okay.
00:23:50
Plant People
And so they're kind of opposite ends of the spectrum, but I'll give you two two examples here. So one would be, let's say you've you're selling blueberries and you're gonna sell a small box for $4, a medium box for $7,
00:24:08
Plant People
or a large box or maybe even an extra large box for $8. So that's one that's one scenario. What to you jumps out about about that do you think, Alexis?
00:24:21
Alexis
I mean, immediately you're like, man, if a large box is, or if a medium box is $7 and a large box is $8, why wouldn't I spend another dollar to get the large box? Like, that's, yeah, obvious.
00:24:31
Plant People
Yeah. and look, at the large box is like more than double the size of the small box.
00:24:37
Alexis
Mm-hmm.
00:24:37
Plant People
And you know, we should be eating more blueberries anyway because antioxidants and you know, ah there's so all the other marketing messages that can kind of play into the fact that this product may have a ha health halo for your customer, or it may be that their kids really like it, or they like the idea of supporting whatever.
00:24:48
Alexis
Mm-hmm. Mm-hmm.
00:24:52
Plant People
But in this case, that medium price that's in there, even offering the medium box in the first place is what would be our decoy.
00:24:58
Alexis
Mm-hmm.
00:25:00
Plant People
It's the one to say, well, that medium box is crazy overpriced when I can just get the large box for $8
00:25:07
Plant People
It's kind of the similar psychology of upselling in general with like a super size me thing where instead of saying the meal, the giant meal costs $10 and the medium meal costs, you know, $9 and the regular meal costs six, you can just jump straight from the regular meal to the super size me.
00:25:31
Plant People
And all we're going to upcharge you is that, you know, 80 cents or a dollar or whatever. And the person's not necessarily going to do the math because they're perceiving that they're getting more for not that much more money.
00:25:40
Alexis
Right, they're getting a deal.
00:25:42
Plant People
And so that again, that medium one there is to push people towards selling the the larger box. And so in this case, like for me, if I was trying to move more volume of product, this would be something I would think about.
00:25:46
Alexis
Mm
00:25:53
Plant People
um
00:25:53
Alexis
hmm.
00:25:54
Plant People
I don't I think sometimes people have a tendency to rush to want to give people a bulk discount or a larger volume discount. And sometimes that's good. That's good. But if your product is highly in demand and you're constantly always selling out, then breaking like giving people a huge discount on on more volume.
00:26:07
Alexis
Yep.
00:26:13
Plant People
is not necessarily in your best interest as a business. Like if you can sell pints for $5 all day, there's no reason to sell courts for $8.
00:26:16
Alexis
Yeah.
00:26:24
Plant People
ah frankly
00:26:25
Alexis
100%. Yeah.
00:26:25
Plant People
um
00:26:26
Alexis
The same in the flower world, that's sort of equivalent to like, ah you know, Mother's Day or Valentine's Day. It's like, I can sell every, you know, if I can sell every flower at a retail price, why would I ever, other than, you know, efficiency and just, you know, ease of selling to one location, but from a strictly a ah so price standpoint, why would I so ever sell them wholesale if I can sell every stem retail price? And it's, yeah, the same same concept. And And one thought, it bleeds into sort of a different strategy of this price framing of you can do something for $3 each or two for $5. You can almost combine that with that decoy pricing. Because if you one pint is $5 or you can get two pints for $9, they're saving dollar.
00:27:17
Alexis
you know nine dollars that they're saving a dollar and you're moving more products. So if you have a lot of blueberries and you're like, if they don't sell this weekend, they're going go bad kind of thing, um you know, and you can afford to do that. And so, or, you know, even pricing that individual one higher, you only want to make $5 off of, off of it. That's like, that's your goal. So you're going to price the individual at $6, but price for two for 10. So you're, you're, again, it's not, um,
00:27:47
Alexis
It's not like, it's not cheating. You're just, and in a way they're getting better deal and you're making what you want to get. So yeah, those kind of bleed bleed together a little bit, that idea of decoy pricing and then just this bundled pricing.
00:28:00
Plant People
Yeah. and just to reiterate and put a little, you know, even a finer point on this, you go through your math and you say, okay, I'm producing this cucumber and what I need in order to make money, in order to make back my costs, plus the amount of margin that I want to make, I need to sell this cucumber for 75 cents.
00:28:22
Plant People
I know in my mind, if I was just going to charge based on making the money that I want to make, it's 75 cents. Well, I go to my stand and I go to price and I say, okay, the chart, the cost for, again, 75 cents was what I wanted to make on that one.
00:28:36
Plant People
And I say, i will sell you one cucumber for a dollar or I'll sell you two for a dollar 50.
00:28:45
Alexis
right
00:28:45
Plant People
In other words, I'm telling you if you want, I'm not telling you, but in the back of my mind, I'm saying, if you want to buy just one cucumber, I'm going to actually charge you a 25 cent for,
00:28:56
Plant People
fee
00:28:57
Alexis
Convenience fee, yeah.
00:28:58
Plant People
of having to buy that one. It reminds me a little bit like in the in the trades world, like in having your ah furnace worked on or having something replaced at your house or whatever.
00:29:08
Plant People
If there is a job that a contractor does not want to do, they will often quote you a price
00:29:13
Alexis
Yeah.
00:29:16
Plant People
that is crazy high. And what they're saying is, if you want to pay the crazy high pain in the butt price, I'm more than willing to do that.
00:29:18
Alexis
Uh-huh.
00:29:21
Alexis
I'm willing to do it.
00:29:24
Plant People
If you want me to crawl in your gross crawl space and deal with this, I'll charge you that. Like, yeah, sure. If you want to pay 20% over market, sure.
00:29:31
Alexis
Yeah.
00:29:32
Plant People
That sounds good. But if you don't, you don't. It's a similar thing with the with the decoy pricing. It's like, I don't actually want to sell anything at a dollar.
00:29:38
Alexis
Right.
00:29:41
Plant People
I want to sell it at 75 cents, but I want to move to it once. And you're playing on the psychology of, well, I'm getting a better deal by buying two.
00:29:49
Alexis
Right.
00:29:49
Plant People
um So that's kind of like, it's not like you'rere the price that you're needing to get is a dollar and you're voluntarily giving discounts.
00:29:57
Alexis
Right.
00:29:58
Plant People
And I think just going back to that cost thing, making sure you understand your costs plus the amount of margin that you're wanting to make.
00:30:00
Alexis
Mm-hmm.
00:30:04
Plant People
um A different variation on this ah is when you are in fact trying to move something at the middle of the price point. And so, for instance, you say you have our ah the cut flower world.
00:30:11
Alexis
Liam?
00:30:18
Plant People
I've got my basic bouquet, which is $10. I've got a seasonal bouquet, which is $18. I don't know why you would call it seasonal. This is just the example that I have written out here. Let's say basic.
00:30:31
Plant People
um Let's say um what will be a better what would be a better middle one?
00:30:36
Alexis
<unk>
00:30:37
Plant People
And then we have to change premium.
00:30:40
Alexis
Oh, deluxe. I use the word deluxe a lot.
00:30:42
Plant People
And deluxe is top, right?
00:30:42
Alexis
i don't know. Yeah.
00:30:44
Plant People
Yeah, so we've got basic bouquet, $10. Premium bouquet, $18. Deluxe bouquet, $30. deluxe bouquet thirty dollars
00:30:51
Alexis
Mm-hmm.
00:30:52
Plant People
People will now combining the the top price being a reference point, the bottom price being a reference point, and the the one in the middle being slightly in this case, 10, 18, 30, it's slightly below the midpoint.
00:31:07
Plant People
That medium one feels like, you know, I'm splurging on myself, but I'm being reasonable here.
00:31:12
Alexis
Yeah. Right.
00:31:15
Plant People
And as a business, i'm I'm actually wanting to sell the middle point bouquet. I will sell you the premium, the the deluxe one.
00:31:19
Alexis
Mm-hmm.
00:31:21
Plant People
I'll sell you that all day if you want it.
00:31:22
Alexis
Mm-hmm.
00:31:23
Plant People
But I know that more customers are willing to hit that middle point of pricing. And that that three reference points against pricing is referential lets me know I'm not being crazy.
00:31:34
Plant People
you know I'm still below $20.
00:31:35
Alexis
Mm-hmm.
00:31:37
Plant People
That's another psychological tipping point. I'm still below this. we have it We have a base 10 number system thing, 10, 20, 100.
00:31:41
Alexis
makeup made up thing
00:31:45
Plant People
For whatever reason that psychologically plays with us, it's below that. you know It's $18.
00:31:52
Plant People
Do you ever play around with this that that kind of thing, Alexis?
00:31:54
Alexis
yeah i think i kind of referenced that in in a little bit of a different way earlier with uh you know i have my
00:31:54
Plant People
Yeah.
00:32:01
Alexis
my goal price that I would like more people to buy. So I'm going to price something higher so that they feel bad. And it sounds like what I need to do is is create a lower price point in some way. but But yeah, I think it's good. And especially, you know, in the flower world, people are often buying for someone else. So they don't want to be the cheapskate, even though no one will probably know what they spend in their mind. They don't want to be cheap. they don't want to buy their friend the cheapest thing. But they also may be weren't planning on spending that much or, you know, maybe they're giving them something else and additional. And so, again, that right in the middle of the road, um whatever price point that is feels reasonable because you're not being cheap, but you're also being responsible by not doing the top tier. Yeah.
00:32:45
Alexis
For sure, I think that's that makes sense. Or, you know, the same could be said in the cucumber world, you know, do you want the the smaller cucumbers that, you know, aren't super pretty but taste good? or do you want the, you know, really fancy English cucumbers that are perfect and seedless and all of that? Or do you want just like the pickling cucumber that does the job that you want it to do and is right that middle of the road?
00:33:10
Alexis
Yeah. And yeah, those three different price, if the more often I think you can have sort of three different price points, as long as it makes sense for you and your business, as far as like, you know, the time you have and the efficiency sake, think it's the way to go.
00:33:23
Plant People
Right.
00:33:25
Plant People
Another way to do it would be to make the lower tier option like slightly less attractive. So in other words, the basic bouquet, the $10 one is like, it it doesn't suck.
00:33:40
Plant People
you know We still want it to be nice, but it might be, there there might be a 50% markup on the amount that you would normally charge for those stems individually as part of a retail bouquet.
00:33:42
Alexis
It's a lot smaller. It's it's visually not as impactful.
00:33:49
Alexis
Yeah.
00:33:53
Plant People
The seasonal bouquet may be a 30% markup, which is where you're targeting for your business, but people in you know in the world don't know that. And so when they look at the basic bouquet for 10 or the medium bouquet for 18, where you're getting a ton more stems relatively in terms of value, it becomes even more of a no-brainer of like, that's where we want to go.
00:34:11
Alexis
yeah
00:34:13
Plant People
And and the reality is we don't actually want people to buy the basic bouquets. We will sell them to them, but we don't want them to buy that. We want them to buy seasonal and above.
00:34:23
Plant People
um And again, it could be a a thing where you actually even have a markup where you're like, okay, do you, you know, you're going to buy a seasonal bouquet.
00:34:24
Alexis
Mm-hmm.
00:34:34
Plant People
Do you want to add a splash of dahlias for $5?
00:34:38
Alexis
Mm-hmm.
00:34:39
Plant People
And so now they've bought 18, they're already in on the consumer purchase.
00:34:45
Plant People
$5 more. Okay. It's going to take it up to, I'm not good at math. I don't know, 23, which is still less than 30, but Splash of Dahlia sounds cool and it's fun. And I can, that's a nice ah party, you know, story later for my dinner party when I have this.
00:34:56
Alexis
Makes it special. Yeah.
00:34:58
Plant People
ah So anyway, that's just another, another psychological kind of way of, of doing is the, the idea of the, the plus up.
00:35:04
Alexis
Oh yeah, I 100% in the cheaper option, the stems are more per stem. The markup is higher per stem in the smaller option. So like if you're a person like me who does does the math, a lot of the time when I see stuff, I'd be like, well, those are 350 a stem.
00:35:20
Alexis
Those are 250 a stem. So why don't I get those? I'm getting more for them. So yeah, for sure.
00:35:25
Plant People
Yeah. And um I think also just to, you know, going back before we move on from the, the bundling concept um and another way of doing a bundle or doing a, even just a value add, you know, naming and adding value is to take in bundle unlike ah products that aren't all the same together in some sort of a the The way example I give is like, here's the Wednesday night dinner package.
00:35:53
Plant People
And so it's got some carrots, it's got some potatoes, it's got some, a roast of some sort, and maybe like a bag of fruit that's like for dessert or something.
00:35:54
Alexis
Oh yeah.
00:36:06
Plant People
And you sort of pitch it as here's the mealtime, here's the meal bundled meal thing. And the total value of that is still the amount of money that you make, but it's a little cheaper than it would be if people bought all of those things independently and separately.
00:36:20
Alexis
individually. okay
00:36:22
Plant People
um this There's another another kind of psychological way of of approaching pricing and pricing.
00:36:26
Alexis
I love me a bundle. Someone's like, here is your salad kit. You can go home and make a really delicious salad. You just get this one thing that's already together for you. Yes, please. I will take it. Give it to me. Here's my money.
00:36:41
Plant People
so what about scarcity? What about limited a dish? We were, we were looking through uh, uh, our, our co colleague, Gabe and I were looking through some market information about the dairy industry.
00:36:59
Plant People
And one of these things that one of these dashboards that we can access, it tells people, it tells you like what claims, um, are like in vogue for given product packaging. So, you know,
00:37:10
Plant People
Is it high protein or is it you know and animal ethics or is it GMOs or is it whatever?
00:37:13
Alexis
Oh.
00:37:18
Alexis
This year it's all about the fiber.
00:37:20
Plant People
one of the One of them, and it has to be, i don't know if I have no idea, but one of them was like for soft cheeses, one of the top claims was limited edition. Yeah.
00:37:33
Alexis
Like, is that cow going to die soon? Or...
00:37:37
Plant People
All I know is I want in before the limited edition.
00:37:40
Alexis
Immediately paying my money. yeah
00:37:42
Plant People
Yeah, the Pokemon cards and Beanie Babies have given given way to soft cheeses as the collect v collectible to have for the Gen Z crowd.
00:37:47
Alexis
Yeah. Millennials are in.
00:37:53
Plant People
But as as silly as that sounds, um the notion of scarcity can be an important part of...
00:37:53
Alexis
Okay.
00:38:00
Plant People
um It influences people's willingness to pay, but it also influences that even just their conversion to be willing to pay the price that you are charging.
00:38:11
Plant People
So examples of this, I think, would could be um that these are the first of the season that kind of makes it special or unique. And often at the beginning of the year, yields are maybe a little lower.
00:38:22
Alexis
For strawberries of the year.
00:38:25
Plant People
um I think comparably last of the season, you know, could be, this is the last year, last chance to get vine ripened tomatoes this year, or this is, you know, we're going to be at you know, out or whatever. um Even some other language that I, I saw suggested was the idea that, um,
00:38:43
Plant People
we've only got 12 boxes of this or we only have, you know, 10 dozen ears of corn this year, this week. So come get them again. It, it hopefully moves people to buy that specific product, but also to move, to come into your booth or come, you know, come to your business or whatever, whether be a road, you know, a standout and, and they'll see if you have other things for sale and then your other merchandising elsewhere comes into play and you have to do those things.
00:39:04
Alexis
Mm-hmm.
00:39:11
Plant People
But,
00:39:12
Alexis
Yeah, you can use this, ah you know, in CSAs as well. So, you know, saying like we only have, you know, 20 spots for a CSA or, you know, advertising that you only have 10 spots left or something like that, I think is really drives people. I mean, when I think about It's always that thing. it's I'm interested in it.
00:39:32
Alexis
I'm going to think on it a little bit, maybe buying something. I'm going to think on joining that CSA, but I'm definitely interested. you know I've been seeing their posts. They've been doing all the all the things, and I've been looking at their website a couple times. But then when I see that maybe they only have five spots left, I'm like, oh, okay. It's like make or break time. I got to make that decision. And most of the time, I'm like, all right, I'm in. And so that's going to push me to do that. And I think you know if you're selling stuff online as well, You can, um from a you know availability standpoint, say you maybe have 15 of something available. Maybe put in that you only have 10. And then not only does that like save you a little time, but that little red alert is going to pop up when people click on it. And going to only three left. and That maybe happens a little bit sooner. and so And then you can always add inventory you know as you go. But I do think that that little only three left, only five left in this you know area does drive people you know to do that. And and you know you may think, well, isn't that a little like deceptive if I'm telling people I have 10 spots and I have 15?
00:40:37
Alexis
I don't know. That's up to you. That's a decision I think you can make on that. But they're going to get a great cult quality product out of it. So it's not like you're cheating them out of anything.
00:40:48
Alexis
So.
00:40:49
Plant People
Yeah. Scarcity does drive, it that drives people to, to act. I mean, people, when there's scarcity over things that people don't even care about the fact that it's like, why are you fighting over this?
00:40:56
Alexis
yes
00:41:00
Alexis
I mean, we just went through snowstorms, right?
00:41:00
Plant People
I don't understand.
00:41:01
Alexis
Milk, bread, toilet paper.
00:41:03
Plant People
Yeah.
00:41:03
Alexis
Like, it doesn't matter if you have a bunch at home.
00:41:04
Plant People
Okay.
00:41:06
Alexis
You're going to need more because you might not be able to get it So.
00:41:11
Plant People
So here's one I'm curious, curious your thoughts about this. Um, in the olden days, people would sometimes talk, ah that you would see stuff, you know, I almost conjures images of, um, infomercials in my head of only three easy payments of 39 95, right? That the idea of, if you can get your price to fall just under,
00:41:40
Plant People
um
00:41:41
Alexis
one of those major like you know whole numbers 10 20 30 yeah mm-hmm
00:41:44
Plant People
Yeah, i i think i I think that's called charm pricing. um But regardless, it's that not $20. It's $19.95.
00:41:51
Alexis
and
00:41:52
Plant People
ah That kind of used to be ah a retail thing that happened that people were into and and promoted because there was a psychology of seeing $20 versus $19 did.
00:42:04
Plant People
Just like we talked about earlier with the $18 bouquet instead of the $20. I think there does is some of that. But I think there's also – curious what your thoughts are, Alexis.
00:42:14
Alexis
Yeah, i ah I've heard that and some with some of the grocery stores that I know buy some local product of like, they're going price something at $14.95 or $19.95 or something like that because they still think or have witnessed in their stores or I don't know where they're getting this that, like you said, putting the $20 or putting the solid $15 scares people away.
00:42:39
Alexis
think I'd rather, your point, that $95 or $99 is straight up old school infomercials and I feel it feels ickier.
00:42:51
Alexis
I don't know. It feels more, in my opinion, more like the salesman that none of those used car salesmen, all of us are trying not to be.
00:43:01
Plant People
Mm-hmm.
00:43:01
Alexis
Those of us who are trying to make sales, I'd rather say it's $19 flat fee or $18 or try and adjust my product to a whole round easy cash number of $15 or something like that.
00:43:18
Alexis
I think you can still get the same idea of like, oh, well, it's less than 20 or it's less than $10. You can still get that same hit without the like ick of the 95, 99 thing.
00:43:30
Alexis
There's something about it. don't know.
00:43:33
Plant People
Yeah. Well, I think that the the more round number feels, to it to me, feels a little more modern. And it also feels, it feel it it human like it almost humanizes the business and the the charge.
00:43:41
Alexis
Yeah.
00:43:48
Alexis
Yeah.
00:43:49
Plant People
20 Yeah. Yeah.
00:43:49
Alexis
It's like, they're going to round up, right? Like you don't see something and say, oh, it's 1995. I see it and I read 1995, my brain. i'm like, it's 20 bucks, you know?
00:43:57
Plant People
twenty buck yeah
00:43:57
Alexis
So why not just call it that if if that's the price it needs to be?
00:44:02
Plant People
And I think in larger scale situations, especially when ah when a person is evaluating a bunch of different options right next to each other, you know, you got this salsa and it's $3.99 and I got this salsa and it's $4.25.
00:44:16
Plant People
Well, I'm going to get the $3.95 one.
00:44:18
Alexis
Yeah, yeah, that's true
00:44:19
Plant People
as compared to a situation where like the business and the product are just different. And this is why, you know, talk about like earlier that we're trying to be competitive on price through differentiation and increasing the value and perceived value of what's being sold rather than just strictly trying to reduce the price to the point where the customer is going to be able to accept it.
00:44:37
Alexis
true.
00:44:40
Alexis
Right.
00:44:40
Plant People
um An example that I thought of, that like it's, it's, and this is now dated. Like I'm, you know, I'm i'm a elder millennial, not a boomer, but even this is dated, but it does, it does indicate the difference.
00:44:55
Plant People
I think about like the Mac store or like Apple and the way that they sell their products.
00:44:59
Alexis
Oh, yeah. Mm-hmm.
00:45:00
Plant People
They have not used a decimalized ah price thing in like decades. And people think of Apple, they think of the Mac store as like hip and modern and hybrid.
00:45:08
Alexis
again
00:45:11
Plant People
Again, i am old. I understand that this is not the cutting edge like it was back then. But the idea of here's this very simple thing, it doesn't come with a really long manual and the price is, they so they still play with it. So they're not going to charge $1,000 for something. They're going to $999. But and and nine thousand nine hundred ninety nine dollars but That to me is like a step in that direction.
00:45:34
Plant People
And if you're offering a smaller scale artisanal special product, there can also be a feeling of like honesty or communicating, you know, authentically and truly here's look, there's no, there's no baloney on this.
00:45:34
Alexis
Mm-hmm.
00:45:46
Plant People
This is how much it is. Um, so yeah, that's, that's another interesting one and in the spaces that we, we are in. um
00:45:54
Alexis
Oh, that's a good point. I never thought about the fact that they didn't use decimals since you know they don't say 999 and 99 cents. Like you just, you round up the dollar in your brain.
00:46:02
Plant People
Right.
00:46:04
Alexis
Yeah.
00:46:05
Plant People
Yeah. Well, and like another example would be like, if you go to a really hip artisanal coffee shop, often you'll see Americano four, you know, there there's not even a dollar sign.
00:46:17
Alexis
yeah
00:46:17
Plant People
It's like the number four. Now go to a, like more of a, like a a less hip one.
00:46:20
Alexis
yeah
00:46:23
Plant People
Maybe it's like this coffee's a, you know, $1.50 go to McDonald's and it's 99 cents or it's, you know, $1.19 whatever.
00:46:29
Alexis
Right.
00:46:31
Plant People
And I think that that you know where where are you falling in the spectrum? You don't have to quite be that chic and that hip, but you also don't have to charge $3.99 for your tomatoes.
00:46:36
Alexis
Mm-hmm. Mm-hmm. yeah
00:46:42
Plant People
You can just say they're $4 a pound and and people might appreciate that or associate something with that. um A last one here that I thought maybe ah this isn't necessarily how to price your products, but it's like kind of how to stand behind your price and the value.
00:46:59
Alexis
Yeah. it
00:47:00
Plant People
There's a little bit of like a pep talk coming, I guess. So you've done the math. You've done, you know what your costs are. You know how much money you need to make. You've done a little bit of market research. You've done, you've seen with the prices out in the, in the ether, in the surrounding spaces, whether that be grocery store, or other vendors, other, businesses, other, what where depending on where you are.
00:47:21
Plant People
And you know, based on your costs, this is how much money I need to make. And this is a fair price in the market. And then you do your jiggery pokery to figure out exactly where you're going to price your product.
00:47:34
Plant People
Well, you now know the value of your product. You know, it's value in the marketplace. You know, it's cost, you know, all those things. Now is not the time to get sheepish.
00:47:44
Alexis
Yeah. Done the work.
00:47:47
Plant People
You've done the work. You you have a you know ground to stand on. And guess what? People, some people are always going to complain about it. Some people will come up and just ask and you will think that they're complaining and you'll preemptively get sheepish about it. and like oh But the example that I kind of sketched out here was Somebody comes up and asks, you know, how much are these ah these tomatoes?
00:48:12
Plant People
And let's say you are in a market where charging $4 a pound for your tomatoes is borderline scandalous.
00:48:21
Plant People
You may feel like, oh, I'm going to almost have to apologize. But if you go into that interaction, people respect confidence. They respond to confidence. If you go into that saying, oh, you know, they're $4 pound.
00:48:34
Alexis
What?
00:48:35
Plant People
What? $4 a pound? Oh my. yeah As compared to saying they're $4 a pound. That's actually, ah you know, this heirloom variety that ah we really like because it's really flavorful.
00:48:48
Plant People
And we actually picked those this morning. It's a very different tone. You're explaining the value, the special value of the thing. You're always going to have people complain. You're always always going to have people who want to buy
00:48:57
Alexis
Sure.
00:49:00
Plant People
three pounds of tomatoes at 1978 prices. And there's nothing you could do about that. But the idea of being confident and in your product, that it's special, it's unique, it's good. Again, we're we're working to differentiate as a way to make value clear to the customer.
00:49:18
Plant People
You're going to have to stand on business.
00:49:20
Alexis
Yeah. I want you to internalize, and this, I feel like it changed the game for me when I finally like really internalized this was like, not everyone is your customer. Sure. We're trying to be as broad, right? Cause that's good for business, but not everyone is your customer. And even more, here's, here's the one that, that personally still gets me sometimes. you might not be your own customer. And sometimes I think we see farmers do that because they under we naturally undervalue what we do. And so in our brain, it's crazy to spend $4 a pound on tomatoes because you know you know what went into it and stuff. And you know you're probably forgetting all the labor and sweat and tears you put into it usually. But it's a lot easier for us to undervalue it because we walk out to pick it, right? Or I think for a lot of people, maybe not all of you, send me your wisdom. but
00:50:09
Alexis
Not everybody is your customer. That is an okay thing. That's often better for business. You can find your customer and and help them better. And also, you might not be your own customer. And man, when I learned that, someone said that in the flower world, because and I was like,
00:50:26
Alexis
oh yeah, that's a fact. I'm a cheapo. you know So in some ways you might not be, but that doesn't mean your product isn't worth it.
00:50:30
Plant People
Right.
00:50:34
Alexis
You did like Brett said, you did the research and, you know, so stand by it with confidence. You, you, you got the receipts to back you up. So.
00:50:43
Plant People
I think to that point about that, it could be also that some markets aren't your markets. It's not just even individual consumers. If you go to a certain you know farmer's market or you pitch your CSA in a certain geographical location and people are all balking at the price, that does not mean that what you have is not valuable.
00:51:00
Alexis
Right.
00:51:05
Plant People
It does not mean that your price is wrong. It could mean those things, but it does not necessarily mean those things. It just means that's not necessarily the place that you need to go and sell. And I think This is one of those business management components to the work that we do that I would say gets frustrating.
00:51:21
Plant People
i get frustrated on behalf of the the people that are asking the questions is that people seem to go into a situation determined that they want to do everything that they can to make a marketing situation work.
00:51:24
Alexis
it's hard.
00:51:34
Alexis
Yep.
00:51:36
Plant People
And the way that this is actually supposed to work is that you offer your product at at the price that you need, the buyer decides whether they're gonna purchase it or not, and then over the course of time, you realize this isn't profitable for me, I'm gonna change tack or whatever.
00:51:45
Alexis
Mm-hmm.
00:51:52
Plant People
It's not, I'm gonna put myself through a whole world of pain to convince these people that what I'm offering is worth what I'm asking or reduce the amount that I'm asking so that they will at least show me a little bit of love and buy something.
00:51:56
Alexis
sister
00:52:06
Plant People
Sometimes it is about like, this isn't going to work for me.
00:52:11
Alexis
Yeah. Mm-hmm.
00:52:11
Plant People
And that's, it's a hard conversation to have because people will have bought a farm in a particular place and they thought that they could make a market work or whatever. ah But there, there are many situations where you have set the price correctly and it's not about your numbers are wrong. It's about your expectations of the market or of the people in a place.
00:52:34
Plant People
It's about how highly valued what you offer is in that particular place or space. um And in some cases, you can communicate your way out of that.
00:52:41
Alexis
Yeah. Mm-hmm.
00:52:45
Plant People
You can say, here's why my product is special. And some people will hear that and they say, i hear you, but it's not $4 pound special.
00:52:52
Alexis
yeah
00:52:54
Plant People
And there's not really a whole lot you can, I mean, you can't really do a whole lot to to change people's mind necessarily in that case. Like you might think about offering some samples or you may try, you know, there's some mitigation you can do, but there needs to be a little bit of a matchup, I think, of values in the first place before you.
00:53:09
Alexis
Yeah, yeah. Just ah we're we're here to to tell you or remind you that it is okay to switch gears in business. And so whether it's what you grow, what you price, you know, where, where you market it that like, you don't have to have gotten it right the first time or the second time you know, at two rodeos is not a whole lot of rodeos to know to supposed to know what you're doing.
00:53:32
Plant People
It's not a lot of rodeos.
00:53:33
Alexis
Right. So ah we're just here to remind you it's okay to switch gears, but you've got to know your numbers to do that. So knowing your cost of production is ah just a really great place to start. um If you're not sure if,
00:53:45
Plant People
Yeah. So let's, let's, let's go with a couple, like, let's think, think of a couple of examples of what, ah what was the word that you used pivot or what what did you, what was the word you said?
00:53:56
Alexis
ah i don't know what i I don't know what I said.
00:53:59
Plant People
I'm now I'm fixated on roadie.
00:53:59
Alexis
You weren't listening two rodeos.
00:54:01
Plant People
Now I'm just thinking about two rodeos. Isn't that many rodeos?
00:54:05
Alexis
yeah This ain't my first rodeo.
00:54:07
Plant People
Yeah. You need to up.
00:54:08
Alexis
like i'm supposed to have it figured out by my second rodeo?
00:54:08
Plant People
Yeah. Uh,
00:54:11
Alexis
That's not very many rodeos.
00:54:13
Plant People
So one one example would be, let's say ah we'll stick with the flowers for a second. It could be that you are ah flower grower.
00:54:23
Plant People
You are nerding out. You're into it. You're bulbs, you're corms, you're tubers, you're grace, you are seeds, you are power, you are the energy of that sacred flower and you love it so much.
00:54:29
Alexis
Mm-hmm. Get it.
00:54:39
Plant People
And naturally, you gravitate toward growing some crazy stuff that is hard to grow.
00:54:44
Alexis
Mm-hmm.
00:54:46
Plant People
It's hard to hold.
00:54:46
Alexis
It's
00:54:47
Plant People
It's hard to store. It's hard to do all those things.
00:54:50
Alexis
expensive to buy, all those things.
00:54:51
Plant People
Expensive to buy. And if you were in Nashville, if you were in New York, you would have to be fighting people off to buy these products from you.
00:55:04
Plant People
But you're not in New York. You are in a rural Kentucky County and you are selling primarily at your farm stand or at your farmer's market, et cetera. You try it for a little while, no matter what people say, dinner plate Dahlia, they're not going to spend, what is $4 a stem, $10 a stem?
00:55:25
Plant People
I don't even know.
00:55:26
Alexis
yeah five to six mm-hmm
00:55:26
Plant People
$5 to $6 a stem, that's insane to them. How, how, what would be some angles that you might think about for pivoting ah in that case?
00:55:36
Alexis
Yeah. I had a similar question actually come up at Oak Conference and in a certain way. and But you know my first things are, ah do you have the ability to switch markets is usually my first question. Because to me, as ah as a plant person, as a horticulturist, it's ah it's a lot easier to shift markets. Again, this is just my personal plant nerdness. It's a lot easier to switch markets than to totally switch your production practices, especially if you're dealing with some crops like Example with Dahlia that's a little bit more perennial based. You've invested a lot of money into it. So I would say, can you switch markets is my first question. And if they say no, or I don't really want to, then it comes down. The next thing is, um okay, do you know your, usually i ask this first, but it's like, if you know your cost of production, you know, can you bring that price down? You know, what are, where are you basing your price off of? Is it fair market value? And, you know, they might say, yes, this is, i have to get this in order to make money.
00:56:34
Alexis
Totally fine. Love that for you. The next question then is you don't want to switch markets. You can't change your price. You've got to change your product if you want to stay in that market. So instead of the five, $6 Dahlia dinner plate Dahlias, maybe grow smaller Dahlias that are two to $3. Or if, you know, people are just wanting, you know, bulk buckets or something like that. So you can have that available where they feel like they're getting a deal. um you know there's ah There's a couple different things. Or Grozenius. And sometimes that's what people you know give the people what they want. And you you may even be able to have a higher markup on those just to you know make it worth it for you. But to them, it's only a dollar a stem. But maybe you're making 40% markup on that versus sometimes with dahlias, it might be a $5 or $6 stem, but you might only be making 20% markup, right? So those are like kind of the places that I would start. um
00:57:28
Alexis
Usually in the flower world, changing the market is going to be... um a good way to go because there are lots of options. And so it's not necessarily like changing the farmer's market you go to. That could definitely be it going to a more popular you know place where people have more funds to expend on a luxury item. But it could also be, oh you're going to do DIY buckets for brides or something like that. And so it might just be that you switch the type of type of product you sell as far as packaging goes. You're still selling the dinner plate dahlias, but you're going to sell them to a bride for $5 instead of at the farmer's market.
00:58:05
Alexis
So that's that's usually how I start with things.
00:58:05
Plant People
Yeah.
00:58:07
Alexis
And I think it's pretty similar with, you know, veg, um you know, fruit, other things along those lines as well.
00:58:14
Plant People
I think within that too, one thing I would point out is that it can be a blend of those things that
00:58:20
Alexis
Mm-hmm.
00:58:21
Plant People
It's like, okay, y'all don't love my dinner plate dahlias.
00:58:22
Alexis
Very true.
00:58:25
Plant People
I'm going to go find somebody who does, but I still like selling to you all because you like to buy bouquets for $5 or $10 each.
00:58:25
Alexis
Mm-hmm.
00:58:32
Plant People
I'm going to give you a $5 bouquet according to my price structure.
00:58:33
Alexis
Yeah.
00:58:35
Alexis
Right.
00:58:36
Plant People
I don't mean that in in like a vindictive way. like I'm going to give y'all a $5.
00:58:39
Alexis
Yeah, no, it's just like, you maybe you want to stay involved with the community so that, you know, from, ah again, from a flower perspective, people might not be buying dinner plate diets from every week, but they know you have them.
00:58:40
Plant People
Yeah.
00:58:49
Alexis
So when they do get married, they know to come to you. Right. So it's, you're almost using it as like a marketing way.
00:58:55
Plant People
Or in some cases, you may end up making more money selling $200 bouquets than you did on 10 of your dinner plate dahlias.
00:58:55
Alexis
Yep.
00:59:02
Alexis
Yep.
00:59:05
Alexis
Totally.
00:59:05
Plant People
And that becomes this like, okay, what's the what's the local value? What's the local price point? And then working backward from that price point to think, okay, I know I can produce this kind of bouquet for $5.
00:59:16
Alexis
Mm-hmm.
00:59:17
Plant People
um Yeah, I think that like another example would be in the like in the veg world, it could be that you produce some really specialty cool ah pickling cucumbers.
00:59:29
Alexis
Mm-hmm.
00:59:30
Plant People
they're ah They're a vintage variety. They're special people like they make the best pickles. They fert stay firm in the jar.
00:59:36
Alexis
Or they
00:59:37
Plant People
They do whatever, blah, blah, blah, blah. blah People around you just don't care. Like they, they like, they know that they're good.
00:59:43
Alexis
don't can or yeah.
00:59:45
Plant People
And the one, the couple, the you know, the, the handful you gave them that they tried, they were like, those are the best pickles I've ever made.
00:59:46
Alexis
They trust you.
00:59:50
Plant People
But three for, you know, or two for a dollar is too, too rich for my blood. I'm not going to buy them.
00:59:56
Alexis
Mm-hmm.
00:59:57
Plant People
Those same people might not blink an eye at paying $8 for a quart or a pint of those. And you may be able to take your product, get it into a jar,
01:00:10
Plant People
market it locally, but also market it elsewhere. You know, that you can actually ship stuff.
01:00:13
Alexis
Yeah.
01:00:15
Plant People
You can sell online. You can sell a value-added product, assuming you're complying with all processing requirements, ada yada, yada, yada.
01:00:16
Alexis
Mm-hmm.
01:00:22
Plant People
You can sell that online in a way that you could not possibly have done, you know, into your local market. And instead, you realize that people in the local market, they really just want some ah ah sweet corn and you're able to grow sweet corn super easy.
01:00:40
Plant People
You can harvest it super easy. You can bring it in. soon as you sell out, you hit the road and you're just a specialty corn specialist or you're a a sweet corn specialist locally and you take all your specialty products and you sell them into some other markets that maybe value them more highly or ah add value to them so that that, you know, $2 worth of retail cucumbers becomes $10 of retail pickles or whatever.
01:01:05
Alexis
Mm-hmm.
01:01:05
Plant People
um So anyway, that's just another like another example of maybe adjusting. you You see the price point, you know what you need to make. It's not working. Adjust the market, adjust the product, adjust your expectations and your messaging. If you've done all those, might be time to to move on from from that particular thing. So we've gone we've gone a while, but you know pricing is one of those things people like to talk about and we get amped on.
01:01:29
Alexis
We get endless questions about pricing. It's hard. It's hard. But, you know, I think if you've hopefully taken anything away from this, it has been that in order to do anything, you need to know the cost of production and don't forget your labor in there. And that can be scary, but you're not in trouble if, you know, you're not charging enough when you include your labor. That's just a mark that you need to get to. Right. So ah It's better to, Brett gave the example to me the other day of the of the pink pink elephant. Can you give that one real quick? I love it.
01:02:00
Plant People
Yeah, so I have a presentation and i it start it has three slides the or four slides. One of them is ah just it starts with just jet, it just black, solid black. The room, there's there's an item in this room and the lights are off. Who can tell me what this item is? Of course, nobody has any idea what it is.
01:02:16
Plant People
And so then I have a next slide where it's this blurry outline. The edges are blurry, but you can see that it's kind of a pink blob in the middle. Who has some idea of what this is or something about what this is. Okay. It's pink.
01:02:32
Plant People
It's kind of roundish. It's surrounded by a white border. Okay. We have more information now than we did before.
01:02:37
Alexis
Right.
01:02:38
Plant People
Slightly less blurry picture. You can now see the outline. You can kind of tell that this is a, an elephant. Okay. So it's a pink elephant. And then I switch again and I go to a fully clear picture and the fully in the the pink elephant, I think has a name tag that says Fred.
01:02:52
Alexis
Bandana on them, sorry. Yeah.
01:02:55
Plant People
And so, A shot in the dark, this is an app this is a metaphor for our costs and our understanding of our business underlying business um vitals, if you will, is that a shot in the dark is worse than an educated guess.
01:03:13
Alexis
Yes.
01:03:14
Plant People
An educated guess is is better than a shot in the dark is another way of saying that. And then an educated guess that is improved by some analytics to the point to being like a good approximation is better than an educated guess. And then a clear eyed picture. So it's better to know this is a blob and it's pink.
01:03:30
Plant People
I can at least get in the ballpark of what we might be than just no information at all.
01:03:33
Alexis
Right.
01:03:34
Plant People
I don't have to get all the way to this is a pink elephant named Fred and he's smiling in order to have some decent information to to yeah to help to try to assure some success.
01:03:39
Alexis
To be successful.
01:03:42
Alexis
Mm-hmm.
01:03:44
Plant People
And so that's just a pitch for trying to get some information down and then working toward improving that across time until you're able to say, because if you can tell me, I know it costs me between 50 cents and a dollar to produce a pound of tomatoes.
01:04:02
Plant People
Instead of, I know that it it costs me 63 cents to produce a pound of tomatoes. Okay. I mean, 63 cents would be better, but between 50 and a dollar it can get us a long way opposed to, i don't have any idea.
01:04:15
Plant People
I don't know.
01:04:15
Alexis
Yeah. Yeah. Yeah.
01:04:17
Plant People
So, yeah.
01:04:17
Alexis
Well, i I just, I love that. i love the the visual that that does. And and hopefully that makes it seem less less scary, right? Like all I got to do is like at a minimum produce a pink blob, right?
01:04:28
Alexis
Pink blob is better than nothing. So let me let me at least try the pink blob approach.
01:04:32
Plant People
had the pink blob
01:04:33
Alexis
Well, we hope you gained something out of this. If you have questions about pricing, of course, check out any of our resources on the Center for Crop Diversification. That's ccd.uky.edu. You can also shoot us an email when you email us on our Hort Culture One. All four of us will get that email. And the person that is the smartest on that topic will will hopefully email you back. And by hopefully, I mean, hopefully it's a smart one, but someone definitely will. But we appreciate you being here with us today and we hope you'll join us next time.
01:05:04
Alexis
Have a great one.