Maine Organic Farmers and Gardeners Association
Organic Farmer Toolkit: Setting Prices

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Setting prices – Setting prices should be based primarily on costs of production and profit goals, which an agriculture business can assess using enterprise evaluation tools. However, this section includes a variety of resources that help business owners evaluate organic prices at different market channels and regions, investigate pricing methods based on sales volume, and learn more about how to articulate why small-scale, organic production may cost consumers more.

Jump to:

Value-Based Pricing Method

Explaining Why Organic Products May Cost More

Sources of Organic Price Data

MOFGA Organic Price Reports – From 2006 through the present, MOFGA has created price reports based on Maine certified organic producer data. These reports typically represent direct-to-consumer sales but also include some small-volume wholesale sales; they usually include information from 20 to 30 producers; and they usually include few livestock products.

Vermont Monthly Farmers’ Market Report – These reports list both organic and conventional prices from a sampling of Vermont’s farmers’ markets for fruits, vegetables and a variety of proteins. From the link above, scroll to the bottom of the page. The price reports there are not listed in chronological order but report through October 2016.

USDA National Retail Report: Local and Organic – These price reports from the USDA Agricultural Marketing Service include advertised pricing at major retail supermarkets nationwide for both local and organic products (scroll down for organic). They include fruits, vegetables, meat, poultry and dairy.

USDA AMS "Run a Custom Report" – This service pulls data from any of the USDA’s market news reports. Start from the page hyperlinked above, choose a category, and you can then sort for any product type you are interested in, and choose organic specific information. Once you generate a report you can sort by region, date ranges, etc.

Value-Based Pricing

Most pricing methods are based on either competitor pricing (i.e., using price reports) or (much better) cost-plus pricing (knowing your costs of production and adding a certain percent for desired profit margin). The most lucrative pricing method often is considered to be value-based, which takes the previous two methods into consideration and factors in the consumer’s willingness to pay – i.e., the additional value the consumer places on your product. Value-based pricing is difficult to calculate for most small business owners but could be evaluated based on sales volume: If you are using cost-plus pricing and are still selling through your inventory, this could suggest that you could charge a higher price without reducing the overall volume of sales.

Cabbige – This software helps farmers achieve value-based pricing. After entering your harvest and sales into Cabbige, its proprietary pricing algorithm determines the most profitable price for your crops. In the 2014 pilot, participating New England farms saw a 9.6 percent increase in revenue. However, using Cabbige could duplicate record-keeping for some farms. This subscription program costs $36/month, but a free 30-day trial is available with no credit card info required.

Reading on Value-Based Pricing

A Quick Guide to Value-Based Pricing (Harvard Business Review)

Value-Based Pricing 101 (Price Intelligently)

Explaining Why Organic Products May Cost More
Check out our Organic Pricing Talking Points (PDF 66K)

First note that organic products don't always cost more, even if they probably should. A few informal evaluations demonstrate that sometimes organic products can be more affordable (see here and here; the first piece, from The Cornucopia Institute, has some great considerations regarding the myth that organic is elitist). Even when organic food does cost more, sometimes the premium is surprisingly small. This great study by the USDA Economic Research Service from 2016 has a lot of information about which organic products have the highest and lowest price premiums. This review by Business Insider is less rigorous but has similar conclusions. Finally, the Vermont Agency of Agriculture Food & Markets produced a helpful report that determines that organic produce at farmers' markets is almost always competitively priced with that at grocery stores. I have all of the links above saved as PDFs, so just let me know if any of them disappear from the internet.

Organic Pricing Talking Points

PLEASE NOTE: At the end of 2017, MOFGA will produce a pricing analysis that looks at

– pricing at farmers' markets, natural food stores and grocery stores

– pricing in different regions of Maine

– pricing at different times of the year: May, August and October

– how this information compares with the last pricing analysis we did in 2012, which reviewed data in MOFGA price reports from 2006 to 2011

This publication will show how organic pricing has (or has not) changed over time in Maine. Initial results will be discussed at our 2017 Farmer to Farmer conference.