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Polypay, Targhee and Columbia
sheep on the USDA/University of Idaho sheep experiment station.
Photo by Edwin Remsberg. |
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Stand By Your Price
The easiest way to determine your price is to start with the cow
and work your way to the consumer. It costs you x to make a 500-
pound calf, x to finish it, x to process it, and x to store, transport,
package and dis-tribute it. Once you know all that, you can simply
add what you think is a fair profit. You may end up having to revise
it, but at least you will know where your break-even point is. The
point is to create a price and stick to it. You can count on folks
trying to talk you down. Don’t take it personally. This is
how the commodity game is played. However, don’t be afraid
to turn some folks down because of price. You can’t be all
things to all people, and there are plenty of other places a person
can find cheap beef.
Items to be worked into your price:
• Cost of creating a saleable animal (labor, supplement,
replacement cost, etc.)
• Land
• Finishing
• Transportation to slaughter facility
• Slaughter fee
• Processing
• Packaging
• Storage
• Transportation to retail
• Promotion
If you are still not sure that your prices are in line with what
the customer will pay, go to a big natural foods store in the nearest
thriving metropolis, and check out the prices. Write down the price
of each cut, per pound, and compare them with yours. Figure that
the retail price is about 30 per-cent higher than what the wholesaler
sold it for. If they ask what the heck you’re doing, you can
always say that you are planning a big shindig and are on a tight
budget.
One mistake we made early on was not pricing our beef high enough.
People didn’t perceive this as a bargain. They perceived our
beef as inferior to beef that sold for a higher price. So we simply
priced ourselves higher and made everyone happy.
Refer to Factors that Impact Your Bottom Line (p. 84) for more
tips on pricing.
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