I guess I named this a marketing and profitability thread, so I guess it is time we move in that direction.
I am by profession a salesman, so some of this may come second nature to me. If at any time you have any questions, feel free to stop me and ask questions.
Marketing and profitability is a huge wide open subject, but is applicable in everything you attempt to sell.
Profitability- In its simplest terms, it means calculating your costs, subtracting from your selling price, the left over being profit.
People can spend a LOT of time, making it confusing and calculating taxes, electricity, structure costs, etc... and while technically true, there are tax benefits, long term depreciation, things that cross my eyes, so basically for the purposes of this thread, I will count acquisition costs (how much it costs to buy chicks, piglets, calves, whatever), feed costs, processing costs, marketing costs, delivery costs, and that's about it until someone reminds me of something obvious that I have left out.
I will start small with eggs. If you take in consideration the cost to buy chicks, pullets, or laying hens, add in feed costs, it is very difficult to turn a profit at less than about $1.75 per dozen if my memory serves me correctly and that is pricing 50lb of layer feed at $10.00 which I am not sure even exists anymore. Now if you are in the business of selling hatching eggs, it could be very profitable if you have a following and sell your eggs within 10 days of hatching.
I have my farm set up to sell hogs, chicken and eggs. I am building a market for my products. It is slow going but it has been rewarding.
The bottom line regarding profit is knowing your cost and refusing to sell for less than that. It is one reason I don't sell in my own area and at local farm markets.
How do I get around it? That is called marketing.
When all this first started, I was given some chickens. I built them a coop and a run. They destroyed the ground, then predators got in. I now free range. My eggs are better than anyone elses eggs.
What would you do if you saw this as an ad?
Or, Farm eggs $2.00 doz.
Or, Cage free eggs, Free range eggs, pastured eggs.....
Marketing is all about differentiating yourself from everyone else that does what you do.
1st- We live in the internet age. You can get a website up with little to no cost. I have been working on mine for 3 years but it has attracted business since the day it went live. Mine is powered by Weebly but there are many places to choose from.
2nd- If you live in an ag area, it is awfully hard to market to people that do the same thing as you or has a relative or a friend that does. Then, it comes down to price. Look at a company like Omaha Steaks. Is their beef any better or worse than what you or I can find at a local farm? Why do they command premium pricing? Why don't we? I for one am working on it. I turn down business that is not profitable, and go after business that is.
3rd- Your story- Your story is unique. Give of yourself and people will identify with you and want to do business with you just because you are you.
4th- People love to buy but hate to be sold. Tell your story but don't push your product upon them. Use your resources to tell the story and let them ask. THAT is the power.
5th- Know your market- In these trying economic times, is there anyone that can afford your premium product? Yes there are and I am proof of it. I have told my story and people have responded.
Economics 101- If I sell widgets that cost x..... If I have hogs that cost $75.00 each, feed them 800lbs of feed @ $.20 lb = $160.00 raise them to 225 lbs or 180lbs hanging weight. Processing $40.00 kill, $.40lb to package = 104.00 equals $339.00 or $1.88lb.
If I sell my pork for $2.50 per lb that equals $.62lb profit or $111.60 per hog.
If I have a story and the right customers and sell for $3.99lb or $2.11lb profit or $379.80 per hog.
20 hogs at $379.80 per hog profit equals $7596.00 profit. To do that at $.62lb you would have to sell 68 hogs to make up the difference. I don't know about you, but raising 20 hogs is a lot easier and less capital intensive (less expensive) than 68 hogs. I can raise 20 hogs on my 4 acres, 68.... no way. Well.... I suppose I could, that would be 34 hogs per 6 months, but if and when I have that many customers my profit would be $25,826.40 and guess what? I could afford to outsource the raising of those hogs that feels that $2.50lb is good profit.
Shall I do the same for meat chickens?