Working out what to charge

Pricing works backwards from a unit cost that producers often understate, because the largest components do not feel like costs.

Build the unit cost honestly

Per jar: the spice at your real yield-adjusted cost, the jar, the closure, the label, the shrink band or seal if you use one, and a share of the outer case.

Then the part usually omitted: the time to fill, cap, label and pack one jar, at a rate you would actually pay somebody. If you would not pay a person to do it at that rate, you are not making money, you are buying yourself a job at a discount.

The line people forget

Yield. A kilogram bought is not a kilogram jarred, and the loss to cleaning, grinding and sifting can be substantial. Price against the cost of the spice that reaches the jar, not the invoice price per kilogram.

Also the cost of the lines that do not sell. A range where six lines fund fourteen slow ones has a real cost per selling unit considerably above its apparent one.

Wholesale and retail from one number

Start from unit cost. Wholesale is conventionally around twice it; retail around twice wholesale. Those multiples are a starting point rather than a rule, and the test is whether the product is viable at the wholesale number, because that is the number a growing business will increasingly sell at.

A product that only works at retail margin is a product that cannot take a wholesale account, which caps the business.

Sense-checking the result

Compare against other independent producers rather than against a supermarket. If you land far below them, you have probably understated your costs. If you land far above, check whether your jar is doing work your competitors solve more cheaply.

And check the shipped price for online, because at these unit values postage frequently exceeds the goods and a price that works at a market can be unsellable in a parcel.

References