Entrepreneurs consider pricing way too late
and may cheat themselves in the process, report claims
“On average, companies spend two to three years on product research and development, 12 to 18 months on go-to-market planning and execution, and just under eight hours on pricing.” So states the provocative claim that opens a comprehensive new pricing report, prepared by Pricing Innovations, LLC, for the Agricultural Utilization Research Institute (AURI). The report is now available for download here. The 58-page document contends pricing considerations should go well beyond covering the costs of goods sold plus an often arbitrary margin. For example, when addressed early in the process, companies can design products in ways that will yield the highest possible margins.
“This report is a must-read for food entrepreneurs to develop strategies for pricing their products,” says Shannon Schlecht, executive director of AURI. “Consumers make purchase decisions based on perceived value, and this report explores ways to create value for innovative food products – with opportunities in production, packaging, channel, promotion, and distribution.”
The report offers the proprietary “Food Pricing CanvasTM” to help companies develop their pricing strategies. It consists of 10 sections, each representing a structural component of a business, product, or market. Each section helps food entrepreneurs design a pricing plan by using scenario testing to validate the financial outcomes of strategic and tactical decisions.
Finally, the report includes a “sample food business growth plan” and a demonstration video created especially for AURI, viewable here.