Plants, Having hard time pricing my product

[gardeningangel]

I have been in business for 7 years now, my prices are low and am having hard time pricing my products. I have 12" hanging baskets was 17.95 now$19.95, 6 and 4 packs was .99 now $1.15 ea, 4"Perennials was 1.45 now1.95, 4"Herbs was 1.45 now1.75, 2 Gallon Roses Jackson and perkins was 12.95 now 14.95, Accent plants 4" pots have always been $2.45, 8" Zonal Geraniums 6.99, 6" Tomato Pots was 1.50 now 1.95, 1 gallon Perennials was 2.50 now 3.95. Assorted other assorted plants too many to list.

Last year they were brought up quite a bit but still not comparable with other local businesses. I am very bad at pricing my products but feel I did a big jump last year. I don't want anyone to think I am greedy and a ripping them off. I am finally going to start paying myself $500 a month salary and possibly $500 in rent. I just recently Incorporated to help with taxes and other assorted benefits coming with incorporating. I wished they had spell checker here. [img]/forums/images/icons/blush.gif[/img]

My question is I just can't bring the prices up to meet others prices, I am really trying hard to mentally prepare myself for this price raise and it is hard to accept. Sounds silly huh? If I can't make a living off retail my next plan is to wholesale, reducing the employees needed to stay and wait on customers, but having to buy a van to deliver plants. I think since I am incorporated I may have a easier time pricing since I am now an employee and making decisions to make the company succeed.

Incorporating I know will help with taxes not that I have had to pay any yet since I am in the red. My lawyer says I should lease the greenhouses and shop to myself for possibly $500 a month. I have 2 vehicles a 97 flatbed chevy and 85 GMC, a tractor maybe 10 years old and equipment to go with the tractor, would it be a good idea to sell the vehicles and tractor to the business and pay a yearly payment or lease the vehicles? I own all vehicles, is there some tax advantage to either way? [img]/forums/images/icons/confused.gif[/img] [img]/forums/images/icons/confused.gif[/img]

Is there anyone to give me advice on making it ok to have competitive prices with local business, they are bigger and a off spring of a very large business in Boise. So I feel like a little fish with below average products and my customers say my plants are much better than the other greenhouse, but they do have a larger variety of certain things. I have 3 greenhouses 2- 145 ft and 1- 95 ft, the other greenhouse I worked at and has I think 26 greenhouses, when I started working there we had 5- greenhouses. My husband was great at pricing, he went to college for business and sold those plants wholesale like candy to those Albertsons and Zamzows. Man he was a great salesman!!!


Any advice would be appreciated. [img]/forums/images/icons/confused.gif[/img]

[RichZ]

Ruth, we had similar problems on our farm. Between having trouble pricing, and not knowing when to invest in equipment, livestock, etc. What we finally did was hire a local farm accountant. We meet with her several times each year to go over our buisness, and she gives us advice on all of these issues. She works a lot with the local cooperative extension, and her husband and her also are farmers, though she is a CPA and had also worked for the IRS. Obviously, she also does our taxes also.

At first we were afraid of the expense of having an accountant, but it truns out that her fees are very reasonable, and well worth it. She's paid for herself many times over, and once even got us out of deep dodo when the IRS made some sort of computer error and sent us a very threatening letter saying that we owed tens of thousands of dollars. I knew it was a mistake, but I had no clue how to deal with them. She took the letter and made several phone calls and we got a letter saying that we no longer owed anything (of course no admission that THEY made the mistake).

Anyway, hopefully there is someone in your area like that. If so contract with hi/her. It is money well spent. Check with your cooperative extension for someone to help you.

[gardeningangel]

Hi Rich
Farm Accountant? Cool, I will check on that. I have a CPA but the only advice she gives me is youll make more working for someone else. Thats not the idea, yes I can go back east and make 70k a year but I love my home and my customers. All I want to do is make a living not a killing.

I have had lots of chances to expand, had a man come and offer money to build more greenhouses. I am stubborn, if I can't make it on my own, why do it? I politely refused but appreciated the confidence he had in me. My CPA is $100 a hour, its hard to pay the bill and she don't charge me for everything, she is very nice but worries about us.

I get my greenhouse magazines that have help wanted posts in back, oh my the money they pay for the job I do here and did at the other place. I don't believe I am asking for too much, if I could make 15 a year I could live off that, I am living off less than that now.

I am not good at being tough, I am at times when I feel like I am being pushed into it. I guess this year is the big test.

Glad your IRS mess turned out ok, talked to a fella the other day he had to pay $20,000 to the IRS from somthing his accountant did wrong. [img]/forums/images/icons/frown.gif[/img]

[RichZ]

Good for you, Ruth!!! I feel the same about my farm. Hang in there, I think that you're a lot tougher than you realize.

Also, I should have mentioned before even going the accountant route, try contacting your cooperative extension. I don't know about your area, but my area has a person who's speciality is greenhouses. If you have such a cooperative extension person, he or she can probably advise you on what to do.

Good luck, and keep on plugging away, you'll make it work!!!

[gardeningangel]

Hi Rich

Thanks for the boost. Actually I am doing more than I ever imagined I could before. I had to go in front of Planning and Zoning asking for a special use permit, man that was hard. I about piddled on myself. [img]/forums/images/icons/crazy.gif[/img]

I don't think there is any specialty greenhouse person around here. When I went in for my building permits they tried pricing them at a regular building my size. I had no foundation except every 5 ft for the bars and at the ends was railroad ties, and plastic for a roof. We went our rounds about that. They tried to say it was worth 50 thousand each greenhouse and it cost less than 10 each.

I will check with the Extension Agent. Thanks again.
[img]/forums/images/icons/grin.gif[/img]
Ruth

[DUMBDOG]

First of all, why are we really incorporating? In your case it will not save you any money if you are operating in the red. It will cost you money if you pay yourself a salary with all of the associated payroll taxes and paperwork. In your situation the only thing that incorporating will do is protect yourself in the case of legal liability and in most cases they will go after your self if the corporation has no assets. A good liability policy will do the same, you should have this if incorporated or not. When a corporation or any other employer pays wages, they have to match the social security, in addition there is federal and state unemployment insurance. There is also workmen's compensation insurance. All of these costs get quite expensive, there is also taxation at the corporate level.

A limited liability company maybe a better route to go, maybe.

[DUMBDOG]

You state that your prices are lower than the others yet you have better plants. Why is this? People will pay a premium for a better product. Check out the competition and see what there prices are, most will have a loss leader to get people in the door.

If you feel that you must be lower than the rest, price your products at five per cent less than the rest.

After selling at the local farmers market for five years, I finally turned a small profit last year. It was a total of $355.

I did not have enough product in some areas or my plants were way behind, I ended up buying from some of the other vendors and they received half of the proceeds. I do not plan to have to do this again this year.

Carrots for example are a hot selling item in our market. Most of the vendors were selling them last year. Mine were bagged into one pound bags and I charged $2 per bag. I ran out of carrots in August. Other vendors were charging a dollar a pound.

I ran out of beets before the end of the selling season, I was charging $2 for a bag with one and half pounds or $5 for a four pound bag. Every one else was charging a dollar per pound.

I did have 3200 feet of carrots and 2000 feet of beets.

[DUMBDOG]

The reason that my profit has been in the negative for four of the last five years is that I am a start up operation with all new equipment, including purchased land. Once the equipment is depreciated out in a few more years, I will be able to relax a little bit and drop the 100 hour work weeks down to 90 or so during the picking and selling season. [img]/forums/images/icons/crazy.gif[/img]

We started out the first year planting all forty acres and are down to about 15 each year now. It is my retired brother and sister who help out mornings, the wife and I. I have a son who cannot work due to his back, he helps sell when he can and I have another sister who helps sell on occasion.

The whole point being is that profit is not a dirty word. What you and I do requires a lot of work and capital to keep going.

It is not wrong to charge a fair price for our product. With the increased cost of fuel in the last couple of years, either to till the land, take it to market or to heat the greenhouse, the other costs have gone up as well, the pots for transplanting, repairs, etc.

Price your product close to the competition, try to make some money doing it and have fun. [img]/forums/images/icons/grin.gif[/img]

[gardeningangel]

I guess what I am saying is I have not been able to pay myself for 6 1/2 years. Last year when I raised my prices I did sell more. I never owe anyone money just never have enough to pay myself till now. I have a bunch of bills in the spring so its hard to see whats left till July every year. I feel like my season is from July to June 30. I have been afraid to pay myself because there may not be enough in the bank to pay employees, till this year. It looks good, but there is always those unexpected wind storms, or crop failure of petunias which it seems like every year something happens.

Well I feel like if there is a problem again I will have enough to take care of it and pay myself a small salary. I am a little anal where I want a buffer in case of a problem. I have my buffer now and want the salary,but I want a salary better than the $500.

My customers say my plants look really good but when I see my plants I see my flaws because I don't go check out others greenhouses, I am busy then. [img]/forums/images/icons/tongue.gif[/img]

Yes the Inc. will help because I have a lot of assets. You see I want it all set up before I get paid, I really do have so much I have put into this property, life insurance money, our other home money, and selling 35 acres and selling a couple vehicles,and I just don't want to lose it all. Sometimes I have over 20 customers cars in my parking lot. I have all the insurance I can get but I think the liability is maxed at 100,000. Not sure about that. I just want protection, I want to protect my home and do all I can to do that.

Every year in July I look at whats in the bank and see what my expenses were and there is exactly what I need for the next year's bills. I am feeling better about raising prices now seeing what positive impact it can have on the bank account [img]/forums/images/icons/wink.gif[/img]

I just went to see my lawyer and accountant and they told me I can have the busines buy the vehicles and tractor from me and lease the property which will bring in more income. I can't set a price for any of that till July.

I have had all the unemployment, workers comp .... all those things I should have so its no new expense. At times I have had up to 9 employees and only needed 2, others convinced me they could help but caused more confusion. I finally figured since it was my business I am the boss and can tell those whom I don't need to go home. [img]/forums/images/icons/frown.gif[/img] Man that was hard.


Wholy cow thats a lot of beets and carrots!!! All that bending over ..... I can just feel the pain when you go to picking. I love my work and see all these other people loving what they grow, when I first started had so many people coming and complaining about others prices, it got to me. Well after awhile people from out of town and out of state have been coming and telling me my prices are cheap. [img]/forums/images/icons/smirk.gif[/img] So last year something clicked. I am gonna try and listen to those giving advice and trying to help a struggling business and not listen so much to those that are trying to get my prices down for their own benefit.

I am giving my love of growing plants a lot of time. I have seen others that put everything they have into what drives them and finally give up and just walk away. I want to say I did all I could to make it work, its all a learning lesson. This pricing lesson is a long and hard one to learn. [img]/forums/images/icons/grin.gif[/img]

I understand when someone see's a pack of flowers and is upset because its so expensive, but they don't see that I paid 2,000 just for labels or 13,000 just for 1/2 of the supplies. When I go to the grocery store lately I have a little more understanding why the milk or butter went up. I don't get so angry about that anymore.

Farmers are so terribly underpaid. Its awful the suffering they go through just to feed us. Sometimes they work all year to do a crop and are ready to sell it and the bottom drops out, even though they paid a bunch in feed for the cows or prime prices for the seed, its unfair.

I think I am talking too much. [img]/forums/images/icons/blush.gif[/img]

[DUMBDOG]

A liability policy for $1,000,000 should be readily available. That is what I carry.