Last year, a handful of farms took a chance on me and piloted the early version of Cabbige. They agreed to test our pricing tool by entering harvest & sales data throughout the season, and, in return, received optimized recommended prices in a weekly e-mail.
I don’t know what their expectations were, but mine could be characterized by the old idiom: “Hope for the best. Expect the worst.”
Well, I got more than the best; not only was the pilot an overall success, but I got to see and hear up-close what the impact has been on our pilot farms’ businesses. Natick Community Organic Farm is a beautiful bit of paradise, just across the Wellesley/Natick line. I joined them for family lunch recently, where all the farm workers join for a communal meal; chatted with Casey, Lynda, Dina, and Becca about their business, the new version of Cabbige, and how it’s changed how they think about their prices and market.
The case study below highlights both the immediate impact of Cabbige’s pricing tool, but also how consistent use of Cabbige can inform long-term pricing and planning strategy for small farms.
Background: Natick Community Organic Farm (NCOF) is a small-scale, certified organic farm in Natick, Massachusetts. Under the leadership of Director Lynda Symkins and Assistant Director, Casey Townsend, NCOF produces a wide variety of vegetables, meat, eggs, and maple syrup for sale at their farm stand, various farmers’ markets, and to wholesale customers in the Metrowest region of Boston.
Challenge: Like many non-profit farms, NCOF’s heart is in land preservation and conservation, education programs that teach the next generation about the value of sustainable agriculture, and maintaining responsible stewardship of the land; and its head is in using revenue from the farm to make its programs and mission possible.
Solution: NCOF piloted Cabbige’s pricing tool from June – September 2014, tracking 6 distinct crops, including:
Kale/Collards, Mixed Greens, Flower Bouquets, Blueberries, Slicing Tomatoes, Cherry Tomatoes
NCOF entered harvest and sales data; Cabbige used that data to determine the current best price for their crops and sent them twice weekly price recommendations via e-mail. The recommended prices were highlighted green if the recommendation was higher than the previous price and red if it was lower.
Results: At various points in the season, NCOF altered their prices based on Cabbige’s price recommendations, and the results were very positive.
“Both Lynda and I really like the price recommendations and have been adjusting our prices based on them.” – Casey Townsend, Assistant Director
NCOF consistently sold a large percentage of its Kale/collards crop; with a high sell-through rate, Cabbige recommended a price increase, and NCOF raised the price from $2.50 to $3.00. Kale/collards continued to sell well after the price increase, and the 20% price increase allowed NCOF to capture 9.4% more revenue for this crop than they would have with the baseline $2.50 price.
NCOF also used Cabbige to help price a less consistent product: flower bouquets. Throughout the season, NCOF adjusted the price of its bouquets from $10.00 - $15.00/bunch. At the end of the season, analysis of the data entered into Cabbige revealed that the most consistently profitable price was ~$12.00/bunch. Cabbige measured the effective cost of each bunch (Revenue / Total Harvest) to factor revenue across both sold and unsold bunches. The results were an effective cost per bouquet (eCPB) of $5.59/bunch when priced at $10.00/bunch; $10.39/bunch when priced at $12.00/bunch; and $9.94/bunch when priced at $15.00/bunch.
With Cabbige, NCOF was able to earn more revenue over the course of the season and have the data needed to improve revenue and profitability into the future.