Show Me the Money!
A few days ago a customer asked if I could write about how we price our products. Since we're all about transparency, and I'm always on board with not coming up with blog ideas myself, this week's #whatswithWednesday is all about how we decide what to charge you.
The process for pricing beef and lamb is roughly the same. I start with the cost of production, factoring in the cost of pasture, fed grain, vet care, breeding, processing, etc. Then I look at what I would get if I took the same animal to the sale barn auction, rather than having it processed. This gives me a rough estimate of what the whole animal is worth, either live or hanging. Hanging refers to the weight/value of the carcass after it's been slaughtered, cleaned, and hung, but before it's divided in to the cuts you buy from us.
Then I look at the price of processing. There's a base price for slaughter, inspection, and cutting. Anything more processed gets charged at a higher rate, like smoking, sticks, etc. I also consider things like the mileage to the locker.
Next I shop around to see what the closest comparable product costs, both locally and at specialty grocers in larger towns. I can tell you we're actually not much at all above Wal-Mart or Fareway, and we're substantially less expensive than the co-op or a store like Trader Joe's.
Then I take what it costs me to produce an animal and figure my break even by pound, which is complicated by the fact that you lose approximately 40% of your animal between live and hanging, and another 40% between hanging and the freezer, depending on what cuts you order. The last step is straight supply and demand. For each steer we butcher we get a LOT of hamburger, but not a lot of steak. Lambs still take a lot of work, but yield a lot less meat, which is why the price is higher.
We also get a lot of questions about why wholesale pricing is lower. Our wholesale customers (restaurants, food hubs, etc) generally pre-order and tend to take much larger amounts at a time than an individual customer will. This means I spend a lot less money and time marketing to them and have pretty regular guaranteed sales. This gives us the stability to be more flexible with our market sales.
I hope this helps make sense of what can really be a pretty confusing process. We changed processors over the winter as well, which is why you may have noticed changes in some of our prices. We switched from a state inspected locker to a federally inspected locker because it helps us be able to sell to more customers as we can sell to federally funded institutions and across state lines.