Discounts can be valuable. They reward high-volume shoppers and create customer loyalty. But discounts must also be managed in a way that accomplishes both of those goals without sacrificing your own labor.
With farming, where profitability is all about the details, it is important to think about discounts long before they ever come up. Think about anywhere you might need or want to discount your produce and map out a plan because making up discounts on the fly may lead to discounting yourself out of any profit.
Before you get started, think about how you can standardize your discounts. When you approach a potentially large client, such as a grocery store or restaurant, what are you going to say when they ask about bulk discounts? Make sure that you have that answer ready and that it is always the same.
I recommended basing your discounts on price, not on poundage. For instance, any order over $100 (that’s arbitrary, but not unreasonable) gets 10 percent off. If you want to offer different tiers of discounts—such as 10 percent at a $100, 12 percent at $150, and so on—that can be nice, too. This encourages people to buy more product and rewards them when they do. Plus, it’s easier for you to keep up with.
Discounts by Volume
Discounting by price is simpler than discounting by volume, but that doesn’t mean volume doesn’t work. What makes it hard is that volume can mean different things for different items depending on if they are sold in bunches, pounds, pints, et cetera. That said, there are many people who discount by cases—5 cases equals a 10 percent discount, for instance—so no matter how much they spend, the customer gets a discount after he or she orders a certain number of cases of this or that product from you. This may not lend itself well to smaller restaurants and retailers that don’t buy more than a couple cases at a time, but it may also encourage them to buy more from you in general.
Discounts On Excess
One place you should discount your produce carefully is on excess. Sometimes, especially with fruiting crops in the middle of the season, you need someone too buy the cucumbers. There is no shame in running specials on these items, so long as the customer understands it’s a special circumstance. If a customer gets used to buying heirloom tomatoes at $1.50 a pound, it may be hard to get them to pay $2 or $3 later. The key to managing this is just good communication about why you are having the special and why the customer should take advantage of it while it’s around.
Many coffee shops and small businesses have customer loyalty discounts or rewards, and there’s no reason a farmer can’t offer the same. If you mostly sell your food through farmers markets, offering customers a discount after a certain number of purchases may be a great way to keep them coming back directly to your booth week after week. These cards could be simple business cards with holes punched out every time the customer buys something. On their tenth purchase, they get a free item, a 10-percent discount, or whatever you deem reasonable. People love free stuff, so when you can give it to them without costing yourself too much money, everybody wins.