Pricing Structure
Compost does not sell itself.
Selling your compost will require processes to ensure consistent high quality product levels, establishing marketing and promotional programs, and creating proper pricing structures for all products.
The price of compost must be comparable to similar compost products sold at nearby facilities. It is also important to compare compost prices with the price of comparable materials such as peat moss and topsoil. Survey both municipal and private competition within 100 miles.
o Charge a fair price for your product based on market needs and competitive pricing.
o Municipalities (most often) believe offering a low price for the compost is needed to sell all their compost, but this only reduces the value of the product, establishing a perception from residents that compost should be sold “cheap” due to tax dollars being used to make it. However, there are many reasons not to offer finished compost for free or “cheap”:
▪ It can be a revenue source for municipalities
▪ Your facility can fund marketing personnel and equipment through sales
▪ “Free” product lowers the perceived value of both the product and the industry
▪ Customers value items whose price shows they are valuable! If a product is priced “cheaply”, it the results in is that customers believe the product is inferior. Many municipalities produce excellent products that would be very competitive with commercial compost products. Pricing products appropriately moves inventory more quickly, making space for more feedstocks in the yard.
▪ Undercuts commercial composting facilities competing with subsidized facilities
o Municipalities (most often) believe offering a low price for the compost is needed to sell all their compost, but this only reduces the value of the product, establishing a perception from residents that compost should be sold “cheap” due to tax dollars being used to make it. However, there are many reasons not to offer finished compost for free or “cheap”:
▪ It can be a revenue source for municipalities
▪ Your facility can fund marketing personnel and equipment through sales
▪ “Free” product lowers the perceived value of both the product and the industry
▪ Customers value items whose price shows they are valuable! If a product is priced “cheaply”, it the results in is that customers believe the product is inferior. Many municipalities produce excellent products that would be very competitive with commercial compost products. Pricing products appropriately moves inventory more quickly, making space for more feedstocks in the yard.
▪ Undercuts commercial composting facilities competing with subsidized facilities
Determine shipping costs then put a clause in customer agreements for spikes in fuel cost
Discounts
● Offer 1st time buyer incentives to get started
● Establish volume pricing for larger purchasers
● Establish volume pricing for larger purchasers
Construct customer agreements
● Obtain signatures for confirmation to ensure stated pricing is recorded and accepted
● Update annually, provide customers with a copy, and save for future reference
● Update annually, provide customers with a copy, and save for future reference