Episode Description
Are you wondering how to calculate the price you should charge for your microgreens? In this episode, I give you a full breakdown on how to price microgreens.By the end of the episode you will have a good understanding of everything you need to consider before deciding on a price for your microgreens.
Mentioned in this episode:
Free Microgreens Seed Density Calculator: https://microgreensentrepreneur.com/seedcalculator
Ask a question by leaving me a voice note: https://www.speakpipe.com/Microgreensentrepreneur
Ask a question by email: brian@microgreensentrepreneur.com
Electricity Costs Blog Post: https://microgreensentrepreneur.com/microgreens-electricity-costs/
Episode Transcript
Microgreens Entrepreneur Episode 7: How To Price Microgreens
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You’re listening to The Microgreens Entrepreneur Podcast, where the aim is to help you start, grow, and improve any microgreens business. I’m your host, Brian, owner of a microgreens business that I operate out of my own home. Stay tuned and welcome along.
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[0:35] Hello, there, and welcome to another episode of the Microgreens Entrepreneur Podcast. Hope you’re having a great week. On today’s episode, I’m going to go through everything you need to know about how to price microgreens. By the end of the episode, you’ll be able to price your own microgreens regardless of what currency you’re using or where you are in the world.
[0:54] Now, before we get started on today’s episode, I want to say a big thank you. We got our first two podcast reviews. The first one was from Joey in Portland, Oregon. Joey is enjoying the show, and he had some questions about mold. I have an episode coming up very soon that’s going to tell you everything you need to know about mold and microgreens. So, stay tuned and subscribe to the podcast if you haven’t already, so you don’t miss that.
[1:20] The second review was from Ruben in South Africa. Ruben says, “Thanks for your very informative podcast.” Ruben, thanks very much for your review. It’s really appreciated. Ruben also asked about how to go about pricing microgreens. Hopefully, this episode will answer some of the questions that you have about pricing. Thanks a million for those reviews, guys. They’re very much appreciated.
[1:44] Just one more thing before we get started. I was thinking about doing some Q&A episodes of the podcast. What I was thinking was that these episodes would be supplementary episodes, but for that, I need some questions coming in.
[1:57] So, if you have a question that you want me to answer, you can leave a voice note through the SpeakPipe link in the show notes, and I’ll play your message on the podcast and then answer your question. If you’d rather your voice wasn’t featured on the podcast, you can also write me with your question: brian@microgreensentrepreneur.com
[2:14] I have a few questions that came in on the SpeakPipe link, and enough to get started, but for it to be sustainable, I need more questions to come in. If that’s something you’d like me to do, please go ahead and give me some questions, and I’ll get going with that.
[2:29] Now, let’s get down to the reason why you’re really here, and that is to learn how to price microgreens. The easy way out of this is to go and find microgreens that are being sold somewhere close to you and make your microgreens price similar to that. Well, that’s not what I recommend, and it’s not a good idea, in my opinion.
[2:48] It’s good to know your competitor’s prices to get a general idea, but it’s not the way I would go about pricing your microgreens. You see, some microgreens growers might be doing this on a much larger scale. They might have a harvesting machine, and automated watering, and stuff like that. That might enable them to produce a lot of microgreens, charge a lesser price, and still make a good profit by selling a large quantity of them.
[3:13] This podcast isn’t aimed at big growers like that, and this method of pricing microgreens that I’m going to share with you is for small growers like me and like you. My microgreens business is run out of an 8 x 8-foot spare bedroom in my house, so I really only have the capacity to serve local restaurants and the local community here. So, I could never compete with a mass grower on price. But I know I could definitely beat on quality of product and customer service. So, let’s get down to how I price microgreens.
[3:43] The first thing we need to do is gather up some information. We’re going to start by calculating all of our costs. So, that’s all the materials that are needed to produce microgreens. What you’re not going to include here are your capital costs. That’s your fixed one-time expenses like your
shelves, your trays, your lights, and things that you buy once, but they’re not costing you money on an ongoing basis.
[4:04] For the example that I’m going to give here, I’m going to use dollars as the currency as the majority of you listening are using dollars as currency, but if your currency is different, these principles are the exact same. It’s the exact same method and the exact same [4:17]. For the example here, I’m going to use a 10 x 20-inch tray of China Rose radish, and I’m going to tell you how to come up with a value for that and price it so it suits you.
[4:27] The first cost that we’re going to find is our soil cost. I’m paying about $11 per bag, and there are 25 kg in a bag. In grams, that’s 25,000 grams. On average, I’d use 1500 grams a soil per 10 x 20-inch tray. So, I’m going to get about 16 trays out of a bag of soil. I’m paying $11 per bag, so I’m going to divide 16 into $11, and that gives me 69 cents. So, 69 cents on soil per tray of radish microgreens is my first cost.
[5:01] The next thing we’re going to do is we’re going to calculate the seed cost. This is much the same as calculating the soil cost. For a 10 x 20-inch tray of China Rose radish microgreens, I’m going to use 45 grams of seed.
[5:14] Before we go any further, I want to let you know that I’ve created a microgreens seed-density calculator, and that will give you the seed density that I use in the top ten most popular microgreens that I use. That will work for you and give you the density that I use regardless of what size trays you’re using. I’ll leave a link for that in the show notes.
[5:34] So, the price I pay for China Rose radish seed is $12.50 per 1,000 grams. I’m going to divide $12.50 by 1,000, and that gives me 1.25 cents per gram. If you multiply that by 46 grams of seed, that will give you 57 cents for your see cost.
[5:52] The next thing you’re going to look at is your packaging. I use a cellulose compostable package, and they’re slightly more expensive than plastic. They’re the typical clamshells that a lot of microgreens growers use, and they work out at 25 cents each for me. I use Avery labels to put on the packages.
[6:11] There are 2,100 labels in a package. The cost of a package of labels is $35 so that only works out at about 2 cents per label. So, it might not really be work putting it in, but I will. I print the labels myself. We use the printer for other things other than printing the labels, so it’s very hard to calculate the cost, but it’s minimal. Let’s just say the total cost is 5 cents for each printed label.
[6:38] So, I know from experience that a tray grown with that volume of seed, I’m going to harvest roughly around 400 grams of radish microgreens from it. I put 50 grams of radish microgreens into each clamshell, so that’s 8 clamshells used per tray. The cost of each clamshell with a sticker on it is 30 cents total. So, 8 x 30 cents = $2.40.
[7:01] Not all microgreens have the same yield as radish. Radish is one of the highest yielding and most profitable microgreens that I grow. I’m actually planning on doing an episode in the future that’s on the most profitable microgreens there are to grow.
[7:15] Now, we’re onto the electricity costs. The electricity cost works out roughly around 15 cents per tray. Working out the electricity costs of growing microgreens is for another day. I’ll do an episode on that in the future. I actually have a blog post on that on my website, microgreensentrepreneur.com. I’ll leave a link for that in the show notes. But, just so you know, electricity costs are minimum.
[7:39] So, that’s all our costs. When we add them all up for a finished tray of China Rose radish microgreens, we’ve got:
· Soil .69
· Seed .57
· Stickers & clamshells $2.40
· Electricity .15
· Grand Total $3.81 per tray of China Rose radish microgreens
It sounds like a good deal to me.
[8:05] So, you might be thinking that this is amazing. They’re so cheap to grow, and it is great that the costs are so low. But the big thing that we haven’t accounted for here is our labor, and that is going to make up the bulk of the cost, and it’s going to determine the price that you charge for your microgreens.
[8:19] You might be wondering now, how is that going to determine the price of my microgreens? I mentioned back in episode 3 in the pros and cons of starting a microgreens business that your time is a resource, and it’s part of the cost of growing microgreens. I’m going to explain that to you now.
[8:36] If you haven’t listened to that episode already, I’d encourage you to go back and listen to it. With every packet of microgreens that you sell, you’re actually selling a small part of your time with it too. So, we have to account for that and value it. Let’s work that out now, and once we do that, you’re going to be able to price your microgreens.
[8:55] We’re going to look at some of the jobs that you’re going to have to do when you’re growing and selling microgreens, and I’m going to give some time for these jobs. These times are going to vary from person to person. Some people are going to be faster at them. Some people are going to be slower at them. You really need to work these times out for yourself. This is just an example.
[9:12] We’ll start out with planting a tray of microgreens. I have five minutes for that. Then, I have watering and monitoring a tray of microgreens for a week, and I have 20 minutes for that. Then, we’ve got harvesting and packaging a tray of microgreens, and I’ve got 30 minutes for that, so that will include boxing them, labeling them, stamping them, putting them in the fridge. Then, I’ve got tray sanitizing, and for 2 trays, let’s say that takes 5 minutes. Then I have down for delivery and admin, 15 minutes.
[9:45] Just so you know, delivery is a cost that’s really variable. I’ve just added an average here. Also, with your admin like making invoices and labels, etc. that’s variable too, and this is also just an average. I’ve left a couple of costs out here like the electricity costs of running the fridge, fans, dehumidifier if you have one. It’s just too hard to determine these costs to a per-tray value. But the cost of running these is low in the grand scheme of things.
[10:12] So, when we add up all the time it took to do those jobs that went into that tray of microgreens, we’ve got 1:15 of our time. So, now, finally, you might say, we have all the information that we need that we’re going to be able to price our microgreens.
[10:27] Now, you have something to do. You’ve got a decision to make. You need to decide how much you’re willing to work for per hour, and what value do you put on your time? Before you make that decision, I’m going to give you an example.
[10:38] Let’s say that you want to make $20 per hour. So, you put 1:15 into that tray, so the cost for your labor for that tray is $25. The costs of your materials was $3.81. So, all-in-all, you need to make $28.81 from that tray. You’re going to get 8 clamshells full of China Rose radish from that tray. $28.81 divided by 8 = $3.53. Let’s round that down to $3.50.
[11:09] So, to make $20 per hour from growing radish microgreens, you would need to charge $3.50 per packet. If you want to earn $30 per hour, it’s going to work out as $5.00 per packet. If you’re willing to work for less than $20 per hour, you’re going to be able to charge less for your microgreens. Do you see where I’m coming from with these numbers?
[11:27] The amount that I make per variety of microgreens varies. I might make a little bit less than the hourly rate I want to make on some, and I might make a little bit more on others. This is because there are different yields for each microgreens and longer and shorter growing times for each one.
[11:42] I don’t like having big differences in the prices that I charge for each variety of microgreens. Let’s say I was to charge $4.50 instead of $3.50 for that packet of radish microgreens. That extra dollar would allow me to charge less for a microgreen that isn’t as profitable, but people still want it, so I grow it because there might be a case they want that microgreen that isn’t as profitable, and along with that, they’ll buy the others, so that offsets the smaller margin that you make from the less-profitable microgreens, and you should still come out with the amount that you want to make. I hope that makes sense.
[12:15] To sum things up, there’s no right or wrong price for your microgreens. It all comes down to you gathering all the prices for the materials that you’re going to use and adding up the time it takes you to do all the work involved in growing the microgreens and then deciding how much you’re willing to work per hour. I know there’s a lot to think about there, and I’m going to make a blog post about this, and it will be up on the website soon. Being able to read it might just help you to understand it better.
[12:41] So, that brings us along to the end of the episode. That’s my method of pricing. There might be another way of doing it, or there might be a better way. If you have any feedback on it, please let me know.
[12:50] As always, thanks a million for listening. I hope you enjoyed the episode, and maybe you learned something. If you do have a question that you want me to answer, you can leave me a voice message through the SpeakPipe link in the show notes, and your question could be played and answered on a future episode on a podcast.
[13:04] If you did enjoy the episode, please subscribe to the podcast, so you don’t miss an episode every week, and I’d also really appreciate it if you left a review on your podcast provider. I read them; I really appreciate them, and it helps with the show’s rankings.
[13:17] So, that’s it. Thanks again for listening. Have a great week, and I’ll catch you on the next episode.
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[End of episode 13:58]