One aspect of social enterprise that I wish we didn’t have to deal with is PRICING CHANGES. ACK!
We’d love to sell our soups for less than we do, but the reality is that changing the world through a social enterprise is a social mission AND a business, and we have to be competitive (and cover our costs!).
We started small…selling soup in-person and at local craft shows and slowly moved into larger craft shows, farmers markets, small boutique grocery stores and then we tackled the giant…GROCERY CHAINS!!!
Let me tell you – we were EXCITED to land our first large retail contract. After a few presentations at retail roadshows, we landed a small contract: 3 Farmboy Stores, a small fresh-forward grocery chain (now growing like gangbusters in Ontario!). 4 years later, we were thrilled to become part of the Sobey’s/Foodland retail chain selling our vegetarian/vegan varieties. Our grand hope was for every new Raw Carrot site to be able to access these existing sales pathways to get their soups to market – and into the hands of our amazing customers – quickly and easily.
While our partnerships with both Sobey’s and Farmboy has been amazing (they have been keen to work with small local vendors and have helped us every step of the way to navigate the wide world of retail sales), the average markup on a product in the retail food business is, at a minimum, 30%.
For a small social enterprise trying to make a difference in the world, that 30% is a huge percentage to lose. Even without the high listing fees that retail takes from their big clients to buy into coveted shelf space, the markup in enough to be a significant barrier if margins are tight.
The lesson to be learned? Price your product high enough to ACTUALLY cover your costs. If you try to low ball to get into the store, you will find it difficult to move the price up – and retailers really don’t like that game. Know your costs and how much you need as your price. Be open to negotiate and be willing to say no if the price is too low. If you can’t take the 30% hit, think carefully about whether going into retail is worth it and consider other options – markets, online, in-person sales – instead.
Need advice? We’re always happy to chat! https://therawcarrot.com/get-involved/book-a-consultation/