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by things they know about. So effective advertising is essential 

 to the successful use of prices to increase volume. 



Yes, advertising is expensive. Yet it is a necessary element 

 of this type of program. It need not be elaborate, but it must be 

 effective. Certainly the "specials" must be advertised. But don't 

 overlook advertising and promoting other things as well. New ship- 

 ments of particularly exotic merchandise and special services of 

 the business should be promoted al ong with the specials. 



Methods of Pricing 



Straight Markup 



Probably the easiest and simplest method of pricing is adding 

 a certain percentage to the cost of the merchandise. That is, if 

 bananas are purchased for ]0t per pound and a markup of 40 percent 

 to cover costs and give a profit is desired, (40% X 10^ = M) ]0<t 

 + At = 14(t per pound would be the selling price. This is a clear- 

 cut method that can work quickly for all merchandise purchased. 



For homegrown produce the problem is not so simple. Since the 

 cost of producing the produce is usually not known accurately, it 

 is not possible to add a markup. One alternative, however, is to 

 get wholesale prices from a produce broker or through market news 

 reports . 



This system also requires some knowledge of your costs. Re- 

 member the markup must represent an amount to cover selling expenses 

 and leave the desired profit. In the case of a roadside market, 

 the actual percentage of expenses may be determined from last year's 

 records. But where records are not available or are inseparable 

 from the production expenses, even the expense measures are diffi- 

 cult to obtain. Of course, this points up the importance of keep- 

 ing records. If you are not sure what your expenses are, it is 

 difficult to know how much profit (or loss) you are making or where 

 it's comi ng from. 



Competitive Pricing 



Another common method of pricing is called 

 As the name implies, you price according to the 

 market, that is, whatever the market will bear, 

 cerning yourself with 

 the price for you. 



competitive pricing 

 going rate in the 

 Rather than con- 

 expenses, you let your competitors determine 



In the case of homegrown produce, this method makes sense be- 

 cause the produce represents a fixed or sunken cost. Assuming the 

 going price is high enough to pay for the harvesting and selling, 

 the grower wants to at 1 east recoup part of his production costs. 

 Even if he doesn't know precisely what they are, he will be better 

 off to recover what he can. 



