I had a customer message our Facebook business page recently with the following message:
I asked the guy if it would be “absurd” to charge a $3.75 bottle deposit if the bottles were in fact $3.75 to replace, or even $4.
He responded, “Yes it is absurd when other bottle deposits are $2 and I can get a gallon of delicious raw milk at a grocery store near Spokane for $8. And a gallon of raw organic jersey milk from a farm in Montana also for $8. If you are having trouble with profit margins then perhaps it’s an issue with how you are operating your business. I say this as someone who has seen the entirety of a dairy operation. It would be a shame if you continued to raise prices until you go out of business.”
Keep in mind this guy lives in Bonners Ferry, and the drive to Spokane would be a lengthy and costly one, as also would be the drive to Montana, where, by the way, raw milk in the grocery store is not a thing. In fact, I mapped his drive to Spokane from Bonners Ferry and it is in fact about 105 miles one way. Using the federal mileage reimbursement rate as the cost of that trip, he would be at $136 in transportation to go pick up his $8 gallon of milk that he thinks is such a great deal.
I did a little research actually and found the Yoke’s in Liberty Lake has a Jersey raw milk in plastic bottles available for $10.49. They don’t give the size.
There is a Zeigler Farms raw milk in plastic half gallon for $7.49, and there is a goat milk half gallon available for $7.99.
He may know of another source, but basically he wasn’t being truthful with what he was messaging.
The reality is that what I stated it to be in my initial response to him – take 1980 milk, multiply by consumer price index inflation since then, and all milk on the shelf would be over $20 per gallon.
New pickup trucks these days cost over $100,000 fully equipped. New tractors? Very expensive.
Labor – we have to pay market rate, which thanks to the brilliant idea of elevating minimum wages in some places to $15, is now well above that amount.
We also believe in making a profit. Ghastly, I know, but we’ve been in business for 10 years this coming October, and plan to be in business 10 years from now, Lord willing. For me to want to do that, I have a make a profit on my labor and a return on my millions of dollars invested in cows, equipment, buildings, and land, and return on my expertise and willingness.
The only real thing that is absurd is that this customer thought to say our bottle deposit and pricing were absurd without him knowing anything about any of it. He has no idea what our costs are, what our profit margins are, or even how efficient or inefficient we are.
He also obviously doesn’t understand how supply and demand affect pricing. In other words, he doesn’t understand basic economics.
The reality is farmers deserve to make a profit, and farm employees deserve to be paid well and get benefits, including paid vacation. We just put our milking guy on a salary and with paid vacation annually. We also have been continually increasing the pay our delivery and bottling people make so that we are competitive with what they would make driving for someone else.
As a Certified Public Accountant and professional dairy farmer who knows what I am doing, I can assure this guy I know exactly what I am doing in pricing, economics, and the cost of our business. I have the pricing set exactly where it needs to be for me to want to continue doing this, maintain a good farm, and keep my people adequately paid, and I believe the consumer of our product is getting a good value.
In other words, it’s a win for me, a win for my family, a win for my employees, a win for the 12 grocery stores we are in, a win for our suppliers, and a win for our customers.
If a potential customer feels the price is too high, and they want to communicate that to me, I have no problem with it. However, when they begin to assert that my prices are absurd and that I don’t know how to run an efficient dairy, they’ve just wasted their time and mine – other than to have me write a blog post on the subject.
Bottom line – don’t be this guy when you communicate with local businesses of any kind, and especially with local farmers. Don’t be the guy who makes assertions from your own position of ignorance, or worse, stupidity.
We all have to make choices on how we spend money. When you make a choice to not buy my product, then just go buy something else. Don’t think you have to tell me my bottle deposits are “absurd”. The only thing absurd in this situation is you.
Trust your farmer and decide if their product is worth it for you. If it’s not, move on. Trust them that they’re not gouging you, and trust that they deserve to make a good living just like you do when you work hard.