How To Price Beef Cuts in Your Farm Store

Freezer beef is a popular item at farm stores for good reason — there’s nothing that tastes quite like it.

Customers are increasingly willing to pay more for ethically-raised, high-quality beef, and online sales make it easier than ever for farmers to offer direct-to-consumer (DTC) sales.

But how do you price your beef cuts in a way that protects the longevity of your business while also being fair?

In this post, we’ll take a deep dive into:

How farm stores fit into the consumer landscape
Six practical tips for setting beef prices at your farm store

Let’s get started.

Where Farm Stores Fit in the Current Consumer Landscape

Let’s address one key point upfront: You can’t compete with grocers and corporate-backed meat sellers by undercutting them on price. In most cases, going down that route leads to undervaluing your products and selling them at break-even or even at a loss.

That leaves the question: With inflation, tariffs, and other rising food costs, how can independent farm stores stay competitive while pricing their products at a healthy profit margin?

A recent article in Grocery Dive hints at an answer. Despite higher costs, healthier, premium products are the current biggest drivers of growth in the food industry as a whole. This means there’s still a large segment of potential customers who will happily pay more for an ethically-raised, higher-quality product.

Farm stores have an exciting opportunity to meet the needs of this customer segment, positioning themselves as a premium brand selling top-quality products at a higher price.

But there’s a catch. If you’re going to market and price your products as premium, the shopping experience at your store has to match that higher standard. This often intimidates a lot of small farms and ranchers.

Until recently, the only option to buy meat directly from a farm was to reserve a quarter or half cow, provide butchering instructions, and pick up meat — this is simply too complex for many people.

This is why leveraging a farm store point of sale (POS) and e-commerce solution is essential for laying the foundation for a modern shopping experience and to give you the visibility you need to make confident pricing decisions.

How To Price Your Beef Cuts: 6 Aspects To Consider

Whether you’re trying out a new business model like online meat sales or looking to boost profits for your in-person store, it’s never a bad time to reconsider your pricing.

Here are six tips to dial in a pricing strategy that works for your beef cuts.

1. Understand Your Cattle Costs

Without knowing the specific costs of raising cattle, it’s nearly impossible to have the confidence to raise your price or adjust pricing as conditions change.

Calculating your costs can be tricky at first, but it’s an essential step to dialing in pricing that’s profitable but fair. Here are the basic steps, as outlined by the owner of the Leona Meat Plant, a local butcher and meat processor:

Add up all the costs it takes to raise your cattle (e.g. purchase cost, veterinary care, feed) to get a per-pound cost for each animal.
Once the animal is slaughtered, divide by 58% to get your “hanging cost.”
To the hanging cost, add on any processing, transportation, or other labor costs.
After your hanging cost (+ expenses), you find your “cut out” cost (i.e. the cost after breaking down the carcass) by dividing that amount by 60% to 65%*.
From there, you can add on a markup or a desired profit margin to figure out what your retail price would be (software like GrazeCart can help you calculate this automatically).

*Note: The 60–65% figure is for beef, and the percentage varies for different types of animals.

This formula isn’t the only way to get a pricing baseline, nor does it account for standard items vs. premium cuts (more on that later). However, these numbers will give you an honest view of what kind of profits you need to achieve to maintain a healthy business in the long run.

A quick note if you’re new: You don’t have to be perfect.

We know better than most that when you’re starting a farm store for the first time, your records and cost numbers may be a mess. That can be discouraging and end up with you taking the path of least resistance — looking at competitor prices.

But, in our experience, this leads to the“blind leading the blind,”, with many new farmers undercutting each other and undervaluing their stock because they don’t have an honest picture of their costs.

Our advice: Don’t get hung up trying to look back at historic expenses. Use the costs that you can find today (e.g. current cost of feed, price of packaging, price of maintaining the store) to give yourself a starting point. As your business scales up, you can work on tracking your numbers more accurately and refining them, but we all have to start somewhere!

2. Factor in Fixed Costs (Especially If You Sell Online)

It’s easy to forget about labor and material costs when you’re thinking about pricing, and those costs can differ depending on whether something is sold in store or online.

If you’re running a small farm shop, your beef cut pricing should account for:

Meat processing (either the costs of outsourcing or internal labor)
Labels and packaging
Credit card processing fees

If you’re doing business online, there are some additional costs to factor in when considering pricing, including:

Labor for preparing orders
Packaging materials (e.g. insulated boxes, dry ice, cool packs)
Delivery costs
Website hosting

Because of this, you might consider pricing your products differently in store and online. Most inventory management systems let you set different price points depending on where the item is being sold to avoid creating separate entries.

For the sake of simplicity, focus on your costs that are static for each order or roughly the same. Accounting for every single overhead cost, like electricity, occasional maintenance, and other incidentals, makes the process harder than it needs to be.

3. Adjust Your Pricing Periodically

Image via Seven Sons

Setting product prices is not a one-and-done task — it’s something you need to update over time. Yet, it’s also one of the easiest things to procrastinate — and many farmers worry about alienating their customers when they change prices.

The reality is, if you don’t adjust prices regularly, you may be leaving money on the table (and make the fallout of a price change with customers worse than it needs to be).

While there’s no hard and fast rule, we recommend that small and new farms reassess their pricing every three months (at a minimum). A larger-scale farm like Seven Sons (whose owners co-founded GrazeCart) looks at their pricing at least once every few weeks.

Changing prices every few weeks might seem extreme at first, but it’s worth noting that this is a common practice in the food industry. Unlike other retailers, the factors that go into the cost — whether it be weather, disease, or anything else — change constantly. Your prices should reflect current conditions.

More importantly, making small adjustments every few weeks is much more palatable to customers than making larger, more drastic changes less frequently.

To create more value for customers, don’t make dramatic adjustments to your bulk purchases (e.g. 25 lb. beef boxes, steak bundles, etc.). The overall profit margin on these is likely still relatively high, and the increased costs of some individual items make the savings look even more appealing.

This strategy can turn a price increase on individual premium cuts into a bigger bulk sale!

4. Price Staples Differently Than Your Premium Cuts

To deliver a modern shopping experience, you won’t be selling an entire cow at the same price point per pound. Instead, you’ll sell a mix of different products, including staples like ground beef and chuck roast to specialty cuts like Tomahawk and porterhouse steaks that customers can choose between freely.

No one would price all of those cuts the same, and most customers are willing to pay extra for specialty cuts — and to a certain extent, the price is determined by what the customer is willing to pay.

So, while you might aim to price staples at a 30% to 35% profit margin after cost of goods sold (COGS), your margin on primal cuts could be much higher. Look at other farm stores and local butchers to get a baseline, then check your sales data every few months to see how your inventory turnover and sales perform at that price point.

Bonus tip: Having an attractive website with great product descriptions and pictures will go a long way towards differentiating yourself as a premium brand. Don’t discount the value of storytelling in creating unique selling points.

GC - How To Price Beef Cuts in Your Farm Store - BLOG

Keep in mind that customers perceive price increases of staples (e.g. ground beef) differently than “nice-to-have” items (e.g. top sirloin). Put into practical terms, just because you need to increase the prices of certain products, you shouldn’t increase them by the same amount across the board.

Example Pricing for Grass-Fed Beef

Here are some baseline numbers to price your different cuts, from by-products and low-value cuts to mid-value and high-value cuts:

Bones: $2 to $5/lb.
Ground beef: $8 to $10/lb.
Chuck roast: $10 to $14/lb.
Sirloin steak: $14 to $18/lb.
Ribeye: $20 to $25/lb.
Filet mignon: $28 to $35/lb.

Remember: Once you get to the mid- and high-value range, the price point will be highly dependent on what your customers are willing to pay.

5. Communicate Price Increases With Customers

As a farm store, it’s natural that prices will fluctuate seasonally — but for people who are used to grocery stores, they may not be used to a farm’s more pronounced seasonal swings. Plus, sometimes you’ll need to make larger price increases to account for unexpected supply chain issues, extreme weather, or other incidents that are out of your control.

Regardless of the reason, having a clear and consistent communication strategy is key to maintaining trust with your customers. Here are the key aspects to remember:

Timing: Don’t wait too long to communicate major pricing changes. Give your customers at least a few months' warning to process the increase.
Specificity: You don’t need to communicate every price increase with all your customers. Instead, segment communications to only those people who have bought the affected products before.
Honesty: The goal of communicating a price increase isn’t to make excuses, but to build trust. Be transparent with the reasons why you’re increasing costs (even if the reason is that you didn’t properly factor in your overhead costs in previous years).
Value: Point out to customers how price increases are rolling out and (most importantly) the best way to save on the affected products. This helps turn a pricing announcement into a potential sales opportunity.

No one likes to hear that prices are going up, but being surprised by it is much worse. Always be transparent with your customers to make pricing adjustments as smooth as possible.

6. Focus On Marketing and Convenience To Justify Higher Pricing

Ask yourself: Will a new customer be willing to pay premium prices for your beef if your store isn’t inviting, if your website is barebones and hard to use, or if they don’t have any way to learn about your farming practices?

If you’re used to selling in farmers markets or small farm stands, aesthetics and marketing don’t mean much since the types of customers who frequent those spots don’t need a lot of convincing.

However, if you’re trying to scale up your farm store sales, you need to put more effort into your marketing strategy. People have a lot of choices when it comes to buying food — marketing and the convenience of the shopping experience itself are how you’ll convince them that you’re the best choice for quality beef.

Here are some general tips:

Tell your story: People who buy from farm stores aren’t just concerned about what you sell, but who you are. Find opportunities to tell people about your farming practices, values, and commitment to quality on your website, packaging, and signage.
Make an easy-to-use website: Online sales are one of the biggest ways to grow your beef sales, but it’s important to create a user-friendly website that features great product images, mouthwatering descriptions, and easy checkout options.
Include labels: USDA organic, farm-raised, sustainable, grass-fed, regeneratively farmed, and similar labels have a big effect on customers’ perception of quality and value. Work these terms into your product descriptions and store description.
Focus on aesthetics: People are less likely to drop premium prices on a website or store that doesn’t “feel” premium. Try to inject some personality into your logo, website, signage, and display cases.
Create bundles and subscriptions: Offering curated bundles (e.g. summer grilling packs, breakfast sausage samplers) or savings for subscriptions are great ways to upsell customers and make the shopping experience more welcoming.

Adding value and personality to the shopping experience helps differentiate your brand, which in turn justifies higher pricing.

Get Better Pricing Insights With GrazeCart

Finding ways to decrease overhead costs and maximize your profits is an ongoing process. Don’t beat yourself up if you don’t stumble onto a winning formula on your first try.

That doesn’t mean you should do things at random, either. Having visibility into your costs, sales, and margins will help you significantly.

GrazeCart was built by farmers, for farmers, giving farm stores simple, user-friendly tools to sell meat by weight, track inventory, set prices, and monitor sales performance. With GrazeCart, you can easily track sales of individual items and product categories to see how your customers react to pricing increases and to know which types of products are driving the most profits.

Whether you’re looking to turn a hobby into a business or ready to scale up production to a national scale, GrazeCart offers flexible pricing options that fit your business.