Setting prices for your microgreens can be hard. This is especially true when you're just starting your farm. Except for looking at what your competitors are charging, you have no baseline for how much to charge. Yes, you should base pricing off of your production costs, but you don't know your production costs yet. It takes time to understand your different input costs, which makes this a cart-before-the-horse issue. How can you set prices based on costs? You haven't started producing, so you don't have the full picture. You can and should estimate using hypothetical calculations, but why not use our information and that of other farms? Thankfully, most farms around the country charge roughly the same prices. The price variation across farms can mostly be attributed to the different costs of living (COL). A chef in New York will pay more for the same product than a chef in rural North Carolina. The COL is higher in NY, which means businesses - the restaurant and the microgreen farm - need to charge their customers more for a product or service. The other main variance will come from who you're selling your microgreens to. Home consumers will expect to pay more than chefs who will expect to pay more than wholesalers and distributors.
If you want to get an answer and move on, there’s a pricing table below. If you want to tackle this issue in more depth, continue reading into section two. In section two, we cover the many factors that affect product pricing and farm profit. You’ll also find a link to our microgreen pricing and profit calculator, which does all the hard work for you.
The table below outlines the most common microgreen varieties. It also lists a few popular blends at Piedmont Microgreens. We suggest a low-end and high-end price per ounce for each. We display exact prices for each product for our restaurant and wholesale customers. After the table, we conclude section one of the article with a few caveats and considerations.
| Category | Variety/Blend | Low End ($/oz) | High End ($/oz) | What We Charge (Restaurants) | What We Charge (Wholesale) |
|---|---|---|---|---|---|
| Common Variety | Arugula | $2.50/oz. | $4/oz. | $18/6 oz. | $14/8 oz. |
| Common Variety | Broccoli | $2.50/oz. | $4/oz. | $18/6 oz. | $14/8 oz. |
| Common Variety | Cabbage | $2.50/oz. | $4/oz. | $18/6 oz. | $14/8 oz. |
| Common Variety | Kohlrabi | $2.50/oz. | $4/oz. | $18/6 oz. | $14/8 oz. |
| Common Variety | Radish, Daikon | $2.50/oz. | $4/oz. | $18/6 oz. | $14/8 oz. |
| Common Variety | Radish, Rambo | $2.50/oz. | $4/oz. | $18/6 oz. | $14/8 oz. |
| Common Variety | Radish, Triton | $2.50/oz. | $4/oz. | $18/6 oz. | $14/8 oz. |
| Shoots | Pea, Basic | $1.50/oz. | $3/oz. | $14/8 oz. | $10/8 oz. |
| Shoots | Pea, Tendril | $2.00/oz. | $4/oz. | $20/8 oz. | $12/8 oz. |
| Shoots | Sunflower | $1.50/oz. | $3/oz. | $14/8 oz. | $10/8 oz. |
| Shoots | Fava | $2/oz. | $4/oz. | $20/8 oz. | $12/8 oz. |
| Specialty | Basil, Genovese | $6/oz. | $8/oz. | $16/2 oz. | $36/8 oz. |
| Specialty | Basil, Purple | $6/oz. | $8/oz. | $16/2 oz. | $36/8 oz. |
| Specialty | Basil, Lemon | $6/oz. | $8/oz. | $16/2 oz. | $36/8 oz. |
| Specialty | Beet | $6/oz. | $8/oz. | $16/2 oz. | $36/8 oz. |
| Specialty | Celery | $6/oz. | $8/oz. | $16/2 oz. | $34/8 oz. |
| Specialty | Chard, Red | $6/oz. | $8/oz. | $16/2 oz. | $36/8 oz. |
| Specialty | Chard, Yellow | $6/oz. | $8/oz. | $16/2 oz. | $36/8 oz. |
| Specialty | Chard, Magenta | $6/oz. | $8/oz. | $16/2 oz. | $36/8 oz. |
| Specialty | Chervil | $4/oz. | $8/oz. | $16/2 oz. | $36/8 oz. |
| Specialty | Cilantro | $4/oz. | $8/oz. | $16/2 oz. | $28/8 oz. |
| Specialty | Dill | $6/oz. | $8/oz. | $16/2 oz. | $36/8 oz. |
| Specialty | Fennel | $6/oz. | $8/oz. | $16/2 oz. | $36/8 oz. |
| Specialty | Lettuce | $2/oz. | $8/oz. | $16/2 oz. | $36/8 oz. |
| Specialty | Mustard | $2/oz. | $8/oz. | $16/2 oz. | $36/8 oz. |
| Specialty | Nasturtium | $4/oz. | $8/oz. | $16/2 oz. | $36/8 oz. |
| Specialty | Parsley | $6/oz. | $8/oz. | $16/2 oz. | $36/8 oz. |
| Specialty | Shiso | $6/oz. | $8/oz. | $16/2 oz. | $36/8 oz. |
| Specialty | Onion | $3/oz. | $6/oz. | $16/3 oz. | $36/8 oz. |
| Specialty | Cantaloupe | $3/oz. | $6/oz. | $16/3 oz. | $36/8 oz. |
| Specialty | Sorrel | $18/oz. | $30/oz. | $22/1 oz. | N/A |
| Blend | Broccoli, Cabbage, & Kohlrabi | $2.50/oz. | $4/oz. | $18/6 oz. | $14/8 oz. |
| Blend | Daikon, Rambo, & Triton Radish | $2.50/oz. | $4/oz. | $18/6 oz. | $14/8 oz. |
| Blend | Arugula, Radish, & Mustard | $2.50/oz. | $4/oz. | $18/6 oz. | $14/8 oz. |
| Blend | Cabbage, Cilantro, & Radish | $2.50/oz. | $4/oz. | $18/6 oz. | $14/8 oz. |
| Blend | Red, Yellow, & Magenta Chard | $5/oz. | $8/oz. | $18/3 oz. | $36/8 oz. |
Caveats & Considerations:
Your costs of goods sold (COGS) refers to the direct costs of producing your product, which are the microgreens. COGS includes tangible inputs, such as seeds and soil. It also includes intangible inputs, like the electricity to run the grow lights. If the costs can be directly linked to producing the product, rather than running the business, it would be included in COGS. However, generating accurate COGS for a small business can be difficult. Why? Small businesses don’t tend to have a sales department and a separate manufacturing facility and a separate retail outlet. Why does that matter? In that scenario, the cost to operate the manufacturing facility, and the cost of the raw inputs therein, would be part of COGS. The sales department and retail outlet would not be involved. Those activities aren’t directly involved in creating the product. The operative word here is "creating." Sales, HR, and administration are critical to a business's success, but they're not involved in creating the product. So, why is COGS hard to calculate in a small business? COGS is hard to calculate because small businesses don't tend to have distinct departments. The owner spends their time involved in production, sales, HR, compliance, and deliveries. Electricity is used to power the grow lights and dehumidifiers, but also the overhead lighting and bathroom vent. How can a small business reasonably separate costs that go toward production versus those for running the business? It's difficult, which is why we propose a modified version of COGS. The components for COGS in a microgreen business are seeds, soil, packaging, fertilizer, labeling, disposal, and spoilage. Disposal covers the cost of getting rid of used trays of microgreens. Spoilage covers the cost of planting a microgreen tray, only to compost it before harvest because of disease. We will leave all labor, utilities, rent, software, and distribution costs for later.
COGS = Seeds + Soil + Fertilizer + Packaging + Labels + Disposal + Spoilage
Gross profit (GP) is the amount of a company’s revenue that remains after accounting for the COGS. GP is often described as a percentage, called gross margin (GM) or gross profit margin. For example, if you sell $1,000 of microgreens at the farmer’s market, but it costs $200 in COGS to produce those microgreens, your GM is 80%.
Gross Margin = (Revenue - COGS) / Revenue * 100%
GM will most heavily be affected by the specific variety of microgreen. Why? Each microgreen variety will have a different seed cost, yield per tray, and price point. The other variables that feed into COGS will largely be the same. For example, the seed cost per tray can be as low as $0.30 for radish, but as high as $6.00 for nasturtium. The yield per tray is 10-14 oz. for radish, but only 4-6 oz. for nasturtium. Farmers can charge $2.00 - $4.00 per ounce for radish, but as much as $6.00 - $8.00 per ounce for nasturtium. Seed cost feeds into COGS. Yield per tray and price per ounce feed into revenue. These three factors are the most varied across varieties and all three factors affect the GM equation. When considering how to price your microgreens, these three factors are what you should pay the most attention towards.
What’s a “good” gross margin to target? How do you know if you’re charging too much or not enough? These are great follow up questions. You don’t want to pick a target GM of, say, 80%, and then try to price your microgreens to all hit an 80% GM. If you structure your menu that way, you’ll end up with 20 varieties, all with different price points. Yes, it’s okay to have different price points on your menu. However, nobody wants to see a list of “specialty” microgreens with prices of $15.41, $14.36, $12.78, $18.91, and $16.17. That menu will be confusing and hard to read. Your prospective customers will think you don't know what you're doing. You should instead price your products such that your whole menu averages an 80% GM. If we look back at the table under "What We Charge (Restaurants)," we can see we have seven price points for 36 items. All prices are also whole numbers; no cents. This makes for a clean and simple menu. It makes it easy for customers to understand what they're paying on a per-ounce basis. You can also sell by the ounce instead of using fixed-size containers. In summary, you should target an average GM of 75% or higher. Use the Microgreen Pricing & Profit Calculator to play around with numbers until you land on the right combination of price-per-ounce and GM.
Now that we understand COGS and GM, we can move on to operating expense (OpEx) and net margin (NM). For the sake of this blog, OpEx is every other cost involved in running the business, aside from taxes. We’re assuming you don’t have business debt to consider. OpEx will include payroll, rent, utilities, equipment, gas for deliveries, software subscriptions, and anything else. The money that remains after COGS is the gross profit. It now has to go toward paying the operating expenses. Certain OpEx items will be variable depending on usage, such as electricity. The more lights you plug in, the higher your electricity bill. Certain OpEx items will be fixed, like rent. It doesn’t matter if you use 100% of the facility or 10%, the rent is the same.
After entering your operating expenses into the calculator, you need to decide on a goal. Do you want to target a certain net profit per month? A certain number of trays sold per month? A certain number of container sales? If you enter a goal for net profit, the calculator will determine how much revenue you need to generate that month to hit the goal. For example, let’s say you want to hit a monthly net profit of $5,000. We’ll assume your GM is 85% and you spend $350/month on utilities, $900/week on labor, and $400/month on rent. You would need to sell $11,365 in microgreens each month to hit your net profit goal.
Net Profit (NP) = Revenue - COGS - OpEx
Net Margin (NM) = NP / Revenue * 100%
In the above scenario, we’re specifically looking at selling the microgreens for $1.63/oz., which is an 85% GM based on the other inputs. If we only change one variable, price-per-ounce, let’s see how things change. If we increase the price to $3.00/oz., the revenue needed to hit the NP target drops to $10,520. The number of trays needed drops from 582 to 292. The revenue difference is only $845, but think of how many fewer trays you’d need to produce - 190! That’s a lot less work for the same profit. In the end, what you charge for your microgreens will have the biggest affect on net profit.
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