For example, non hybrid seed, which the farmer can save, will be more price sensitive than hybrid seed. Price will be a more critical factor in marginal farming areas, where spending power is low, but less important where high yields can be obtained and farm produce can be sold profitably. Providing the benefits of the seed are understood, it is other factors, such as the availability of fertilizer and confidence in the produce market, rather than price that dominate the farmer's decision to purchase. Price and demand The manager responsible for pricing a product must know how much more will be sold if the vice is lowered and, conversely. As prices increase the point is reached where substitutes to bought seed, such as farm saved seed, may be used or the farmer may choose to plant a different crop.
Price can be one of the most effective marketing tools available to a company.
Pricing strategies for a product or product line should be established on the basis of reaching short and long-term marketing objectives such as selling a certain quantity, achieving a certain market share or making a given margin over costs. However, prices are often set without taking into account the true cost of production and the effect which that may have on the competitive position of a product or product range. The cost of seed Cost is a major factor in any discussion about price. Thus the costs involved in putting a bag of seed on the farm must be recorded, analysed and known to management. These costs will include the cost of the processed and packaged seed and the marketing costs associated with selling and distribution.