Four Reasons
Why Your Company
Should Have
a Price List
Number of words
515
Time to read
3 minutes
Value
Insightful
Who should read this
Commercial/marketing professionals in the agriculture business
We often ask agribusiness companies whether they have a price list in place. The answer is rarely straightforward. Some companies have no price list at all, x others have one internally but do not make it publicly available.
In this article, we outline four good reasons why a manufacturer of agricultural products should establish and maintain a price list ahead of their sale season.
Communicate your value with a recommended farm gate price
A price list is your opportunity, as a manufacturer, to communicate value. In many cases, farmers aren’t fully aware of what a product is worth or are not familiar with its features and benefits. A list price signals that value clearly.
A good practice in agribusiness is to build a price list tied directly to farm value-specifically, a “recommended” farm gate price. The farm gate price is what a farmer pays their dealer or distributor for a product. By publishing a price list, you give your channel partners a clear reference point for what to charge the end customer (e.g farmers).
Help your channel partners make better pricing decisions
Many manufacturers assume that their distributors–being closer to farmers-have a better understanding of what farmers are willing to pay. We would push back on that.
Yes, distributors interact with farmers more frequently than manufacturers do. But a typical agricultural distributor manages a portfolio of roughly 20,000 SKUs-crop protection, seeds, fertilizers, irrigation equipment, and more. Their default pricing approach is usually cost-plus: buy a product for $100, add $20, and sell it for $120.
A distributor managing 20,000 products, from different suppliers, simply does not have the time, training, or capacity to assess the value of every item they sell. Understanding value and willingness to pay is the manufacturer’s responsibility. When a manufacturer produces fewer than 100 products, they are in a far better position to evaluate them properly.
By providing your distributors with a recommended price list, you help them price more strategically and improve their margins.
The anchoring effect
The anchoring effect is a well-documented psychological phenomenon: our judgments are heavily influenced by the first number we encounter—the “anchor.”
What makes anchoring especially powerful is that it works on everyone, from seasoned executives to everyday buyers. A price anchor shapes decisions, often without people realizing it.
When you publish a price list, you automatically create an anchor. That anchor serves a dual purpose: it sets a reference point for your recommended reseller price and provides a baseline for the discounts and rebates that are part of your commercial policy.
Legal considerations
For antitrust reasons, it is illegal in most countries for a supplier to require distributors to sell at a fixed price. The principle is straightforward: price competition must remain free. As a manufacturer, you cannot dictate what your distributors charge-but you can offer a recommended list price (this is not legal advise. Always recommend that you check your terms and condition with a lawyer) .
As long as that price is presented as a suggestion rather than a requirement, it is permitted under antitrust law. A recommended price list gives you influence over channel pricing without crossing any legal lines.
Get In Touch
Need assistance with AgPricing? Reach out to our team at info@agpricing.com . We’re here to help and respond promptly. Let’s grow together!