Friday, June 21, 2013

Market Update

We had our second market last week and we sold out of falafels, but there isn’t a lot of gross profit. Actually, the profit margin is fairly good, but that’s because when you work for yourself, you often neglect the value of the time that you put in, which isn’t right, but that’s reality. I think we would do better to make more money.

There are two approaches to farmer’s markets, and for that matter, many retail businesses. You can either charge a lot and have a high profit margin, but you end up selling less, or charge less and have a low profit margin, but make up for it in volume. We opted for the latter with dumplings, and we are leaning in that direction for falafels, it’s just that you don’t sell nearly as many falafels as you do dumplings. Then again, they’re a lot easier to make, and don’t require seven solid days of effort. I think that makes them actually more profitable.

Either way, I still think the market is slower than years past, and it got me to thinking about the whole market dynamic. We have a local market in our home town and it does poorly, largely because the locals just don’t come and support them. I don’t blame them, farmer’s markets tend to be expensive, and small towns can’t really sustain them because a lot of us can’t afford it. On the other hand, people like and want farmer’s markets. Our local market is running on fumes, and I am not completely sure why it still exists.

This got me to thinking of why the big city market is more profitable, and I realize that it’s because it doesn’t rely solely on the locals, most of whom can afford to shop at farmer’s markets because there is money there. Think Ivy League and all. What makes the big city market work, in my opinion, is that its population is continually in flux with students, professionals, and academic types who are changing throughout the year. As a consequence, you get a nice flow of new people who are willing to try new things. When you’re hoping for that the locals will regularly buy your stuff, it just doesn’t seem to work.

This is especially true when you make something like a falafel, which a lot of people have never even heard of. We are doing okay, we get a fair number of people who are trying them for the first time, but they are willing to try them, for which I give them enormous credit. You don’t always find that in small towns like ours.

In the end, it is what it is. It’s just interesting to see how the market economy/dynamic works, and to be a part of it.

Until the next time, thanks for reading, and thanks to Liz Edgar for the pic.

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