Marketing Compost (EAWAG) - The Water, Sanitation and Hygiene

Item
Labourers’ wages (12 person/day per ton of finished
compost at $ 1 per day)
Biological conversion unit (3 kg per tonne of compost at
$ 2.40 per kg)
Packaging: 1 tonne of compost requires 25 bags of 40 kg
each at 20 cents per bag
Marketing expenses (including pamphlet and commissions
to agents)
Cost
($/tonne compost)
12.00
7.20
5.00
6.00
Overheads (including royalty, bank interests etc.) 4.00
Total expenses 34.20
Selling price per tonne
40.00
Profit 5.80
Table 6.2: Compost production costs in India (example)
The overheads and management costs, including bank interest, the fee paid to
the municipality, travel costs for sales visits, rent of a small office, stationery,
accountancy, and a nominal monthly stipend of $ 40 for the manager are relatively
fixed and do not increase in line with sales. This business was reasonably
profitable after four years. The manager had paid off most of the bank loan,
and had also repaid part of the considerable sum he initially invested (Adapted
from Harper in Ali, 2004).
6.2 Customer attitudes, needs and resources
Ultimately, only customers can decide if the price is right.
Customer attitudes, needs and resources are critical considerations in setting a
price for compost. This is the time to consolidate what you have found out about:
how your product rates in the marketplace including quality, reputation and
convenience etc. (covered in Section 5);
customer willingness and ability to pay (covered in Section 4.2); and
customer attitudes towards compost (covered in Section 4.3).
Quality is among the most important determinants of customer attitudes and
purchasing behaviour. People will often pay a premium for consistent high-
Marketing Compost—Product pricing 73