Spudnik farms

Abstract

Sumeet used to be a lawyer, working in the corporate world. In 2013, feeling she was not accomplishing what she wanted to in her professional life, she decided to give a go to a project that meant a lot for her: supplying people with safe and high-quality vegetables grown directly in a trusted farm. That’s when she started her own farming business of heirloom, organic produce, which she delivered personally to her customer base. However, despite sufficient demand and high satisfaction and loyalty from the consumers, the project was aborted as it lacked financially viability. Sumeet did not stop there and revived her project with a new business model for Spudnik Farms. Customers would indicate their preferred vegetables, which she would deliver in a bundle directly to their doorstep. The payment would be subscription-based, with an upfront fee to adhere to the farm, followed by a monthly fee to order and receive the basket of carefully selected vegetables. This idea was but a starting point: SF would become a network connecting trusted farmers and customers. We had the opportunity to meet Sumeet as SF was rebirthed at the beginning of the term, September 2018. After a thorough discussion where she shared her successes and challenges, we determined that we could help her on her pricing strategy. The objective was to construct a model to help her fix a cost-based price, i.e. a price based on her total costs given her forecasted production on which she may apply a desired margin. Under Mrs. Sreelata’s guidance, we additionally decided to take it a step further and provide a complementary analysis on the economic value of SF.