Know Your Products: Relative Value & Market Value
Recently, I assisted one of our Sales Managers doing a feasibility analysis for a prospective customer who was considering establishing a mechanical soy processing business. This particular customer was considering a competitive soy processing system and worked with an independent consultant to conduct a feasibility analysis. Based on the analysis, they made the decision to not pursue the project.
Our Sales Manager challenged the customer to share his values and allow Insta-Pro to evaluate the cost and pricing assumptions supplied in the competitor’s analysis. Immediately, we discovered the pricing assumptions provided were based on a solvent-extracted soy meal and not in line with what Insta-Pro sees by their customers when selling ExPress® soy meal. The value of the ExPress® soy meal garners a higher market price vs. solvent soybean meal and other mechanically-processed soy proteins, which is based on higher digestibility of protein and oil (energy) giving improved animal performance, as evidenced by independent University research.
University Nutritionists have developed a calculation to help evaluate differences in various soy meals and thus establish the “Relative Value.” The calculation allows for giving consideration for the higher level oil in the meal and improved digestibility of protein and energy found in ExPress® soy meal when compared to solvent-extracted soymeal. Using this “Relative Value” calculation, we have developed pricing models to evaluate “what if” changes made to pricing and digestibility based on local market conditions and giving various “Market Value” scenarios. Use of these pricing models allows for more accurate values to be used in the overall feasibility analysis, thus giving a more realistic analysis.
If you are interested in learning more about Relative & Market Values of ExPress® soy meal, or a Feasibility analysis, contact Insta-Pro today.