Pricing Considerations

Individual T. derasa serving bowls ranging from 25 to 30 centimeters in size sold for a retail price of $6.00 each at the MMDC gift shop, but identical items sold for a retail price of $30 each in Honolulu shops! Although this may appear to be a grand export opportunity, bear in mind that upscale retail shops in high-rent, high-traffic areas such as Waikiki or Ala Moana Center often use a “triple key” pricing system, a high markup form of “keystoning” in which the retail price represents a tripling of the store's landed cost. Therefore, for the same item that retails in Waikiki for $30, an island-based producer could expect to receive about $10 less shipping costs, but only if he were dealing directly with the retailer.

In most cases, though, producers in remote areas will find dealing directly with foreign retailers to be impractical because of distance and communications constraints. Many island farmers don't have frequent international mobility or the initial capital needed to develop offshore marketing relationships. More typically, they deal with wholesalers or distributors who come to the farm gate to purchase shells. If the island-based farmer is selling clam shells to a wholesaler or distributor, the farmer might expect to receive just $3 per specimen for something that will retail for 10 times that amount in a distant city in Japan or the United States. In the case of heavy or bulky items like giant clam shells, shipping and handling costs must be researched very carefully because they are significant factors in determining prices.

The easiest way for farmers to avoid paying shipping costs for giant clam shells is to market them directly to consumers. Direct marketing is advantageous because the middlemen and their markups are avoided, and producers can achieve high returns by charging retail prices. Direct marketing's major drawback is that it requires the retailer to “be there” for the customers. That means establishing and staffing a shop of some sort and adapting to regular hours in the shop. This topic will be discussed more later.

Nothing is intrinsically wrong with export marketing of giant clam shells to wholesalers, but most producers find that the buyers want large quantities (on the order of 20 tons or more at a time) at very low prices. Selling the shells at retail prices close to where they were produced often makes better sense and helps keep more jobs and dollars at home. On the other hand, exporting raw materials, such as unprocessed clam shells, allows foreign crafters to gain employment and foreign wholesalers and retailers to enjoy markups that could have been reaped where the shells were produced. Therefore, if the area in which you produce giant clam shells has any sort of tourist industry, consider ways in which the visitors may be induced to tour your farm and pay cash for your shells and shell products.