THE REVENUE RISK OF VALUE-BASED PRICING FOR FED CATTLE: A SIMULATION OF GRID VS. AVERAGE PRICING

The reluctance to adopt value-based pricing stems from a fundamental problem created by the system: increased revenue uncertainty and variability. The literature suggests that inconsistent carcass characteristics cause revenue variability under grid pricing. The possibility that the grid pricing structure, regardless of cattle quality variations, also causes revenue variability has been recognized but not fully analyzed. This study quantifies the impact of grid variability over time, pen quality differentials, and quality grade price discounts on average revenue per head for a pen of fed cattle. Grid pricing revenue results are compared to average pricing results.


Issue Date:
2001
Publication Type:
Journal Article
PURL Identifier:
http://purl.umn.edu/34261
Published in:
International Food and Agribusiness Management Review, Volume 04, Issue 3
Page range:
275-286
Total Pages:
12




 Record created 2017-04-01, last modified 2017-08-25

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