KENYA · GUIDE 0034 · EDITION 4.2
Lemongrass growing in Kenya: Pricing and Break-Even
Price an accepted unit, not an activity title
Start with this sale unit: bundle or clump.
Separate lemongrass sold as cooking stalks from leaves bought for drinks and rooted planting clumps, giving each a clear description and independent selling unit locally.
A quotation needs the accepted quantity or scope, exclusions, completion point, delivery arrangement and payment schedule. Without that specification, two apparently similar prices may pay for different work.
Build the direct-cost sheet
- planting stock
- trimming
- freight
Cost stalk cleaning, leaf trimming and digging clumps as different jobs, including unusable material rather than assuming the whole harvested plant receives one uniform selling price.
| Calculation | How to use it |
|---|---|
| Variable cost per accepted unit | Direct inputs, labour, delivery and measured losses divided by accepted units. |
| Contribution per unit | Agreed selling price minus variable cost per unit. |
| Period operating surplus | Contribution from units sold minus fixed overhead for the same period. |
| Break-even units | Fixed overhead divided by positive contribution, rounded up. |
Count rejected output, unsold stock and correction time. Keep fixed overhead in a consistent period; a daily contribution cannot be compared directly with a monthly overhead figure. If contribution is zero or negative, extra sales do not establish a workable break-even point.
Reconcile the cash separately
A customer's unpaid balance cannot pay today's supplier bill. List actual collections, advance payments, supplier deadlines, refunds and recurring bills by date. Separate refundable deposits and money held for an uncompleted commitment from funds freely available for expansion.
A mixed bundle creates disappointment when a buyer expects substantial cooking stalks but receives mostly leaves, even though both parties use the same familiar crop name.
Test a weaker outcome
Recalculate with fewer accepted units, a delayed customer collection or a higher input quotation. Change one assumption at a time to see which constraint matters. Use the actual pilot record: Record the plant part ordered, raw harvest weight, prepared saleable quantity and use feedback, then compare repeat demand before favouring one product in the planting plan.
Do not interpret the invented financial teaching exercise in the complete manuscript as a market price or predicted income. Replace its assumptions before using it for a real decision. The public planning tool can help with arithmetic; it does not validate the inputs.
Work through this business's example
Test the listed example when things change
These calculations are invented teaching cases derived from this guide's example, "Invented teaching scenario; not a market quotation or income forecast". They are not observed customer results, local quotations or forecasts. They hold the listed input bill constant unless the row explicitly changes it. Excluded expenses and tax still need to be added.
| Case | Accepted / priced output | Example revenue | Listed cost | Difference before excluded costs / tax |
|---|---|---|---|---|
| Original example | 50 | KSh 2,500.00 | KSh 1,220.00 | KSh 1,280.00 |
| 20% fewer accepted units, rounded down | 40 | KSh 2,000.00 | KSh 1,220.00 | KSh 780.00 |
| 10% reduction in the assumed selling price | 50 | KSh 2,250.00 | KSh 1,220.00 | KSh 1,030.00 |
| 10% increase in every listed cost | 50 | KSh 2,500.00 | KSh 1,342.00 | KSh 1,158.00 |
The lower-acceptance case represents the loss of priced output, not a prediction of the actual reject rate. With 40 accepted units, the same listed bill costs KSh 30.50 per accepted unit. Do not divide it by the original 50 units and hide the loss. A whole-job price needs its own agreed acceptance and partial-payment treatment.
Inspect the cost that can change the decision
The largest listed line is Identified lemongrass divisions, each: 20 at KSh 25.00, giving KSh 500.00. A 10% increase in this line alone adds KSh 50.00 to the example bill. Check its exact unit, scope, quotation validity and whether it is a one-off resource or a repeat input before changing the quote.
Keep every input quantity separate from priced output. A fall in accepted output does not automatically reduce already-purchased inputs. Use the itemised costing tool to change the real quantities, rather than scaling the whole bill by a sales percentage.
Connect the commercial check to quality
For lemongrass growing, investigate this concrete failure: Weak or wrong aroma. The guide's diagnostic check is: Check source identity and compare a cut sample. Proposed response: Hold unknown grass and obtain competent identification..
Record what was actually found and rechecked; do not mark a corrected item accepted until the agreed buyer checkpoint has passed. Any rework materials, transport, labour or credit must be added to the actual cost/result record.
A cash-timing exercise using the same example
Assume solely for arithmetic practice that opening cash is zero and the entire listed input bill of KSh 1,220.00 must be paid before handover. With no advance, that amount must be funded before any sale is collected. This deliberately simplified case does not establish when your actual suppliers need payment.
If a buyer hypothetically pays a 30% advance on the example revenue of KSh 2,500.00, cash received would be KSh 750.00. Paying the listed bill then leaves KSh -470.00. The additional cash needed to avoid a negative balance at that point is KSh 470.00. The unpaid remainder is KSh 1,750.00; it is a receivable, not cash already in the business.
The 30% figure is an invented teaching assumption, not a recommended or agreed customer term. Check whether deposits are refundable and which commitments they can actually fund. Do not count the advance again when entering the final collection. Add equipment payments, tax, owner drawings and unlisted operating bills to the dated cash plan as appropriate. The 13-week planner in file 10 shows week-end funding gaps; inspect intra-week dates for a large payment.