Vol. III, No. 3, March 2025
The magic of added-value transformational experiences
If you are looking for ways to maximize the value of your agritourism offerings, increase guest traffic, and charge a premium price for the privilege, look no further than the progression of economic value. Although the name seems slightly academic, the concept is simple. It's about increasing value-added. It starts with raw commodities that are transformed into goods, which are then wrapped in services, then transformed into experiences, and finally into transformational experiences. Each level increases the total value to the customer and, accordingly, the total price the customer is willing to pay. Generally, price sensitivity decreases, profit margins increase, and competition decreases as you move up the progression of economic.
We'll use apples as an example. At the first level of economic value, the apples are sold in a farm market. At the 2nd level of economic value, they're turned into goods, such as apple sauce, apple pies, cider, cider donuts, and maybe even hard cider. Based on the added value, these goods sell for a much higher price and usually have a higher profit margin than raw apples.
The 3rd level of economic value is to offer apples as a service. This can include serving customers a slice of apple pie in a farm market restaurant or a glass of hard cider at a cidery. The prices for these services are higher than the cost of buying apple pie or cider to consume at home.
Now comes the next level of economic value, the 4th level, where farms turn apples into an experience. Crazy as it is, people will pay a farm to do the labor of picking the apples (the experience) with U-pick, also called pick-your-own (PYO). Most customers for U-pick, especially families with young children, don't come to U-pick farms to save money by harvesting a commodity. They come for the experience of both picking the produce and consuming produce that is local and fresh. People perceive the experience as worth more than just the value of apples they get. Recognizing this value equation, many U-pick farms now charge admission in addition to the charge for the apples themselves. Sometimes, the premium for the experience is built into the price U-pickers pay for the container they can fill with apples. Sometimes, U-pick pumpkins are priced higher than supermarket ones since there is now an experiential value to them. By offering U-pick, farms command a premium price for the crops versus their commodity price.
A corn maze is perhaps one of the best examples of raising a commodity's value to an experience. A farmer might sell 5 acres of corn as a commodity for $6,000. However, turn it into an experience by charging people around $10 to get lost in a 5-acre corn maze, and 15,000 admissions will result in $150,000 of revenue from those same 5 acres, a 2,500% increase in revenue.
But the magic truly happens at the 5th level of economic value, transformational experiences. Transformational experiences make you a better person, help you grow, and permanently change you in positive ways. These have an even higher appeal and come with higher revenues and profitability than the 4th level. For apples, an example would be an apple pie cooking class. The attendees might even first pick the apples they're going to use. In a farm market, apple tastings where staff explain the heritage and differences of the apples are another example of a transformational experience. It will raise the perceived value of the apples for sale and introduce customers to buying new varieties.
Other examples of transformational experiences include farmer-led farm tours, tours of a farm's cidery, and beer and cheese tastings from local producers. Having a hay wagon ride guide explain the farm's history and what people see on the ride can elevate that experience to a transformational level.
An example of a combination of the 3rd, 4th, and 5th levels of economic value might be a long-table dinner in an apple orchard where guests meet the farmer and learn about apple farming and the orchard where the dinner is being held. The chef who prepared the meal might explain some unique apple dishes. It's not unusual for people to pay $200 a person for this type of experience. The dinner and drink might only cost $80 if served in a restaurant. The other $120 of value is created by the unique dining experience and its transformational additions.
Providing your guests with the meaningful, lasting impact of a transformative experience can give your agritourism venue a competitive advantage and allow you to charge a premium for the experience while still providing guests with experiences perceived as a good value for their money.
In addition to the economic value and profitability at the different levels of the progression of economic value, there's another dimension on how people value each level - the progression of time. With only 24 hours a day and seven days a week, 40+ hours a week for work, and 8 hours a day for sleep, time is an immenselylimited currency. Time wasted is to be avoided at all costs. Goods and services are about time well saved, so a person frees up their time for other things. Instead of spending time making an apple pie, you buy it at the farmers' market and save time. Experiences are about time well spent. At the 5th level, transformational experiences, the progression of time takes on a greater value to time well invested, as transformational experiences, the improvement to either body or mind, lasts. Learning to cook a recipe that includes apples means you have the knowledge to enjoy the recipe for the rest of your life, a great return on the time you spent in the cooking class.
For many people, leaving home and visiting a particular leisure venue is more about using discretionary leisure time than spending discretionary money. In our time-pressed culture, the last thing people want to do is waste their leisure time. For that reason, to ensure it is worth their time, we see a trend of people choosing premium, higher fidelity, meaningful experiences when they go out, even if they cost a premium in price. For higher socioeconomic consumers, who are the vast majority of the out-of-home leisure/entertainment venue market and are the most time-stressed, their time is more valuable than their money. It is better to part with more money to be assured of gaining the maximum value and enjoyment for time well spent or invested.
Higher socioeconomic households are the prime market for out-of-home (OOH) leisure and entertainment, including agritourism venues. 80% of all spending on local OOH entertainment and art venues admissions is by households headed by a person with a bachelor's degree or higher.
Bachelor+ households have the least leisure time (74 minutes less a day than a high school graduate), meaning they will definitely want to avoid wasting their leisure time and are most willing to pay to ensure it's well spent or invested.
A PEW Research study found that this higher socioeconomic population has the greatest percentage of lifelong learners - 87% - meaning they are highly motivated to seek transformational experiences.
Agritourism farms and ranches can grow their businesses and profitability by making a paradigm shift by adding the offerings with the highest economic and time value - transformational experiences.
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