Pricing Your Gift Baskets Right
One of the first obstacles anyone starting a gift basket business has to overcome is to master the art of pricing their products. There are some things you should consider when pricing product range.
Don’t underestimate the value of your products and services. If you do, you may make the mistake of pricing too low. There are three outcomes of pricing too low when you start your business. One, customers may not think you offer quality products. Two, you will attract only penny pinchers. These kinds of customers will not keep you in business in the long run. Thirdly, once you price low it is almost impossible to raise prices without losing customers, especially if you have driven down your competition’s prices.
Rather than making your price point competitive, why not focus on your range of products and the things that make your company different. Check competitor prices and use the information as a guide. If you feel that you are offering a better product and have a better marketing plan, then don’t hesitate to reflect that in your price.
One way to determine price is to figure out how much it cost you to make the basket. Price the contents, labor, and even overhead, and then double that amount to set your sale price. This is the easiest way to determine price and provides you with a significant profit margin of 100%. In order for this pricing scheme to work you will have to get your inventory at solid wholesale prices.
Induce customers to return to shop with you by offering discounts for repeat customers, customer referrals, and customers who want to pick up their basket rather than have it delivered.
Figuring out how to price your baskets can take a little time. It is better, however, to price a little higher to begin with and drop your prices if you need to. It just doesn’t seem to work well the other way around.
You’ll have your gift basket business up and running in no time with a sound and logical approach to pricing. You will offer your customers value and still be able to maximize your profits.
