How to Price Gift Baskets - A Gift Basket Pricing Strategy

Pricing is important in the gift basket business just as it is in any field of commerce. You must know how to price gift baskets if you want your business to be profitable and your products to be marketable. You price has to be fair and competitive while still allowing you to make the profit level that you need.

Pricing a gift basket does not have to be complicated. In this article we set out some pricing considerations for a gift basket business and offer a strategy and formula for coming up with the right price.

Pricing Too Low

Don't make the mistake of pricing too low to try and win customers over and establish your business as you will be limiting your profits and will end up attracting the worst kind of customers. If you do raise your prices in the future to more profitable levels then the bargain hunter clients that you have served will simply move on to the next gift basket business offering budget prices. By pricing low you are leaving money on the table, lowering the value of your products and damaging the overall industry in your area.

Pricing High

Like any industry, the gift basket business is competitive. If you price your product line too highly then you risk losing prospective clients to competitors. However, there are situations where you can get away with prices that are above average market rates.

Look for ways that you can make your baskets and your service better or different from the competition. If you can demonstrate these differences to clients and they see that they are still getting value from what you offer then they will go to your price level. Don't be afraid to ask for premium prices if you really feel that your products and services are better than what the competition has to offer. 

Other factors that may permit you to get away with above average pricing in the market include your brand reputation and your sales process.

What are your Competitors Charging?

One of the best approaches to pricing is to survey the market and find out what your competitors are charging for their baskets. You can then consider pricing your own at similar rates with some adjustments where necessary. Getting pricing data is easy these days as you can analyse a large number of competitors in your area by viewing their websites or giving them a quick phone call.

A Pricing Formula

One easy formula for pricing is to add up the cost of all the items in the basket and the packaging costs, add a suitable amount for labor and finally add on a fair profit. To keep things even more simple many business operators simply work out the total cost of supplies per unit and double it in order to make a 100% profit margin per gift basket.

Larger businesses and those working out of rented premises will have to be a bit more careful with their methods as they will have to figure in fixed costs such as rent and utilities and add a small amount on to the price for each basket to compensate for these expenses. You may also have to allow for other expenses such as marketing and transportation costs.

If you are getting your goods at wholesale prices then often your final basket prices will come out at an amount that is not significantly higher than what consumers would pay for the same products at the supermarket. And the price premium is worth it to them for the convenience and presentation value that is added as a result of your work. Retail prices can be a good yardstick to measure your basket prices against. It is OK to charge more than a supermarket for a basket of goodies but try not to go too far beyond retail price levels.

Discounts and Freebies

You may consider offering cheaper prices to customers that pick up their orders instead of having them delivered. When you do have loyal customers that buy from you over and over again you should also offer them small discounts to show them your appreciation.

Don't be afraid to give away sample packages if you are targeting corporate clients as the value of winning some of these lucrative accounts definitely makes the cost of a freebie worthwhile.

Learning how to price gift baskets at a level that suits your market can take time and requires some intuition as well as a method. It is better to price a little high (rather than low) at first to test out prices and then slowly go down from there to find a level that customers are prepared to pay.

Additional Articles -

How to Market Gift Baskets - Our Gift Basket Marketing Plan

Selling Gift Baskets to Corporate Clients

Gift Basket Dropshipping - Becoming a Dropshipper or a Vendor

Gift Basket Advertising - How to Sell Gift Baskets

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