Gift Basket Business Pricing Strategy

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 for coming up with the right price.

Firstly you should aim to hit a fair, reasonable and competitive price that is also profitable. 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 lowering the value of your services and damaging the overall industry in your area.

The best approach is to survey the market and find out what your competitors are charging for their baskets and price your own at similar rates. Don't be afraid to ask for premium prices if you feel that your products and services are better than your competitors.

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.

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

The easiest 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 simple many business operators simply work out their total costs per unit and double it in order to make a 100% profit margin.

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.

Larger businesses and those working out of rented premises will have to be a bit more methodical 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. Retailers can offer much cheaper prices to customers that pick up their orders instead of having them delivered.

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 the freebie worthwhile.

When you do have loyal customers that repeatedly buy from you over and over again you should also offer them small discounts to show them your appreciation.

Pricing your gift baskets correctly to suit your market can take time to get right. 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.