Pricing is one of the most critical and complex aspects of any business, including a floral business. While pricing your products, you need to consider multiple factors and make sure your prices are neither too high nor too low. Pricing too high will drive away customers, while pricing too low will damage your revenue.
So, what strategies and processes should you follow to price your products? Here in this article, we will discuss that in detail.
Factors to consider before pricing your floral products:
Pricing of your products should ideally be like this:
Sell price= cost price of goods+ labor cost+ profit
However, it’s not always that simple, and you need to factor in a number of additional factors to decide the actual ideal pricing for your goods. Here is a list of the factors to consider:
1. Cost of flower bouquets sold
It’s pretty self-explanatory. This indicates the total cost of all the goods required to produce the flower arrangements or the finished products that you are selling. This includes cost of flowers, packaging material, foliage, vases, labor, and other direct costs.
2. Overhead Cost
These are the indirect costs that you bear in order to run your business. This includes marketing costs, rent, utilities, insurance costs, etc. you should include them in your overall cost in order to incur a profit on your pricing.
Competition is a big factor in pricing. You should be aware of the pricing offered by your competitors. If your prices are too high, you will lose business to your competition, and if it is too low, your profit margins will suffer. So, it is important to conduct market research about competition pricing.
4. Target Market
You should also be aware of the target market. If you are operating in a high-end market, then you can levy premium pricing, while if you are operating in a low-end market, then you should keep your prices as down as possible without making a loss.
5. Seasonal Demand
Prices of floral arrangements also go up and down depending on the season. In-season flowers are easily available, hence cheaper, while out of season flowers demand a premium price. It also depends on supply and demand. During Valentine’s Day, the demand of roses skyrocket. So, florists charge more during this time.
Also Read: Designer’s Choice Flowers Guide
6. Value Proposition
You should also consider what additional value you are supplying to your customers, such as, unique designs, superfast delivery speed, amazing customer service, and so on. You can charge extra for providing those values.
Pricing your products should depend on all these factors mentioned above.
Also Read: Floral Wire Service Guide
Common pricing strategies used by businesses to price their products
Now you know what things to consider to price your product. It’s now time to use those data and start pricing your product. When it comes to pricing, there are a number of pricing strategies used by businesses all over the world. They are:
1. Cost-plus pricing
This is simple. Sum up all your expenses and add a profit to decide your price. It covers all direct and indirect costs, and leaves you with a profit. However, it might not always be the best way to price your products as it overlooks several factors.
2. Value-based pricing
This is similar to cost-plus pricing. However, it involves perceived pricing, i.e. what you perceive your products’ costs to be. This might involve charging a premium for providing unique designs, or great services.
3. Competition-based pricing
This depends on what your competitors are charging on similar products. In order to keep your prices relevant to the market, this is a good pricing strategy that ensure your prices are neither too high nor too low. However, you need to make sure whether you are covering all your costs and making a profit or not.
4. Dynamic pricing
This is a strategy that depends on real-time condition of the market. When market prices are high, you increase your prices, and vice versa. It also depends on demand and supply.
To be honest, all these pricing strategies have their own merits and demerits. This is why it is recommended to consider all of them instead of following just one.
Also Read: Holiday Pricing Strategy for Florists
Florist pricing tricks to attract more customers
Pricing plays a big role in attracting and retaining customers. This is why, the way you price a product matters a lot too. Here are some tricks that marketers use to price their product that impacts the customers’ psyche and makes them buy more. Here goes:
1. Anchor pricing
This strategy involves placing a high-priced product next to a lower-priced product, making the lower-priced product seem like a better deal. For example, you could place an expensive bouquet of flowers next to a more affordable option to make the affordable option seem like a good deal.
Bundling means combining two or more products and offering a discount on their total price. For example, you can combine a Mother’s Day Carnation bouquet ($49), a chocolate basket ($25), and a Mother’s Day greetings card ($5) together. The original price will be $79, but you can offer the bundle of products for $65.
3. Limited-time offers
Offer lightening deals and limited time offers attract a lot of customers. In this deal, you offer a discount for only a limited time, ideally, 1 or 2 hours. This creates a sense of urgency in customers and they make a purchase because they don’t want to lose such a great deal.
4. Decoy effect
This is another smart way of pricing your product. In this way, you offer two deals side by side, one obviously more lucrative than other. For example, you can offer a Valentine’s Day Rose bouquet for $99, and offer another deal that includes the Rose bouquet, a stuffed toy, and a greetings card for $105. Placing them side by side will make the second deal seem like a great option, and customers will opt for the second one.
5. Buy More Pay Less
Another way of pricing is the Buy More Pay Less strategy. In this strategy, you offer a better discount for a high value purchase. For example, if someone is making a purchase of up to $100, offer them a 10% discount, whereas if someone makes a purchase between $101- $200, they will get 15% discount.
So, these are all the things that you needed to know about pricing your floral products in an ideal way. Apply them in your daily interactions and see how your revenue improves over time. Get in touch with Hana Florist POS Team and discover more firsthand!