2015 Maine State Florists Spring Conference Follow-Up

Apr 14, 2015

 

Beyond Cost Plus sessions on two different aspects of pricing in retail floral were presented at the 2015 Maine State Florists Spring Conference.

 

This past weekend two Beyond Cost Plus sessions were presented at the 2015 Maine Florists Association Spring Conference in Orono Maine. They looked at very different parts of the flower business.

The first dealt with quoting weddings and events. Not costing weddings and events (there is already plenty of information on that) but how to present quotes in a way that generates more sales and larger profits. The goal is not scare off price-sensitive customers (that need to see a very aggressive price) without discounting unnecessarily to customers that are less sensitive to price (willing to pay more).

The second session dealt with a very different part of the flower business – pricing the "standard" arrangements (rather than event work or fill-to-value orders) that appear on florist web sites, are promoted at the big floral holidays, etc. Again the goal is to have arrangements that work for price sensitive customers as well as higher margin/higher profit arrangements that will appeal to customers less focussed on price.

In talking to the Maine florists in attendance it was easy to spot a parallel with florists in Michigan, particularly in the upper peninsula. In both cases it is not uncommon for a florist to have two very different markets – a local market made up of year round residents, and another market of people that spend their summers in the area. Typically the local residents are more sensitive to price, and the summer residents are more willing to spend.

This can create a pricing nightmare. The local market is essential to the survival of the shop – the florist wants to serve them and has to offer them pieces and prices that they can afford.

But selling to the summer people at the same prices means leaving money on the table. The summer people are almost certainly accustomed to paying more back home in the city, and would probably do the same during the summer. They can be very profitable customers, but only if they are charged what they are willing to pay.

There is another, very serious, danger to offering discounted prices to people that are used to paying more. Price is very closely associated with quality in the minds of many customers. This is particularly true with luxury products and/or products that the customer doesn't clearly understand. Flowers fall into this category, and it means that when people see low prices they are likely to assume lower quality.

Imagine someone from Boston that typically buys flowers from a high-end shop like Winstons. They head up to their waterfront place in Maine for the summer and call a shop that is, most of the year, focussed on serving their local, year-round market with affordable prices. At the very least they are going to get away with spending much less than they expected. At worst they might not purchase at all, assuming that the lower prices imply lower quality.

The good news is that all of this can be addressed with modern pricing strategies, and we looked at several of the most relevant tactics.

One of those involves discounting to locals. Disney is a great example – they offer significant discounts to Florida residents. While this is a good PR move with thw locals it's more about revenue. They understand that people from outside the state who plan a family trip place a much higher value on a day at Disney than the people who live in Florida. Locals are much less likely to pay premium tourist prices, but they can be a vital source of revenue, especially during off-peak periods when out-of-state visitors are rare. The park would rather get some revenue by discounting to locals than no revenue at all.

Another example involves ski resorts. They too typically offer special discounted season passes to local that are not made available to the people in the cities that drive up every weekend. Again the reason is that locals typically place a lower value on the skiing, and the resort uses the discount to align their pricing with that value.

The mechanism the resorts use is fascinating. They typically, and somewhat arbitrarily, insist that anyone looking for such a pass come to the resort during one brief, very specific, period – usually a single evening or weekend. And this period is always well outside of the traditional ski season, when the out-of-town skiers are least likely to be there, and even most locals aren't thinking about skiing. Once they get to the resort they have to prove their place of residence establishing their local status.

In doing so they aren't just keeping it to locals, they are making locals jump over some significant hurdles in order to earn the discount. This is great pricing practice as there are doubtless some locals that will pay full price, and the introduction of hurdles ensures that only those that are most serious about saving money actually get the discount.

The volunteers and members of the Maine Florist Association could not have been better or more welcoming hosts. It was a pleasure to spend time with them. The sessions were sponsored by FloristWare as part of their ongoing commitment to help retail florists be more successful.



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