Valentine's Day is a stressful time in the retail flower business. It's potentially a great opportunity to make money, but only if you get your pricing right. Here are there tips to help.
If you are promoting any kind of deal or special use “charm” pricing, prices that end in the number nine. And if you are the least worried about competition or comparison shopping you also use charm pricing. Customers associate this with value and savings – studies show that people wii, for example, buy the same item at $79 than $74.
A lot of florists pass up high margin sales of single roses because they believe that singles can’t be profitable, or that customers looking for singles will cheerfully switch to a bigger and more profitable dozen if that is their only choice.
Let’s start with the buyer and the idea they can just be flipped to a dozen. It’s not that simple – some buyers just want singles! And they’re about as likely to settle for a dozen as they are a casket spray. If you won’t sell them a single you won’t sell them anything.
Customers can want singles for different reasons and, yes, sometimes (but not always) that reason is price - they want something cheap.
Cheap does not equal value, and cheap can be very profitable.
Think about toothpaste. The cheapest toothpaste at the pharmacy is the little travel size. It also offers terrible value and very high margin.
The person looking for the cheapest price doesn’t expect the best value. The customer that wants a single rose doesn’t expect it to cost 1/12 as much as a dozen.
Forget about your cost plus formula when pricing singles. Come up with a nice presentation and a price to match – a price profitable enough to make you love selling singles.
And there is an added benefit… this kind of single also highlights the value of the full dozen, and anyone that was on the fence will be drawn to the dozen.
For most to the history of human commerce we had a better way of arriving at prices… we’d haggle, negotiating separately with each customer. Before we had to put a price tag on that arrangement in the cooler (or picture on the website) we were less focussed on our costs and more focussed on getting the best (maximum) price from each individual customer. It wasn’t about what it cost to make something, it was about how much we could get.
And, to some extent you still can. You might offer a (full margin) Premium Dozen for $80, and a (higher margin) 25 Rose Spectacular for $175. The customer that really wants to spend goes high, others go low.
But we don’t have to settle for a $80 sale. Sure, we know they don’t to spend $175, but we can offer an extra six roses for $20, or an extra dozen for $40.
That means some customers pay $175 for 25 roses, others pay $120 for 24. It’s a big difference in price, and a relatively small difference in product. That’s good! Effectively we’re back to negotiating exactly what each customer is prepared to pay and charging accordingly.
What about the lower margins on the extra six or twelve add-on roses? Yes, the profit here is smaller, but it’s still profit, profit you would not have if you insisted on getting full margin.
And that is OK! You aren’t cannibalizing full price sales… it’s not like the customer can save half the roses for next year, or split them up and give half to his wife and half to his mistress.