Florist Guide To Pricing Flowers For Valentine's Day

Jan 10, 2017

Valentine's Day happens just once a year. A look at how modern pricing practices and a yield management approach can help florists generate maximum profits.

 

Discounting

There are two main reasons for discounting at Valentine's Day. The first is to encourage customers to order well in advance, a practice that offers you a number of benefits:

The sales are locked in. If you take the order on January 25 you don’t have to worry about how many ads or emails the customer sees from order gatherers and drop shippers over the next few weeks.

Orders booked in advance certainly make ordering less risky – you’re buying to fill orders you already have, rather than orders you are hoping to get.

Advance orders make planning and production easier.

Now the question becomes whether you are willing to discount in return? If so then yes, you should offer discounts to customers that order early.

If not you should still consider a more selective kind of discounting for a different reason – to increase sales.

The key to discounting is to never cannibalize full price sales. You don’t want to offer discounts to customers that are willing to pay full price.

If you believe that certain customers are going to buy from you anyway, with or without a discount…. don’t offer them a discount. Don’t include them on these special offers.

Instead focus on the customers in your database that did not order from you last Valentine's Day. Maybe they ordered in the past and switched to another flower buying channel. Maybe they are only now in a serious relationship. Maybe they think Valentine's Day flowers are a cliche, and/or overpriced. Maybe they are currently buying at the grocery store, and just need a nudge ti try a real florist.

These customers are not likely to buy from you at Valentine's Day, making them perfect targets for selective discounting.

Another trick is to use hurdles. The trick is to structure and present the offer so that the people who are willing to pay full price won’t take advantage of the discount.

Ordering well in advance is a gentle hurdle. The customer that is willing to buy Valentine's Day flowers several weeks in advance is likely serious about saving money, and there is a risk they might go elsewhere. Locking that sale up is likely worth a small discount.

You can also use delivery date to make deliveries and pickups more manageable. This is something restaurants started doing a few years ago. Valentine's Day is very big for them too, and they typically try and max out the opportunity by going to a streamlined prix-fixe menu with higher prices. But there are still only so many people they can get through their restaurant on that one day.

So some now offer lower prices around Valentine's Day. If a diner is willing to jump over the hurdle of going out for Valentine's Day on the 13th or 15th they have proven they are serious about saving money and earned their discount.

Florists can do the same thing by offering discounts for flowers delivered on the 12th or 13th (“Show her that you just couldn’t wait!). The person that is willing to jump that hurdle is very likely someone on a budget, someone that was taking a serious look at other flower buying options. The hurdle helps ensure that you aren’t cannibalizing a full price sale you would have made anyway, instead getting a slightly smaller sale you wouldn’t have made otherwise.

 


Offer Bundles

No matter what you might hear there are customers that hate delivery charges. Yes, delivery is expensive to provide and it should be a money maker for you but none of that matters to a customer that resents paying for delivery – especially now when there are so many flower buying options that (falsely) promise free delivery.

There are a few ways to approach the problem. One is by offering free delivery for orders placed well in advance, or orders that are delivered any day but the 14th. Another is to promote in-store pickup.

But the best approach may be bundling. Examples include the combos you see at fast food restaurants and movie theatres – bundles that contain multiple products.

Bundles are almost magical. People love them, which is why so much space on the fast food menu is devoted to them. In fact they’ll buy them even when the bundle costs more than the same of the component products. Actual savings are usually somewhere between 2-5%.

The reason, most relevant to the flower business, is that bundles let you assign your own value to each component item. Imagine a moviegoer that has their heart set on popcorn and a drink… for them the candy seems almost free.

This same effect allows the flower buyer that hates delivery to not think about delivery. They like flowers, and they love giving flowers… now that is all they have to think about. Out of sight, out of mind…. from their perspective they are no longer paying for delivery, they’re just paying for the joy of giving flowers.

Another benefit, for both the florist, is referred to as a lower “ordering cost”. We’re not talking about the actual cost, we’re talking about the time and effort saved when selling a single item (the bundle) versus selling the three or more component items.

When preparing bundles there is no need to build in a big case discount. That’s not the appeal so why give away profit.

One way to add value to bundles without discounting is by adding things like gift certificates from other retailers. Are there any local restaurants that would like exposure to your customers? Would they consider providing you with $10 gift certificates to include in your bundles?

Bundles should be presented early in the sale process. When a caller tells you they want to order flowers for Valentine's Day you can simply ask if they are interested in one of your Valentine's Day bundles that includes delivery.

 

 

Forget About Margin To Generate Big Profits On Small Sales

For the better part of a decade I spent every Valentine's Day standing at the entrance of a very busy flower shop, doing brief “exit interviews” with as many customers as possible.

Of special interest were those leaving empty handed. We had them in the palm of our hand, right inside the shop, with time to buy a Valentine's Day gift running out… and we had blown it. We had missed our only chance to sell them Valentine's Day flowers that year. We needed to know why.

Sometimes there was the usual grumbling about higher rose prices at Valentine's Day. For most shops it’s not possible to stick to regular prices so it might seem like there was no resolution.

But it turns out that these customers are more focussed on price than value. They don’t necessarily want a great deal, they just want something with roses and a price that is in line with their budget. More on this in a minute.

Another thing we heard a lot? “I just wanted a single”.

Traditionally the shop did not do singles. The designers believed that they were a waste of time and would not generate enough profit. And if we had stayed to an industry standard markup they would have been correct.

Two bad assumptions were being made:

  • that the single rose buyer was cheap – that they expected a single rose for roughly 1/12 the price of a dozen.
  • that they could be pushed into buying a more profitable item like a dozen.

Sometimes those assumptions were true. But often people wanted a single rose because, well, they really did just want a single rose.

This was often the case with younger customers, particularly those still in school, where a full dozen was simply a bigger statement than they were willing to make. In other cases the customer saw special meaning in a single rose.

If you stay with a cost plus formula then yes – it is very hard to make meaningful profit from single roses. But the most important pricing decision you can make is to break from the constraints of a cost plus formula. Forget about what it costs and focus on how much you can charge.

The next year (mid 90’s) that store introduced a very nicely packaged and presented rose for $12.99. The presentation was essential – to get the price we wanted it couldn’t look like we just split a dozen into twelve singles. It added a lot to the perceived value but relatively little to our cost.

These singles were very profitable and sold very well – so well that the price went to $17.99 the next year and $19.99 the year following. They continued to sell very well, and generate larger profits with less of the risk associated with carrying inventory at Valentine's Day.

These singles also satisfied many of the people who complained about Valentine's Day prices. Remember – they didn’t care as much about value as about getting something “Valentiney” at a price they could afford.

As always it is important to avoid cannibalizing full price sales. If someone comes in looking for a dozen we don’t want them to think “oooohhhh… those singles are so nice I’ll just get one of them instead!”. In fact we hope that some of the people looking for singles (and even some of the ones that complain about price) might actually move up to a full dozen.

So at first we kept the singles “under the counter” and didn’t mention them unless the customer asked, or we saw a customer leaving empty handed.

Later this would change – once the singles were up to $19.99 they were almost as profitable as a full dozen, and we were happy to sell them.

And here something interesting happens. The customer that wants the symbolism of single rose is happy. The customer that just wants a low price is happy. The customer that is focussed on value can’t help but see how the relatively expensive single highlights the better value of the full dozen and moves up. Everybody is happier because the prices are now better aligned with the way they value the product.

 


Use More Than One Approach

A successful fisherman has success because they make a lots of casts, but also because they use a lot of different lures.

For a retail equivalent look at Land’s End. If you have ever been on their email list you know that they send a lot of emails (the casts). They also come at you with a lot of different offers (the lures).

One day it might be 20% off everything. Another day it might be free shipping if you spend more than $75. They key is that just as the fisherman uses different lures to appeal to different fish they use different pricing models to appeal to different buyers.

As you market to your customers in advance of Valentine's Day don’t just keep throwing the same thing at them. The pricing model can be as essential as the product itself when trying to get the sale. You wouldn’t offer just one product, so don’t offer just one pricing model.

One email might promote free delivery on orders placed well in advance, another might focus on bundles that include delivery. Another might promote the savings with pick-ups, another savings that come with off-peak delivery.




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