Last Quarterly I talked about my pricing strategy to grow my customer base and how, over time, by noticing their purchases and meeting changing demands, my customers started driving me. But now I’m ready to go to the next level and so this discussion brings me to my real dilemma: I want to change my pricing around to somehow entice each customer into bigger purchases.
I remember years ago I was at Seattle’s Pike Street Market, and I purchased a hair thingy for ten dollars. Something “magical” happened before my purchase was over. The lady had introduced me to the “combined deal” she offered for which, because I had bought ONE, I now had the option to get TWO MORE more for the same price. End of story? My $10 purchase turned into $20 for her because of her witty price point and special offer. Sales add up much quicker when the purchases are $20.
My thinking? I can do this! But what is that “magic price point” at which you are able to get a little more money out of each sale? And how can I encourage more $20 sales while still respecting the fact that people are financially stretched and I don’t totally know what to expect this summer?
My ultimate goal is to get more $20 transactions. I got some feedback from some fellow growers here in the West and Northwest (let me tell you we have got some smart cookies over here) and I have sprinkled their thoughts in here.
I would like to move toward selling more straight bunches and make my booth more like a European market. Straight bunches are way faster to process and less time-consuming than bouquets, so naturally they could be more profitable from a streamlined labor perspective, and you might catch me swimming with the kids at the lake more often. You could price them at eight dollars per straight bunch, or 3 for $20. (Notice the “magic price point”?)
But I grew my business with bouquets, so they are here to stay at some level. Switching over to the straight bunch idea is going to take time and it may not even work in my area. Maybe bouquets are the American way?! I will need to watch my customers closely.
Ideally, if I could sell a bouquet for $12 my magic price point would be a snap; I could say “Or buy 2 for $20.” The glitch in all of this is that nasty
$10 price point that I have already established. Everybody loves it and I can’t figure out a way to get rid of it. I am hugely hesitant to change my price this year, especially after a long-time (20 years) grower in the Seattle area shared that, “Before the infamous crash we had three people churning out $10, $15, and $20 bouquets as fast as we could make them and we sold more big ones than small ones. Lately (though), not so many big ones, mostly $10 boks.” Hmm… okay, if that is going to be my lot for this year, how about buy two bouquets ($10 each) and get the third bouquet half off, making it a $25 sale?
Now a good hedge against economic downturns is a large customer base, and I have spent the last 5 years focusing on strategies to build that customer base. But even as my customers push me, I want to continue growing an even bigger customer base. Last summer I sold a lot of flowers to people I had never seen before, so I am hopeful going into this season. That being said, I am still predicting a need for a small price point; I don’t want to forget to continue to grow that customer base through some introductory pricing (a.k.a. “Try me, I’m cheap!). And, like another grower in the West who offers two price points explained, “The idea behind the Posy bouquet (smaller) is to turn a reluctant buyer into a loyal customer.” One grower here in the West has decided to try offering more straight bunches of six stems for five dollars, or five bunches for $20. (This is not the first time I’ve heard of growers offering smaller-sized bunches to provide a low introductory price point for people.) In fact another grower mentioned customers asking for half bunches and made them smaller for $5 or 3/$10. (I really like that “Magic Price Point”.)
But lower price points do come with some warnings: A couple of growers shared stories where they offered lower priced smaller bouquets and basically felt like they were sabotaging their bigger sales or felt they were “cannibalizing their own sales by offering these.” I can relate here – I always take one of my kids with me to market and will let them make a few “lower priced bouquets” to sell and earn some blow money. I finally put a limit on how many they could make because their “cheap” bouquets always sold and I would lose my $10.00 sale to their $4.00 sale. The main strategy here to protect yourself is that, IF you offer a low price point, your labor into it MUST match that price – or you’re shooting yourself in the foot. That is why I like these growers’ choices of a smaller $5 straight bunch – keep it simple and handle it minimally to justify the lower price. In my opinion you cannot create a “bouquet” for $5.00 and think you’re making ends meet – not at a farmers’ market at least. Remember my talk in Tacoma – farmers’ markets are expensive sales venues. Your expenses to get there and be there can easily run you 30+% of your total sales. And if it’s a rainy day, that just gets uglier. For me, I think I’ll stick to the streamlined, quick and easy ½ straight bunch as my bottom priced introductory flowers.
This article was hard to summarize, I think that the “Perfect Pricing” is the “Perennial Dilemma” that affects every business owner when it comes to sorting out expenses, economy, and trends. But I did come up with something.
Paula’s “Magic Price Point” summary:
Here is my ideal “Magic Price Points”,
what I wish I would have started out doing:
Mini Straight Bunches
$5 each or 3 for $10
$8 each or 3 for $20 ($4 savings)
$12 each or 2 for $20 ($4 savings)
$20 each, add a straight bunch for only $5
Bigger bouquets made to order.
But raising prices is hard to do and I’m hesitant. The below seems like a happy medium….I just don’t think my Price Points are as “magical”.
Here is my “Happy Medium Price Points”,
knowing how popular the $10.00 bouquet is.
(Maybe I can sneak the $12.00 bouquet in another year.)
Mini Straight Bunches
$5.00 ea or 3/$10.00
Full Straight Bunches
$8.00 ea or 3/$20.00
$10.00 ea or 3/$25.00
$20.00 ea add a full straight bunch for $5
Bigger bouquets made to order.
I don’t start my farmers’ market until June, so I have some time to mull this over. If you read this and have an inspiration or a great idea, shoot me an e-mail, [email protected] I’d love to hear from you. After this goes to print, I’ll post this to the bulletin board under “Bouquets – Magic Price Points” so you can check in on all the ideas and experiences that others may have. Wishing you all a “magical” season.