Pricing Your Gift Baskets

How do you determine what price you will sell your gift baskets for?

Are you just setting a sales price off the top of your head?  Doubling your purchase price? Or do you have a formula that will make you a reasonable profit while remaining competitive?

So how do you determine that sweet spot?

There are several methods and formulas that you can use to price your gifts.  Choose the one that works best for you, is simple enough that you can calculate it in your head when shopping for products, and produces enough margin to be profitable.

You also have to consider that buyers in one part of the country may be willing to pay more for the same gift than someone in another area.

One method for pricing is called keystoneing.  This is easy to use because you just double the cost of each product that goes into the basket.  But this method will lose you money as you are failing to be paid for your labor and business expenses.

Some companies determine a price for each product, that will be used in their baskets, as they come in and then add a percentage to cover labor and business expenses.  The price for each product includes the shipping cost to get the product to you.

Shipping costs have risen in the last couple of years and they will continue to rise.  When you shop tradeshows, you sometimes receive free shipping on the products that you order.  Even so, determine what the cost of shipping would be and add it to the cost of the product when pricing it.  The next time you order that product, you most likely won’t have the advantage of free shipping..

Shipping is the one ingredient in pricing that can make the final product cost unreasonable.  You find a great product at a good price but when you receive it, you discover that the cost of shipping the product to you is huge.  One way to handle this is to ask the vendor for an estimated shipping rate before placing your order.  When you are ordering online, there is usually a shipping calculator which will tell you the shipping cost.  But sometime the vendor simply states that “shipping costs will be added when the order ships.”  This can result in a big surprise when you get the order.

When you are determining the price for a gift basket, you can’t afford to forget the cost of the container, fill, bow, wrap, etc.  As far as including payment for your expertise and time, why wouldn’t you want to be paid for them?  This is as important as the products when we produce those professional looking baskets.

Many newcomers to the industry think that since they are homebased, they don’t have any overhead and can give lower pricing to their customers than the bigger, more-established companies.  This attitude can backfire as you try to grow your business and realize that you do truly have overhead and are not charging for it.

Even though you may be homebased, you still have overhead. .  If you don’t consider the overhead now, how will you cover it if your business grows to the point that you move into a retail or warehouse location?

Some kind of price factor must be included for your time and expertise or you will never reach the next level on your way to success.  If you don’t include it now, where will you get the income to pay someone to take over if you need to be absent?   It is a cushion we all need to provide for ourselves if we expect to be a profitable, successful business.

Pricing for Profit

There will always be many variables to pricing. It is not an exact science.

Volume buying, closeouts, regional products, and show specials are just a few of the variables you will encounter.  But these perks are used to increase our profit and not to lower the cost of the finished gift basket.  Next time you may not receive the perk and your customer will expect the same finished gift basket for the same price.

The best pricing formula for you must be an individual decision, but like any other business decision, it helps to know how others in the same industry do it.  Here are some guidelines that were suggested by Jimi Taylor, who operated a very successful gift basket business in Atlanta.

Pricing Guidelines

Containers:  The cost of your container should not be more than 15% of the price of the gift. As an example a $7.50 container would be used for a  $50.00 gift.  An exception to this is when the container is part of the gift. During the holiday season, clients will spend more for a container that will be a keepsake.

Packing peanuts and Unprinted Newsprint:  In Atlanta, packing peanuts are $20.00 per 20 cubic feet. The cost to  fill a $50.00 container is $1.00,   Unprinted newsprint cost $.03 and tissue costs $.08.

Shred:  Parchment shred goes further than other types of shred. A ten pound box will decoratively cover 250 $50.00 size containers. Pulling the shred upon arrival will create 10 times the amount in the box. This breaks down to $.25 per container.  Other shreds of your choice should be priced accordingly.

Enhancements:   We are all creative and love the finishing touches that create that unique look.  But enhancements can be expensive so be selective and cautious of the cost. Floral and similar enhancements are no longer used as much as they once were.  This is an individual design decision that should take into consideration who you are designing for and what is the standard in your area.

Enhancements purchased in bulk are your best value. Buy out of season ones for the best price. Stock up for the next season as soon as the current one is over.  Flowers and greenery purchased by the bunch are always a good choice as they can be separated and used individually.

Ribbons:  Determine the price per yard of all your ribbons so that you know exactly how much a bow costs.  Prices vary depending on the supplier.  For me, standard acetate in the most used #9 size is 12 cents per yard while #16  is 24 cents per yard.

  • Use multiple colors for better presentation.
  • If using imprinted ribbon, determine and charge the price per yard.
  • Blend acetate with decorative ribbons for better value.

A beautiful handmade bow will eliminate the need for enhancements that are pricey and labor intense.



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