As costs rise, it’s impossible to keep charging the same price for gift baskets. Here’s how to increase gift basket prices so you continue to profitably stay in business.
A sample surprise increase
When you start a gift basket business using money accumulated from various sources, you rarely think about how costs will increase over time. It’s enough to create designs and market them without considering future pricing. Still, it must be done if you plan to stay in business over time.
Two cookie suppliers provided me with my first higher price experience. The first was a company with flavorful cookies contained in a unique round package. They went out of business within a year of my first order. I had to find a new cookie company, which I did. However, the amount of cookies the second company sold was less than the first for the same price, and the packaging wasn’t as unique. That’s a different type of increase, but it’s still an example of paying more.
If you don’t monitor the prices you pay for everything from shred to shipping, your profit may turn into a loss before you realize it. I admit that I’m negligent about watching shipping costs, but I’m getting better. The two shippers I use don’t send me notification about higher rates. To counter that I check their websites each month, reminding myself on my internal calendar to do so. Perhaps the shippers ought to send me a notice, but I’ve learned to be proactive about maintaining costs for profitability. That’s your mission, too.
13 places prices go up
Price increases happen for reasons other than buying gift basket materials and shipping services. Here are some of the costs I monitor, many of which may be on your watchlist.
- Domain fees
- Internet costs
- Staff increases
- Website hosting
- Storage products
- Marketing materials
- Returns and thefts
- Insurance coverage
- Photographic equipment
- Studio upkeep/renovations
- Professional services (mentoring, accounting, etc.)
Some items are in the replacement category while others simply rise because of utility charges. These examples, and more in some cases, are reasons why pricing gift baskets at the keystone level is an automatic loss for your business. Doubling the price for basic supplies is fine if you make gifts as a hobby, but a full-time enterprise cannot operate without knowing, watching, and increasing costs at least every 12 months.
What to say to customers
Increases aren’t substantial, but it is necessary. A gift basket that was $100 two years ago is a minimum $110 today. How is that justified to customers, especially the ones who don’t believe your costs should ever rise? You state one or two facts:
- The new baskets/containers are better quality
- Cookies we include for you today are organic/have more flavor
- Shipping is completed in sturdier boxes to ensure your gift arrives perfectly
Mention one thing to them that you’ve improved. That’s the best you can share. Your business is private, so you don’t need to go into other specifics. The customer will either trust your design and delivery because of past experiences, or the person will purchase from another source. The latter may be beneficial for you since you want to work only with customers who know, trust, and like what you offer.
Still not sure how to increase gift basket prices?
Your main goal is to know all prices you pay to operate a business. Every penny must be accounted. It’s also wise to document how much is paid for each product and service according to dates added within a binder, journal, or computer program.
Another sneaky type of increase is product weight. Realizing that a 10 ounce bag of chips is now 8 ounces for the same cost is a price increase. Beware of that.
Schedule a cost review every year at a minimum to stay aware of changes you or a staff member may have been too busy to notice. I cannot tell you how many times such a review has forced me to find better resources or request discounts from current suppliers. Although you may lower your costs in some situations, prices you pay will go up in other categories, and that means the price of gift baskets you make will rise.
Do not fear increasing your prices. If you don’t cover all costs (including your labor), your business doors may close for good.