No store on Earth can survive without selling their products at a higher price than originally purchased from a wholesaler or other facility to ensure that it makes money.
That money allows owners to pay expenses, salaries, and other necessities that keep the store open. The same is true for services provided by accountants, veterinarians, and similar establishments.
Before opening a gift basket business, you must know everything about your costs, and that includes how to price your gift baskets.
Many years ago a new gift basket designer posed this question on an online discussion board:
I just sold a gift basket for $25 after putting $19 worth of products in it. Is that enough to make money?
If all you make from a sale is $6, that’s enough proof to realize two things: You’re:
- Probably making less than $6 because some costs were not accounted for (you may even be losing money)
- Not going to be in business for long since $6 per sale will not be enough to succeed
Research is needed before deciding how to price your gift baskets. There were no guidelines available in 1990, in print or otherwise (the Internet wasn’t available yet), when I started making gift baskets, to help me set the right prices. I made mistakes but was able to fix the problems and price my baskets correctly so I made much more money than $6 for each order.
Today, there is enough information about the gift basket industry and pricing options so you won’t make the same mistakes as those of us who didn’t have access to what’s available now.
One thing you’ll learn from any of this information is that there is no one way to price gift baskets. That is why pricing examples are not shown here. Each situation is different. How you price depends on your geographic location, store structure (homebased, storefront, etc.), and customer type (individuals, corporations, etc.). These details create a formula that helps you charge the right price so people buy and you make money.
There’s another reason why pricing formulas are not shown here:
You don’t want customers to know how you calculate your money!
The formula for setting gift basket prices isn’t based on algebra or trigonometry; it’s a very easy multiplication that you apply to the costs paid for everything you buy to make gift baskets. That includes the basket, shred, products, wrapping, bow, and other materials added to the design.
If you intend to make money with gift baskets, it’s mandatory to know how to price your gorgeous designs before you begin. Otherwise, you’ll suffer from the same frustrations and loss of money experienced by the woman who didn’t know how to price her work.