How to price gift baskets? This is one of the questions our retail partners ask the most. It can be difficult trying to figure out how to reasonably price gift baskets, especially for smaller businesses where profit margins are tight. Our goal is to make establishing gift basket prices easier for you. Check out the FAQs below to learn more.
Can I make money selling gift baskets?
Yes, chain retailers and small businesses all over the country have profitable ventures selling gift baskets. However, profitability is determined by a few key factors: strategic product sourcing, careful pricing, effective marketing, and efficient cost management.
Are assorted gift baskets in demand?
Demand for professionally crafted gift baskets has continued to rise over the last decade due to a massive loyal customer base. When a customer buys a gift basket and the recipient is happy, they tend to buy their gift basket assortments from that same supplier.
Do commercial customers or individual consumers buy more gift baskets?
Commercial customers, meaning businesses, tend to purchase more gift baskets than individual consumers. Keep this in mind when considering your gift basket inventory. Establishing a recurring customer base, such as commercial clients, will go a long way to ensuring profitability and growth for your business. You can do this by making sure your gift basket assortments are produced with professionalism and efficiency, and your inventory covers a wide range of occasions (birthdays, holidays, employee milestones, and customer acquisitions).
What are the best-selling price points?
A good starting range for everyday gift baskets and "Thank You" gift basket assortments is $40 to $50. Suppose you are using nicer items in the assortment. In that case, it is almost impossible to have a quality, gift assortment retail for less than $40 (this starting point guideline will vary based on market, seasonality, gift basket size, and theme).
What are the top-selling themed gift baskets?
The most popular gift basket themes are around major holidays where gifts and goodies are inherently thought about (Valentine's Day, Easter, and Christmas). Although year-round, and "Thank You"/Appreciation gift baskets are always popular for commercial customers. These are an easy way to thank a lot of people for a smaller amount of money. Therefore, most of your gift basket inventory should consist of "Thank You"/Appreciation themes and themes that are considered in-demand, year-round.
How should I price my gift baskets?
Ultimately, you are in business to MAKE MONEY. In order to properly price your gift baskets, know EXACTLY how much money you have invested. Your price should account for every material included in the basket; every piece of ribbon, the basket itself, paper shred filler, and even the tape in your design. Remember to include costs like shipping charges on the products you order.
One of our successful gift basket customers recommends the following formula: wholesale basket total divided by .45 = retail price. (This allows for a profit margin that includes shipping and handling.) For example, a gift basket that costs you $25 in materials should retail for around $55.00. Another way to think about a general rule for overall pricing is to double the cost of production and add a percentage (3% - 5%) to ensure profitability. Lastly, round up to the nearest $5 when calculating your costs (example: if the cost of your materials is $58, round it up to $60).
We also recommend the following general guidelines for the cost prices of the items included in the basket (these guidelines will vary based on market, seasonality, gift basket size, and theme):
$40: Serves 4 to 6 people
$60: Serves 8 to 12 people
$75: Serves a crew
What is the average basket spend?
This is a general metric used to determine if you are accurately pricing your gift basket assortments to generate a profit. To calculate this, add up the total dollar amount of gift basket sales. Divide that number by the total number of gift baskets you have sold. This dollar amount will give you the average basket spend.
How do I know if my gift baskets are priced accurately?
If the average basket spend is lower than the average cost to produce a gift basket, you need to increase your gift basket prices to generate a profit. If your average basket spend is higher than the average cost to produce a gift basket, you are on the right track to knowing if your gift baskets are priced accurately.
What are the profit margins on your gift basket prices?
Even if the average basket spend indicates you are turning a profit, you must also consider profit margins. You can calculate profit margin with this formula: Average Basket Spend - Average Cost to Produce Gift Basket = Profit Margin (can be positive or negative). If your profit margin is negative or not high enough for business growth, you either need to increase the prices of your gift baskets or reduce the quantity of items included in them.
Partner with b+B today and create a wholesale account to get great customer service, fast shipping on all the supplies you need to grow your gift basket business, and always FREE industry education.
