3 Pricing Strategies To Boost Your Summer Revenue NOW (SFFF11)
(The Six Figure Flower Farming Podcast #11)
I have something to admit to you, and it's not something that I'm happy to report, but I'll just go ahead and say it.
It’s July. And on my farm every year, without fail, we have a big dip in our revenue this month. July is our lowest sales month of our growing season every year, which is okay. One of the months has to be the worst, and July just wins that not-so-prestigious award. So it's alright. I discovered this trend after tracking our sales super closely for the past 10-ish years, which is super handy for forecasting and crop planning.
Speaking of, if you aren't already tracking your sales, please just start doing this. It can be so simple. You can use an app on your phone. You can use your point of sale system like Square or Squarespace. You could just use paper and pen. And to be honest with you, I use paper and pen to track our farmers market sales. And I honestly find that it works the best for our farm. So it sounds ancient and crazy, but it can be super simple.
So if you're not tracking your sales, where they come from and your flower sales, I have a free sheet that you can download and use. It's super easy. Just go HERE to get it straight to your inbox. It will set you up to be so much more prepared in the future to tackle things like this. When you have low sales months, you'll know that it's coming and you can take decisive action to boost your revenue, tackle challenges head on, and just get ahead of the game. Tracking your sales is super important for knowing what to expect throughout the season in your business. And trust me, there will be trends in your sales and in different aspects of your business that you'll discover them through tracking.
Back to pricing strategies…
Over the past few years, I have started implementing some pricing strategies that have really helped boost our flower revenue in July and get more cash in the door, increasing our sales during this doldrum month. I rely more on pricing strategies to increase our revenue without actually doing more work on the farm.
On my farm, there are three pricing strategies that we regularly use depending on the time of year, what's in season, and where our sales are at. They are:
-Close pricing
-Distant pricing
-Same-same pricing
First of all, to understand close, distant, and same pricing, we need to learn about a value ladder. A value ladder is when you have several different price points for your products. Typically, you have one low -priced item, a medium -priced item, and a high -priced item. So an easy example would be if you go to farmers markets, you would offer a $12 bunch of foliage, a $20 bunch of dahlias and $30 for a mixed bouquet. So we have that low price point at $12, medium at $20 and $30 for the high price point. Having a value ladder is beneficial for a few different reasons. It gives someone the chance to try you out at the low price point. Your low price point can be added on to a medium price point as a upsell. And you have a price point that basically meets everyone's needs.
So if someone has never purchased from you before, but they're curious about the flowers that you sell and what you have, they will probably go for that lower price point to try you out and test the water. However, if you have somebody who is looking for a gift bouquet to give someone they probably going to want to spend a little bit more (people tend to spend more money for other people than for themselves, so they might go for that $30 mixed bouquet). Using a value ladder, you have options for people regardless of why they are buying.
Within your value ladder, you can change the actual prices to persuade people to buy more of a certain product using these three types of pricing strategies: close pricing, distant pricing, and same pricing. I'm going to go into all these and how you can use all these different pricing strategies on your farm.
We're going to start out by talking about close pricing. Close pricing is when you price your value ladder tightly so your most expensive item is not that much more expensive than your middle-of-the-road item.
So this could look like a $12 bunch of foliage, $20 bunch of dahlias and $25 for a mixed bouquet. The $25 mixed bouquet is only five bucks more than the $20 bunch of dahlias, which makes it look like a steal. And especially if you have dahlias in that mixed bouquet, people who want dahlias might think: “this is a no brainer for only five bucks more! I can get the mixed bouquet and there's dahlias in them. I get the best of both worlds!”
Now, obviously you have to make sure you aren't just giving flowers away for free here. You should definitely still be pricing to earn a profit on every product and every price point you make. But the point here is that this is a strategic way to get customers to spend more per transaction with you. And on that same note, if you have a low priced item, like a 10 or $12 bunch of foliage with just a few stems in it, if they buy a bunch of dahlias for $20, they might be more apt to add on that cheaper bunch of foliage to the dahlias. Which results in them buying two items, plus they're spending more money with you, and you can upsell that cheaper bunch.
Now for distant pricing, you're going to price your value ladder more distantly so your most expensive item is much more expensive than the other items you offer.
This will make the low and mid -priced products look like a steal. For example, this would look like a $15 bunch of foliage, a $25 bunch of dahlias, and a $50 mixed bouquet. That $50 mixed bouquet is a lot more expensive than your other items that are ranging between $15 and $25. When people walk up to your flowers they may think, “wow, $50 for a mixed bouquet. That makes that $25 a bunch of dahlias seem a lot more affordable.” This way, they're more apt to purchase the middle of the road product, which would be the $25 a bunch of dahlias. Essentially what we're doing here is we're just making your other items look much more affordable by putting a really high price point on something that is honestly valuable.
And to clarify here, we are not just taking the same five-stem bunch of dahlias and randomly charging either $20 or changing it to $25. MAYBE you can do that, but what I mean here is you set your prices and then build the product to that value and that price point. What we do on our farm is just change the stem counts of the bunches when we're selling retail to make sure that people get their values worth.
An example of this would be a $20 Dahlia bouquet would have like five stems in it and a $25 Dahlia bouquet would have about six stems in it. A $40 mixed bouquet is obviously going to be bigger or fancier in some way than just a $25 mixed bouquet. To clarifty again, when you're working with these pricing strategies, you're building your product, your bunches or your bouquets to the price point.
Now let's talk about same-same pricing.
With same-same pricing, you eliminate your value ladder. Every bouquet at the farmer's market is the same. Every wedding package you offer is the same. No matter what you're selling, the prices are all the same (or very similar). This could look like a $20 bunch of foliage, a $20 bunch of dahlias and a $20 mixed bouquet all being sold right next to each other for the same price of 20 bucks. Or you only offer ONE product and it's the same price. Perhaps you only sell mixed bouquets of the same size and stem count, and they are all $30… or something similar to that.
This method is easy and simple, and it makes it so your customer does not need to do a lot of thinking to purchase. You want to make the buying process for your customers so clear and so easy that they have no questions, no qualms. Everything is straightforward. There's no confusion. Anytime you introduce any kind of confusion into your marketing or your pricing, you're going to automatically lose people. (We’re tired, ok?)
The clearer your marketing, the more effective your marketing.
We implement this same-same pricing strategy in the spring time often. In April and May, when we have a ton of ranunculus, we pretty much just bring ranunculus to our farmers markets during those months. It’s basically 90 % of what we sell.
Every renunculus bunch that we bring to that farmer's market is priced the same. It makes it so people don't have to hem and haw about which price point or get in their head subconsciously about it. It's all the same. So they're basically forced to make a split second decision as to whether they should buy or not.
This can be really effective at just getting people to just buy flowers.
Something that we are trying that's new this year is doing that same-same pricing in July.
After analyzing our sales trends, it seems like we don't necessarily only sell a ton less flower bunches and bouquets in July that results in lower revenue. It's that we are selling less flower bunches and bouquets in combination with the fact that we are selling them at a lower price point. For example, if I sell a hundred bunches at the farmer's market a week and they're $20 each, that's $2 ,000 in revenue I'm bringing in. If I sell a hundred bunches at the farmer's market a week and they're only $15 each, that's $1,500 in revenue.
Instead of selling $15 bunches of zinnias, we'll just make bigger bunches of zinnias with more stems and sell them for $20 each to boost our revenue. So that is a big new thing that we have been trying this season and have actually been having a lot of luck with it. It is such a simple concept. We literally just raised the value of the items we're selling.
We didn't even raise our prices per stem.
We're just offering bigger bouquets and bunches with more stems for a higher price point. And they are continuing to sell well for us, which is fantastic. So that is going to be a big boost for us this month with our revenue.
Now, if you just read through to all this and you're like, okay, great, but how do I know which strategy to use?? Read on, my friend!
To decide when to use this pricing, whether close pricing, distant pricing, or same-same pricing, it really depends on your goals and your customers.
As far as your goals go, if you want to sell more of your medium priced product, use distant pricing. For example, if you're a farmer florist and you sell bulk buckets of flowers, a la carte floral packages and full service weddings, that's your value ladder. Your value ladder is your bulk buckets for your low priced item, a-la-carte packages for your medium price point, and full-service wedding packages for your high-priced item.
Let’s say that you discover a-la-carte packages are your most profitable and what you like the bst. You want to sell as many a-la-carte packages as you can. You can use the distant pricing strategy by pricing your full service wedding packages really, really high, so it makes those a la carte packages look way more appealing for people who want to work with you. That could mean that your full service packages start at something like $7,000, but an a la carte package starts at $1,000. And I'm just throwing numbers out here as examples, you may price a lot differently than that. The right pricing for your farm will depend on a lot of factors.
Now, on the other hand, if you want to sell more of a high-priced item at the top of your value ladder, use close pricing.
For example, if you want to sell a lot of $25 mixed bouquets, make your straight flower bunches at your farmer's market close to that price point, maybe $20 or $23.00. It makes it so its a no-brainer that if they want a bouquet with both flowers and foliage, they'll buy the $25 mixed bouquet. They’ll probably going to look at that mixed bouquet and say, I get way more variety with that, so I'm just going to spend the extra couple bucks to get the bigger bouquet.
In summary here, I highly suggest that you create some kind of value ladder with a low, mid, and high priced product, and then decide whether you want to price them closely or distantly, or you can price them all the same, depending on your goals.
I also recommend experimenting to see what works and resonates with your customers.
And now, for the giant caveat… these pricing strategies might not apply to things like wholesale or florist pricing because those customers are likely used to buying bunches with certain stem counts. This may not resonate with them. These pricing strategies are not applicable to every situation, but it’s a tool you can be aware of. If you're selling retail in any capacity, like at a farm stand or farmer's market, a subscription program, and even for weddings and events, you can experiment and try new things and see what your customers do and how you can change their buying habits.
We use all of these strategies on our farm just depending on the time of year, what kind of products we have, like what's in season, what we want to push more of, what we want to get rid of. And it really helps.
Keep these stratgies in mind as you go through your season,
Aare you going to use a value ladder? Are you going to utilize close pricing, distant pricing, same-same pricing? Are you going to have a lower priced item so you can upsell products? Let me know in the comments below!
Don’t forget to track your sales so you know what’s working and what isn’t (data-driven business decisions are best!). Download a free record keeping sheet HERE.
Want to listen to this episode instead?
Subscribe now in your favorite podcast player:
Apple | Spotify | Pandora
Liked this episode? Leave a review on Apple and I’ll be forever grateful!
