Beyond Cost Plus Summary: May 2015

May 31, 2015


Three new webinars on pricing in retail floral for SAF, bundling/unbundling and the argument for each, and pricing for diminishing marginal utility.


A new post this month revisited the idea of pricing to compensate for the diminishing marginal utility. This is the secret weapon of some of the most successful retail florists, but most florists continue to believe that they should never sacrifice margin by discounting their product. Bigger florists understand that "you don't take margin to the bank" and recognize that two dozen roses don't provide twice a much utility (pleasure) as one dozen. With that in mind they follow the example of other vendors of highly perishable discretionary goods and discount aggressively to encourage bigger sales.

Anchoring pricing was also revisited, this time in the context of pricing event registration. The regular price is used to establish a high value for the event, and discounted "early bird" rates look almost irresistible in comparison. Some events have taken the practice to extremes, with huge discounts for early registration, and it's a great example of the power of anchoring.

A lot of new bundling/unbundling content was added. One post looked at real world examples of pure bundling – something that can sometimes be hard to think of. An example would be the modem rental with your internet service or the cable box that comes with your package. You can't get internet without the modem or the modem without the internet, and the same thing goes with the cable box and channels.

The next bundling post was really more about unbundling and it looked at airlines. Over the past several decades the cost of air travel has fallen dramatically even as the cost of fuel has almost tripled. There are a lot of factors involved here but unbundling plays a big part.

Another bundling post looked at how different industries have taken different approaches. Decades ago the fast food industry started falling in love with bundling, right about the same time that florists started to unbundle delivery fees and service charges. Is there a right answer? The airline industry proves that in a very competitive market unbundling provides a way to remain competitive, but the fast food story shows that there is a lot to be said for bundles too.

Why is it bundles are so popular with consumers? Another post looks at six reasons why consumers love bundling, and it's good reading for any vendor that is on the fence about adding more bundled offerings.

Taking a break from bundling another post looks at how inconsistent claims and pricing can undermine a unique selling proposition. Prices, even the way prices are formatted and expressed send a powerful message about a product or service. If that message contradicts other messaging it can create real doubt in the mind of the consumer, and that leads to lost sales.

And finally there will be three webinars presented as part of the new SAF Weblast series. These sessions will focus on pricing for retail florists.

Category: Activity Summary

Sponsored by FloristWare: Independent POS Without Compromise

Beyond Cost Plus is sponsored by FloristWare – powerful, affordable and easy-to-use point of sale software for florists. Independent POS does not have to be a compromise

FloristWare – flower shop software/POS system.

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