July 15, 2018
What price should this plant be?
By Warren Patterson
Their vague response made me question whether the nursery had even conducted any consumer research prior to deciding to produce thousands of these unique plants. Were they simply going to base their price on what they thought their production cost was?
They were going to be selling this product for $200, which after proper markup, would mean it would need to retail for at least $400. There was no way I could see a consumer paying over $400 for their product. At least not in the volume this nursery thought.
Do your researchHighly-successful corporations like Apple and Samsung spend incredible amounts of money carrying out extensive consumer research to establish what value consumers place on their latest product offerings.
This year, our garden centre significantly raised prices in order to offset the large increase in minimum wage. Now a few months into the season, there has been very little (if any) negative feedback from our customers. Why is this? I believe the typical consumer does not have a point of reference for the price of our products.
Here’s a comparison: what is the price of frozen pie shells? Most people, myself included, have absolutely no clue, unless you are someone who buys frozen pie shells on a weekly basis. Our product, like frozen pie shells, is an infrequent purchase, based on a specific need and filled with emotion. We need to better understand how consumers value plants: their size, colour and function.
To establish this value, some basic consumer research is needed. Put two, two gallon pots in front of a consumer that have grown to different heights, bloom stage, etc. Then ask them what they think the retail price of each plant should be. I think you would be very surprised by their answers.
Once we have a better understanding of what value consumers place on plants, our industry can start to create a better pricing structure very similar to how other industries operate.
Plants are not the only product our industry sells. But as with our garden centre, what we sell needs to cover the increasing cost of our labour – something we all share. The more money we make on our products, the better we are able to pay our employees. The better we pay, the more attractive our industry is, resulting in more available labour to help grow our businesses.
It’s time to take a look at how consumers value plants and the many other products we offer as another means to helping to solve our labour issue.
Warren Patterson may be reached at firstname.lastname@example.org.