Package Pricing

My mother-in-law is gaining steam in a business for hand-decorated theme cookies. She’s the owner and the sole employee, and she does some pretty amazing designs with icing! She’s been asking for pricing advice over the last few months, and I think she’s finally made some strides in how she’s pricing her items. I wanted to share a quick bit of insight that we recently discussed!

She offers several different sizes of each cookie, and several different levels of decoration. The price is a function of size and decorative complexity, so she’s been pricing the cookies individually. This model works well for cookies, as the sizes and decoration are customizable. However, she also has other baked goods, like mini muffins. She intended to price the mini muffins individually as well, but it would come out to something like $0.50 per muffin. She also wanted to factor in the cost of the container and ribbon, and considered pricing these a la carte as well. Instead, I suggested going with a different route: offer 3 different amounts of muffins, and either standard or premium packaging. I explained that it feels like “nickel and diming” if you start requesting 1 additional muffin, and charging an extra $0.50, a “nice” bow for $1 instead of $0.75, and a bigger tag for $0.75 instead of $0.50.  Offering a single price for standard packaging and premium packaging also applies to any future products, so she’s not having to list out many different prices for each item she offers.

She’s been asked to make up some gift bags within a certain price range, and she was debating about the type of items to include. I think the first question should be, “who is the customer, and what do they care about?”  The client is providing gift bags for Christmas to the mostly male staff, who are generally married with children. I don’t want to stereotype, but I would make the following assumptions: men care less about decoration than taste and quantity, men don’t care at all about pretty packaging, and they will take at least some of the cookies home to their wife and kids. Thus, for a given budget, I would allocate more money to quantity than decorative complexity or premium packaging. She originally suggested one large, highly decorated cookie, a small package of muffins, and a large bow. I recommended two smaller, minimally decorated cookies, a large package of muffins, and a small bow to allow for more sharing.

She hasn’t looked into her profit margins and pricing schemes too heavily, but as her business grows, she’s continuing to research the best options. I think package pricing is going to be more important as she grows the business, and I think there are a lot of ways to make customized packages without confusing the customers or sacrificing profits. If you’re in the mood for some delicious treats, check out her gallery and pricing for Moon Glitz Delicioso! She can ship anywhere in the US (and she’s shipped overseas once or twice too!), and I can say from personal experience, you don’t be disappointed 🙂

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