Rafi Mohammed

The Rose Pricing Strategy of Florists and Discounters

Posted on September 26th, 2007 (0 Comments)

I have a confession to make. For the past few years, I’ve been confounded over a pricing phenomena I consistently observe: why do professional florists sell roses by the dozen while discounters like Costco or supermarkets often sell roses in different increments (e.g., my local grocery store ran a promotion last week of 10 roses for $7.99). C’mon, you’re amongst friends, wouldn’t you think twice if your love interest or dinner party guest showed up with 10 roses…“Hmmm…what’s going on here…isn’t 12 the norm?”

Pacing the shores of Boston’s Charles River in deep contemplation over this most serious societal issue, I came up with two insights: (1) People that buy flowers from discounters may be different than those purchasing from florists, (2) The occasions that people purchase flowers from a florist may be different than those when buying from discounters. A good start, but it doesn’t answer the 10 or dozen quantity question. In search of answers, I tapped friends and industry professionals for their help.

Rob, my Ph.D. advisor, had a great insight. Since discount shoppers are value oriented, he thought selling roses in lots of 10 helped them clearly understand the “per rose” price (it’s easier to divide $7.99 by 10 instead of 12). This helps consumers evaluate the bouquet’s value.

While navigating the roads of San Francisco, my friend George came up with the idea that roses are sold in wholesale bunches not easily divisible by 12 (I later found out he’s right, wholesale roses are sold in bunches of 25). For this reason, he speculated it’s easy for discounters to create bundles of 10 while florists have more leeway: their margins allow them to throw out less than perfect roses and extra roses (left over from the dozen convention) can be used in floral bouquets. A good point.

Finally, I called the Association of Floral Importers of Florida for their insight. By good fortune, I was connected to Christine Boldt – an industry expert. She opined that discounters have a “right price” in mind (e.g., my supermarket’s $7.99 price) and then fill the bouquet with as may roses as economically feasible. Christine’s take also makes a great deal of sense.

My bet is that the combination of these three key ideas answers my burning question of why I observed these quantity differences between discounters and florists. Whew…no more tossing and turning at night! Thanks to my friends Jon, Steve, RAD, Rob, George, and Christine for their great insights.

Next topic…why are doughnuts and eggs sold by the dozen and why do some bakers offer “bakers dozens”…just joking.

Thanks to Wealth Magazine for commissioning the following caricature for their pricing story. While amusing, the message is clear and something I see all of the time: pricing is the easiest and quickest way to improve your company’s bottom line.

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