Trials prove customers will pay for quality

Retailers urged to drop standard cost-plus plant pricing in favour of value-based pricing.

Garden centre value-based pricing trials have revealed that customers will pay more for quality plants. The findings come as a leading grower reports a modest increase in prices achieved for the past six months (see panel). At the HTA’s Selling Plants Profitably conference seminar last week Garden & Leisure Group operations director Carol Paris said camellias priced at £14.99 outsold lower-quality specimens at £12.99 at a recent trial at her centres. Similar trials at Notcutts increased profits on the plants by 12 per cent and sales by four per cent. Paris told delegates: “You need to look at every plant and decide what it’s worth because the customer won’t know.” Consultant Neville Stein said discontinuing the use of cost-plus pricing — using a standard mark-up — in favour of value-based pricing “based on buyers’ perception of a product’s value rather than cost” was the way forward. He added: “If the correct plant is chosen it will not reduce volume sales. Cost-plus pricing is easy but small garden centres can benefit from taking into account market conditions when pricing up plants.” The HTA report Consumer Perceptions of the Value of Garden Plants, from research conducted by Illuma Research, showed that consumers would pay more for better plants. And studies have found that consumers are willing to pay 15 to 20 per cent more if quality is higher. But managing director John Gwynn of Southampton fruit tree grower AE Roberts said putting prices up was a lot easier for retailers than for growers, especially for those that supply multiples. Wyevale representative Neil Fishlock said specification and price were separate issues, adding: “We must compare like-for-like.”

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