To successfully determine retail prices for Christmas trees, retailers must know their customers, understand their needs, and set their tree prices and services at a level that will match them. In addition, retailers must know how many trees they will need to sell at those prices to cover operating expenses and generate a worthwhile profit.
We have noticed that retailers can usually get a higher price for the same tree the farther South and West they are located from the Los Angeles area, and less the farther North and East. We see a spread of anywhere between 100 and 300 percent markup by retailers throughout California and Nevada as we visit them during their selling Season. Retailers that dress up their trees, keep them fresh, display them nicely, and work hard selling them, generally command a higher markup.
Being a unique product of nature, a delivery of #1 trees will vary in densities, tapers, colors, shapes, layering’s, heights, etc. A seasoned retailer will bring out more desirable qualities in some and sell at a premium price, and may mark others down that don’t seem as desirable as the rest. If damage is present, retailers normally make necessary repairs and/or sell at a discount.
Since growers and wholesalers don’t set retail prices for their customers, it would not make sense for them to request credit on a tree that they marked down without the grower or wholesaler also getting paid extra for a tree that they marked up.
Some things to consider when determining retail prices:
- Are Big Box retailers selling trees at or below their cost as loss leaders near you? If so, don’t try to compete price wise. Your success will depend on quality and service instead.
- What did your competitor’s sell their trees for during the prior Season?
- Do you want to sell based on price or on service and quality? It is hard for a customer to put a price on great service, high quality products, and a cherished, yearly family outing in a festive atmosphere.
- How many trees will need to be sold at your desired markup to cover operating costs and also make your efforts worthwhile? Is that quantity and/or markup realistic?
- Are you trying to develop a loyal, long term customer base? Make sure to have adequate stock so you don’t send potential customers to your competitor. Selling out early is nice if you are satisfied with your sales.
- Make sure that your merchandising and pricing strategy makes your trees look more attractive than the alternative artificial tree.