The Christmas season is the biggest sales window of the year for most small and medium businesses. Demand rises, customer expectations shift, and competition becomes intense. Yet many SMEs still struggle with one critical decision: how to price their products in a way that is profitable, competitive, and sustainable during the festive rush.
Pricing for Christmas needs more than guesswork. It requires a clear strategy that balances cost, value, demand, and brand positioning. Below is a ready-to-publish breakdown to help SMEs price confidently and maximise seasonal revenue.
Understand Your True Costs First
Before setting any price, calculate your actual cost per unit. Christmas often comes with additional expenses such as:
- Seasonal packaging
- Extra labour
- Higher delivery or courier fees
- Special gift wrapping
- Temporary marketing promotions
Many businesses forget to include these “hidden seasonal costs”, which leads to under-pricing. Your baseline should always cover:
- Cost of goods
- Operational expenses
- Seasonal add-ons
- Desired profit margin
This ensures every sale brings actual profit—not loss masked as increased volume.
Study Last Year’s Data
If your business operated last Christmas, this data is gold. Look at:
- Best-selling products
- Slow-moving products
- Successful discount levels
- Average order value
- Customer complaints or feedback on prices
If you’re a newer business, observe trends in your category:
- What did competitors price last year?
- What were the best-selling categories in your niche?
- Were customers buying full-price items or only discounted ones?
This helps you predict what customers might be willing to pay again this year.
Create Tiered Christmas Pricing
One of the smartest SME strategies is tiered pricing. Instead of a flat discount or one price point for all products, create levels such as:
- Budget gifts (LKR 1,000–3,000)
- Mid-range gifts (LKR 3,000–8,000)
- Premium gifts (LKR 8,000+)
Why this works:
- Customers shop with budgets in mind
- Tiering helps upsell and cross-sell
- It positions your brand to serve different spending capacities
- It avoids making your entire catalogue look expensive
This structure also helps you plan bundles more effectively.
Bundle for Higher Per-Order Profits
During Christmas, customers prefer convenience. Bundles sell extremely well because they simplify gifting decisions. Examples:
- Skin care mini-sets
- Snack or coffee bundles
- Candle + diffuser sets
- Gift boxes with multiple small products
When pricing bundles:
- Offer a combined price slightly lower than buying items individually
- Maintain at least a 20–25% profit margin
- Use aesthetic Christmas packaging to justify the price
Bundles also help you move slow-moving stock while increasing order value.
Use Value-Based Pricing, Not Just Cost-Based
Customers pay more for perceived value during Christmas. That value can come from:
- Luxury packaging
- Limited-edition products
- Festive scents, flavours, colours
- Gift-ready presentation
- Customisation (engraving, name tags, personalised notes)
If your product offers higher emotional value, price it accordingly. Christmas is a season driven by emotion—sentiment often outweighs price sensitivity.
Avoid Using Only Deep Discounts
Many SMEs make the mistake of lowering prices too aggressively because competitors are doing it. This damages your brand’s perceived value in the long run.
Instead of blanket discounts:
- Discount strategically (e.g., on older stock)
- Provide free add-ons (gift bag, card, mini sample)
- Create early-bird deals
- Offer combo discounts (buy 2 get X% off)
Smart discounting keeps your brand premium while still encouraging purchase urgency.
Check Competitor Pricing—But Don’t Copy
Competitors help you understand the pricing climate, but copying them blindly is dangerous. Their costs, quality, branding, and customer base may differ.
Use competitor pricing:
- As a benchmark
- To detect pricing gaps
- To spot opportunities (e.g., “premium Christmas kidswear lacking in this range”)
Position yourself intentionally:
- Are you the affordable option?
- The mid-range reliable brand?
- The premium gifting solution?
Your pricing must strengthen—not confuse—your market identity.
Introduce Limited-Time Festive Pricing
Christmas shopping has a natural sense of urgency, which you can strengthen by creating:
- Early-bird pricing
- Weekend flash sales
- 48-hour free delivery
- Final-week express delivery add-ons
- Boxing Week promotions
- Year-end clearance for older inventory
Clearly communicate the end date of each offer. This increases conversion while letting you adjust prices as Christmas approaches.
Test Your Pricing Before the Peak Week
Do a mini soft launch:
- Add a few products at proposed pricing
- Boost a small ad campaign
- Watch customer reactions and click-through rates
- Monitor abandoned carts
- Check if price increases reduce conversion
Testing early prevents last-minute panic adjustments.
Be Transparent With Delivery and Packaging Costs
Customers appreciate honesty. During Christmas, delays increase and delivery fees go up. Clearly communicate:
- Estimated shipping times
- Cut-off dates for guaranteed Christmas delivery
- Packaging charges (if any)
- Extra fees for personalisation
Transparent pricing reduces customer frustration and protects your brand image.
Christmas pricing is not about competing on the lowest price. It’s about:
- Offering value
- Understanding customer psychology
- Planning ahead
- Protecting profit margins
- Enhancing the gifting experience
When done right, your pricing strategy not only boosts Christmas sales but builds long-term customer loyalty.
