Actually
that’s sort of a trick question; the actual cost of a merchandise item doesn’t
cost more than the actual cost of a gift card.
If you spend $50 on one item and $50 on a gift card, you’ve spent the
same amount. Your budget hasn’t
changed. What is definitely true is that
the value of a gift card can change appreciably depending on when and where you
use it and be worth more than what you paid for it. In fact, most of the gift cards given over
the Holiday season are used to purchase merchandise items on sale after the
holiday season…often when the value can be double or even triple depending on
the item.
From a
recognition planner’s viewpoint, gift cards will have the effect of increasing
your budget, where merchandise can actually decrease it. Merchandise award companies need to start to
develop their list or catalogs of merchandise awards long before clients will
ever be buying or redeeming for them. They
will maintain pricing for a certain period, but after that period they have
been known to raise them to cover increased costs, and thus increasing
budgets. As merchandise awards are also
burdened with shipping and handling to the individual, their pricing is already
higher by between 10-15%.
Take
advantage of natural market downward price pressure during several times of the
year. When you use gift cards it will
have the effect of increasing your budget by 50% or more, without increasing
your cost.
