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How Much To Spend on Business Gifts

Posted By Susan Payton On November 15, 2011 @ 5:47 am In Finance | 4 Comments

christmas budget [1]

When it comes to buying business gifts, we small business owners don’t have an unlimited budget.  So it’s best to decide right up front how much you can afford to spend per person.

Multiple Approaches

There’s no set number for business gifts.  It varies, depending upon whether you are giving the gift to an employee, or to a client, or to a valued service provider for services rendered throughout the year.

However, $25 to $50 per person seems to be a nice average among the small businesses we polled informally.

If you’re giving to others outside your own company, you will want to keep in mind that their employers may have imposed a value limit on what they can accept.  Policies in many large corporations and government organizations, for instance, prohibit their employees from accepting business gifts valued in excess of  $25 (sometimes less).  For that reason alone, some small business owners limit their gifts to $25 or under.  The thought of having to return refused gifts exceeding allowable amounts, is a complication some prefer to avoid altogether.

Client Gift Budgets

When giving to clients, some business owners look at how much business each client brought them in the past year.  They rank their spending based on this. Other business owners might consider this too crass and commercial an approach — but it is one way to set a holiday gift budget, and we simply point it out here.  Take a look at these examples based on this “client value” method of spending:

  • For clients that brought you $15,000 in revenues this past year, you might  consider spending $100 or more on a quality business gift.
  • For clients netting  you $10,000 or more, spend $100-500
  • For clients netting you $9,999 or less, spend $25-50

If your business bank account can’t afford $100 or more a person, multiplied by several clients and employees, do what you can afford.  Maybe that’s $10 a person, some homemade cookies, a potted plant, or a greeting card with a handwritten note of thanks.  The point is to show your appreciation for the people you work with, and not to go in the red doing so.  The realities of January cash flow constraints will roll around quickly enough.

Gifts and Tips for Service Providers

It’s customary to tip service providers with cash, or a small gift.

Tip amounts vary greatly, depending on where you’re located, your budget, the length of the time the service provider has performed for your business, and other factors.  Tips in big cities tend to be larger than in rural areas.  If you have more of a personal relationship, then a carefully selected gift may be in order.  Some sample tip amounts include:

  • Personal trainer - A cash tip equal to the cost of a session is appropriate.
  • Image consultant - A cash tip totaling cost of one session, or one hour at hourly rate.
  • Package delivery person - Delivery personnel at FedEx, for instance, can accept non-cash gifts up to $75 in value.  Check with the delivery company to be sure of guidelines.
  • Virtual assistant - A cash tip equal to one hour at hourly rate, or $50.
  • Cleaning person - For an individual, a cash tip equal to one visit is appropriate. If a team works together, give a gift they can share, such as gourmet cookies or treats.
  • Driver/Limo Service: Tip 20% of a month’s bill, or $20 – $50.
  • Postal worker - this is tricky, because U.S. Federal ethics guidelines [2] prohibit Post Office employees from accepting anything worth more than $20.  Cash is prohibited, no matter what amount.  Consider a gift basket or homemade goodies instead.

Employee Gift Budgets

For employee gifts, your gift budget will likely depend on how many employees you have. If your staff is 10 or fewer, you may be able to spend more on each staff member. For larger companies, the budget shrinks per person, so look at other ways of giving, such as bonus vacation days or a special dinner event.

The Christmas turkey or ham, long a staple of some American companies for employee gifts, doesn’t seem to be as popular these days.  In many companies it’s been replaced by gift certificates/cards, cash or other gifts.  But a substantial food gift is certainly an option, too, for employees.

Should you spend the same amount or varying amounts for each employee?  Many employers don’t want to deal with hurt feelings that may come from giving different employees gifts of different value.  They opt to spend the same amount on each.

Whether it’s with a small gift or with personal thanks, make your employees feel valued and happy to work for you.  That’s really what the Holiday season is all about.

Tip: When your budget is low, bulk it up with creativity and a personal touch.  Those two elements can make for more memorable and heartfelt gifts, than all the Neiman Marcus ostentation in the world.

Tip: Don’t forget the tax benefits of gift giving. You can take a deduction up to $25 per person you buy a gift for in the U.S. each tax year.  See IRS Publication 463 [3] for more information.


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URL to article: http://smallbiztrends.com/2011/11/how-much-spend-business-gifts.html

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[1] Image: http://smallbiztrends.com/wp-content/uploads/2011/11/christmas-spend.jpg

[2] U.S. Federal ethics guidelines: http://www.justice.gov/jmd/ethics/generalf.htm

[3] IRS Publication 463: http://www.irs.gov/publications/p463/ch03.html