Episode 18 - How to Price Flowers for Profit in Your Floristry Business: with Melissa Westcott
You can be fully booked, constantly making flowers and working ridiculous hours and still not have a profitable floristry business.
It sounds slightly mad when you put it like that, but I suspect quite a few florists reading this know exactly what I mean.
Pricing has long been one of the biggest pain points in floristry.
How much should you mark up your flowers? Are you charging enough for labour? Should greenery have the same markup as flowers? What about ribbon, boxes, cards, wrapping, foam and all those other little bits and pieces?
And perhaps the biggest question of all.
How do you actually know whether your floristry pricing is making you money?
I recently sat down with florist, business owner and Florist IQ founder Melissa Westcott on The Flowery Folk Podcast to talk about exactly this.
Being busy doesn't mean you're profitable
This was probably my favourite point from the entire conversation.
Melissa talked about a time in her own florist shop when the business was busy every day, but when she looked at what was actually left at the end of the year, there was very little profit.
It is something I've experienced myself.
You can work all week, race from one job to the next and feel as though the business must be doing well because you're so incredibly busy.
Then you look at the bank account and wonder where it all went.
Sales are not profit.
And being busy isn't the goal if every order going out the door isn't priced properly.
Should florists use a standard flower markup?
You've probably heard figures such as three times or 3.5 times thrown around when florists talk about pricing.
Melissa's advice is not to blindly use an industry markup simply because that's what you've been told florists charge.
Every floristry business is different.
You might have a retail shop with rent and five employees. Someone else might work alone from a home studio. Another florist may specialise in weddings and events with completely different staffing, delivery, storage and operating costs.
The margin you need has to work for your business.
That means understanding your sales, cost of goods, overheads and wages, then deciding what profit you actually want the business to make.
Only then can you start working backwards to determine whether your pricing structure is doing its job.
Those little extras aren't actually free
One area where florists can unknowingly lose a surprising amount of money is all the little things we add to our designs.
The extra flower because the bouquet doesn't quite look big enough.
A few more stems of foliage.
Ribbon.
Cellophane.
A card and envelope.
A box.
Mechanics.
Individually, they might not feel significant.
Across hundreds or thousands of orders, they certainly are.
Melissa made a particularly good point about greenery.
If you've purchased that foliage from a wholesaler, paid freight on it, stored it, processed it and paid someone to clean the bucket it is sitting in, why wouldn't it have a margin attached to it?
It is still stock.
That doesn't necessarily mean every item in your business needs exactly the same markup. But it does mean everything needs to be considered when you calculate what that finished arrangement actually costs you.
Designing with price in mind
There can be a bit of resistance to the idea of thinking about money while we're designing because florists are creative people.
We want the arrangement to look beautiful.
So we add another stem.
And maybe another one.
Before long, the $90 bouquet we've sold actually contains $140 worth of product.
That's not generosity. That's a pricing problem.
Being aware of stem prices doesn't mean creativity disappears.
It simply means understanding the financial value of the materials you're working with and making design decisions accordingly.
If adding one particular stem pushes a design well over budget, perhaps another flower can achieve the same visual result while keeping the arrangement profitable.
That's part of being a professional floral designer as much as knowing colour, form, line and technique.
What if your floristry prices are already too low?
This was another very practical part of my conversation with Melissa.
Discovering you're undercharging doesn't necessarily mean doubling every price tomorrow.
If your existing pricing is significantly below where it needs to be, Melissa works with businesses to gradually increase their margin over time.
That can make the transition easier for existing customers and staff while still moving the business towards sustainable pricing.
And it doesn't all need to be fixed at once.
Perhaps you start by getting your flower and foliage pricing right.
Then you begin including your sundries properly.
Then you review overheads and other expenses.
The important thing is that you start.
Profit is not the same as your wage
This is something I think is particularly important for small creative businesses.
Your wage for the work you do in your business and the profit the business makes are not the same thing.
For many years, business owners have fallen into the trap of paying everyone else first and then taking whatever happens to be left.
Sometimes that means there's nothing left.
Melissa and I also discussed the book Profit First by Mike Michalowicz, which looks at structuring business finances so profit and the owner's pay become intentional parts of how money is allocated.
It's a useful mindset shift.
If your floristry business is going to sustain you long term, it needs to pay you for your work and eventually provide a return for owning and taking the risk of running the business.
Otherwise, it becomes very difficult to maintain all those long hours.
Where Florist IQ fits in
Melissa originally developed Florist IQ because she was experiencing these exact pricing problems in her own florist shop.
The concept is almost like a supermarket checkout for flowers.
As you're creating an arrangement, you select the flowers and materials you're using and Florist IQ calculates the price according to your own cost prices and margins.
When wholesale flower prices change, you update the cost and your pricing updates accordingly.
You can also create standard products, customise margins for different categories and give multiple staff members access so the same arrangement isn't being priced completely differently depending on who happens to be behind the counter.
Melissa is also developing future functionality around waste tracking, ordering and identifying buying patterns within a florist business.
One thing you can do today
Even if you have absolutely no intention of using pricing software tomorrow, there is one thing Melissa recommends every florist does.
Understand your margin.
Pull out your profit and loss statement.
Look at your sales.
Look at your cost of goods.
Look at your overheads.
Look at what you're paying yourself.
Then look at the profit the business is actually making.
Don't start with the question, “What markup does everyone else use?”
Start with:
What does my business actually need to charge to work?
That's a much more useful question.
Listen to the full conversation
In the latest episode of The Flowery Folk Podcast, Melissa Westcott and I get right into floristry pricing, margins, profitability, undercharging, staff consistency and the story behind Florist IQ.
If you've ever been flat out making flowers and still wondered why there wasn't enough money left at the end of the week, I think this one will hit home.
Find Florist IQ:
www.florist-iq.com.au
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