Find Financial Salvation When You Accurately Mark Up Prices

Gina B Kellogg

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Sep 30, 2011
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Florist News – Miss the Mark (Up) & Miss PROFITS!

Find Financial Salvation When You Accurately Mark Up Prices


By Joe Guggia, AIFD

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I know that,
s a business owner and floral designer, I continually fight with the left and right sides of my brain. One minute, I’m engrossed in the latest artful design approach. The next, I realize I need to step back a minute and make sure my markups are accurate so that “artful” design nets me some cash!
Profit is our key to financial salvation—the true reason why we are in this awesome biz in the first place. It’s become a great game for me to see how much real profit I can make on a design—a game that I take quite seriously, of course, as should you. Losing your grip on this fact can be your demise, or at least make those valleys of loss much deeper than they need to be.

Years ago, Teleflora did some great research in this area and came up with some key rules to follow in our design work. I still use this info to this day; it’s kept my head above water and even allowed me to float around once in a while. See if these suggestions don’t help you play the profit game more successfully:

  • Labor: This is where many flower shops lose daily profit thinking they need to give more to that “special” customer. I’d much rather see you add a flower (that might be tossed anyway) than skimp on the labor charge. You must adhere to these percentages, no matter what!
  • Daily designs: You need to charge at least 25 percent of your gross for labor in creating everyday floral arrangements. That means you need to take 25 bucks right off the top of a $100-retail arrangement. That leaves you with $75 for everything else needed for creating that design.
  • Sympathy arrangements: You can apply the same 25-percent charge for labor to these designs. However, on set pieces (hearts, wreaths, crosses, etc.), you need to charge at least 30 percent for labor because they take more time for setup, etc. Thus, on a $200 piece, you should charge $60 for labor, leaving $140 for EVERYTHING else.
  • Wedding work: We know this work is totally time-consuming, which is why you should charge at least 35 percent to 50 percent for labor. A $150 bride’s bouquet, then, requires a labor charge of $52.50, leaving $97.50 for fresh product and supplies. If there’s more work involved, charge $75 for your time.
  • Permanent designs: These also require a labor charge of 35 percent. They take more time and require a bit more precision for today’s savvy clients. On a $125 design, charge $43.75 for labor, leaving $81.25 for product.
  • Fresh flowers: Our precious blossoms are where we can make some good profit if we keep to our proper markup schedule. Fresh flowers need a markup of at least 3.5 times their wholesale cost. (If you can do more, be my guest!) As a minimum, if you pay $1 for a bloom, the charge in your designs for each stem should be $3.50. Ten flowers = $35. This scale of mark-up is why it’s a great money-maker to use inexpensive containers with more flower product. More sale of flowers = more profit. Cool, huh?
  • Greens and fillers: These products are important aspects of our flower arrangements, adding the final touches, depth and interest to our bouquets. A 2.5 markup on these stems works well. I know these can be difficult to price as bunch sizes change from season to season and depending on the supplier. So think about dividing your bunches into four sections and charge per small bunch. If a bunch of wax flower costs $6.50, charge $4 for each smaller bunch. It’s a simple way to make your life easier while turning the profit you deserve.
  • Supplies/hard goods: Generally, supplies get marked up 2.5 times; there may be some items you can mark up more, such as birds, butterflies and ribbon. I’ve always marked my ribbon three times the cost, which has worked well for me. If an easel stand costs $5, it becomes $12.50 when you use it for your easel spray. An easel cage costing $3 becomes $7.50 once you touch it and mount it on the easel. Right there, you’ve got 20 bucks before you add anything else, so you can see the importance of keeping track of these markups. The easiest way of charging for a spray would be to have a predetermined markup for the setup, then add your labor, flowers, etc. I know it adds up fast, but this is where we make it or break it with our flower arranging. You need to charge for the smaller items, such as cardettes, enclosure cards and wired-wood picks, as well. Research shows me that a charge of 2 percent of the total amount of the order will (generally) cover these costs. So for a $50 order, you should charge a dollar for these items. If you think you can charge more, go for it.
  • Plants and plant designs: These offerings have their own set of markups, and the following system works well for me: I charge 2.5 times the cost of the plant, as well as the container. Premade garden planters get the same markup, but I add on for any birds or other embellishments. If you’re doing custom plant creations, you need to mark up the soil and any additions you include. Divide up the amount of soil used after you’ve marked up the bag 2.5 times. Charge your labor, as well, especially for custom plant designs. Use the same 25-percent labor charge that you use for fresh designs and the 2-percent incidentals charge for the “hidden” items. The 2.5 markup for the container is perfect as well. Just keep taking off each marked up item from the gross charge of your order; when you’re at zero, you’re done!
I know these tips make it sound SO simple, but we all know it really isn’t. Getting busy and keeping track of everything is one of the most difficult parts of our business. When we’re busy, we think we can slide past all the rules because we’re making money with volume. The fact is, however, that those times are when we really should watch our mark-ups the closest to achieve premium profit margins.

We all want to give that great customer just a “little extra” because she is our bread and butter, and we love her so much. But the reality is that we’re giving them a custom product that deserves an appropriate profit margin—and we’re truly worth it, no matter what the economy seems to say. Following these guidelines to the letter will allow you to gain proper profit margins to pay those bills and give you some freedom to live your life. After all, isn’t that what this passion is all about? Living a wonderful life we can share with our family and friends?

Take it from me: Making good money on a flower arrangement that is beautiful and makes your client “ooh” and “ahh” is the name of the game and a total win/win in our floral world.

About the author
In a floral world that can sometimes be scary and tiresome, Joe Guggia, AIFD, works to reinvent himself and keep his floral passion alive. With beginnings as a delivery boy at Sandyland Nursery (Carpinteria, Calif.), he progressed to assistant grower and helped launch the first nursery contract with a supermarket chain. Later, Joe moved on to take ownership of Camfeldt’s Flowers and Gifts (Santa Maria, Calif.).

Today, Joe continues to gather knowledge in all phases of the floral industry. He admits that putting himself “out there” to keep the dollars flowing has been a challenge and isn’t always easy. But sticking to it and realizing that “We’re only as good as our last design” has brought him to a place of industry sharing, both of his experiences and those of others.
Joe’s expertise includes staging, indoor/outdoor decor consulting, custom permanent designs, plant installations, landscaping, custom sympathy and everyday shop designs. He is a mentor to the student chapter of AIFD Cal Poly and promotes the motto of “Educate, motivate and create.”

Joe recently took on a new challenge: educating the public. His new website, http://www.arrangecreativeflowers.com, provides tips and advice to help consumers better appreciate our floral world.

An Invitation to YOU!

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FYI: Joe has written a sympathy-design book called "Create Professional Sympathy Designs," which is for sale on his new site (www.arrangecreativeflowers.com). He also is in the process of writing another, to be titled, "The Creative Daily Design." So check those out, y'all!
 
Great advice. I believe there are times when you can break the rules a bit on pricing, but you need to know your expenses down to the penny. If you add up all your fixed expenses, plus your projected variable expenses over the year, then divide it by the number of days open, you can get an idea of what your break even point is for each day of business. From there, you can make better decisions on staffing, donations, special prices, etc. There are also areas of the country that are far more expensive and would require higher mark ups on flowers. If your rent is 8 grand a month in a city, you will need to charge more than the small rural florist who owns his building and has low property taxes. It's still important to know the industry bench marks so you can find ways to be competitive AND profitable! Thanks, Joe, for the reminder. I need to review my expenses now!
 
I'm wondering how many shop owners have NOT followed this pretty straightforward thinking,and landed the big "bankrupt" sign in their doors.......I have seen this "guilt" drive many owners to extinction,and many more are clinging to "hope" that some some deity will deliver them from financial ruin. This is NOT "new" advice, it's CONTINUAL...for those that wish to continue in the floral biz!