Florist Business Tips: What is your profit margin on flowers?

Today’s Tip Tuesday, Floral Designers!

Can you can easily update your price estimates and confirm your actual profit margin on every project you design?

Planning a wedding with clients can be fun and rewarding!

That is, if you have systems in place to empower you to make smart business decisions that help you balance your clients’ expectations with a healthy profit!

I hope that these tips will help you to think differently about that balance and how to be more efficient in your business.

Let’s dig in!

Last week’s tip was about pricing with the future in mind. Estimating prices a bit higher for projects that are 6 months to a year in advance is a great way to set yourself up to achieve your profit margin targets on each event.

The price fluctuations on flowers seem to put a wrench in those plans though, am I right?

Your profit margin based on estimated prices 6 months before an event were spot-on a few years ago when wholesale prices were predictable. So, there was no need to re-evaluate your orders, update prices, and confirm your profit margin.

Now with major price shifts, it’s a different ball game.

Knowing your actual profit margin is vital to your business and helps you avoid a few pitfalls.

Pitfall #1: The slippery slope of eroding your profit margin

When you have a habit of pricing your designs based on old wholesale prices without calculating your actual profit margin and prices increase, it starts to eat away at your profits!

Over the short term this seems like it’s not that big of a deal. You don’t make as much money as you planned on a few sales.

Over the long term this becomes a bigger problem because prices will continue to increase and your brain is not being trained to compensate for those higher prices. Even if you don’t make as much money on some of your sales as you’d planned, if you compare your estimated and actual numbers you’ll be more aware of these changes. With this process, you’ll be training your brain to see that you are not charging enough and adjust faster.

You see my point, right? The faster you adapt to these changes the more money you make!

Pitfall #2: Not substituting flowers that will allow you to keep your profit margin intact

Does the pricing system you use allow you to quickly and easily adjust the wholesale prices of your flowers and get a revised profit margin calculation?

If the answer is yes, then you are more equipped to keep your profit margin in tact from estimate to final order thanks to substitutions. You can work with your wholesalers and growers to sub out flowers that fit the vision and your budget before finalizing your order.

If the answer is no, then you are not able to make these adjustments that allow you to strike the balance between a healthy profit and making the client happy with your designs. Creating recipes by-hand just doesn’t offer you the opportunity to do this efficiently!

My flower friend Alison Ellis, the creator of Flower Math and Real Flower Business, recently said “ EveryStem is the best tool I’ve used in my biz! Especially this year with the pricing fluctuations- met my margins on every wedding thanks to EveryStem.”

So, it can be done by-hand with lots of time and effort. Or it can be super simple with an efficient and affordable software. Either way it’s a vital piece of ensuring your business is financially sound.

Our Profit Summary Feature (shown below) offers a real-time calculation of profit margin that empowers our members to make the best possible decisions, especially when it comes to flower substitutions.

EveryStem Florist Software- Profit Summary Feature at a Glance after a wholesale price increase. Watch the video below to learn more!

 Pitfall #3: Other costs are rising too!

Maintaining your profit margin on flowers is vital because other costs including rent, labor, and utilities are rising too.

You can control your flower spend and you can control what you charge your client. Other expenses are not as easily controlled and they must come out of your profit too.

Here’s the main issue with that. If you do not adjust prices to absorb those other rising costs they will reduce your take-home profits. While you can’t always control market rates for labor or rent, you can make sure you make enough profit on flowers to cover these expenses and allow for the healthy profit you work so hard for.

So, whether you use EveryStem florist software or another system make sure it’s capable of comparing your estimated prices and actual prices to confirm your profit margin and avoid these pitfalls!

Check out how simple EveryStem makes this process in my quick Tip Tuesday 5-minute video below. You can edit the wholesale cost of a flower once and every calculation automatically updates. It’s seriously awesome!

 Wishing you a happy holiday season!

Until next time,

LuAnn