Is Owning A Flower Shop Profitable? Avoid These Financial Pitfalls

profitable floral design systems series
Written By LuAnn

There were 3 flower shops for sale in Austin when I decided to buy a flower shop back in 2006. And when it came time to look under the hood of those businesses, I was shocked! 

The sellers did everything possible to put lipstick on the pigs, but two out of three of the flower shops I considered buying were not profitable at all. 

The third flower shop was profitable. It had a great team, a loyal base of customers, and it was in an ideal location. I knew I had to become its next owner. Verbena Floral Design is the flower shop I bought and ran for over 12 years! And I am proud to say it was highly profitable every single year that I owned it. 
Now when I look back 18 years later, I can clearly see what separated these three flower shops and what made one flower shop profitable and the other two profit-less! 

Now when I tell people I was a flower shop owner, people frequently ask me “Is owning a flower shop profitable?” And like most things in life the answer depends more on the people behind the business than the business itself. 

Let’s dig a bit deeper into small business profitability and the factors that drive success.

Are flower shops profitable? 

Here’s the short answer. Flower shops are profitable when the owners and managers make smart business decisions that drive revenue, control costs, and yield advantageous results. In fact, this goes for any type of business. 

Flower shop owners who are profitable typically have 3 important things. 

Good product-market fit
A sound pricing strategy
Smart cash-flow management

But if you landed on this post and have gotten this far, I think the question you really want to ask is “how can I make my flower shop profitable?” because you know it’s possible!

The answer lies in learning from other’s mistakes. So let’s look at a few things that create a strong foundation for a profitable flower shop and a few things that need to be avoided if you want to be profitable in the floral business. 

How Much Do Flower Shops Make a Year?

Most flower shop owners don’t want to share how much money they are making each year, but I am happy to share what I made in my flower shop annually. My business revenue was right around $500k and my profit was usually around $85k after all my bills, expenses, and payroll (including myself) were taken out. 

So I know from personal experience that it is possible to make a healthy living and that owning a flower shop is profitable!  And the keys are having a good product-market fit, a sound pricing strategy, and smart cash-flow management. But of these 3 the most important is a sound pricing strategy because without it revenue often falls flat and can be the cause of lots of serious issues in your floral business. 

Do you want to get the scoop on floral design pricing so that you can run a profitable flower shop?

Let’s talk pricing! 

Floral design pricing strategy

Being a creative person, you may not love the math involved in running your floral design business. I understand that completely. However, if you want to become a more profitable floral designer, you must make implementing flower math pricing a priority every day. Then you can take it to the next level by avoiding the top 10 floral design profit pitfalls I'll discuss below.

The fundamental structure of floral design pricing is a cost based model. Why use it? It’s simple and it works! You’ll calculate the total costs it takes to make your product and then add a percentage margin to determine your final retail price.

Your goal is a 70% profit margin on your flowers and hard-goods.

The mark-up on your flowers is typically 3 to 4x your wholesale cost. The mark-up on your hard-goods is usually 2 to 2.5x your cost. The design fee is calculated as a percentage and needs to be in the range of 30 to 50% depending on the complexity of the design.

And what about the other costs of running your business? Rent, phone, internet, etc.? We’ll call that overhead and it’s covered by your profit margin.

Of course, these are guidelines and as a small business owner, you must decide what formulas work best for you. Don’t undercut yourself.  Be sure to keep these suggested numbers as your starting point.

 
 

If you need more help or want to clarify your pricing strategy check out the best flower math course available online. Alison Ellis has it down to a science over at Real Flower Business.

Now that we’ve covered the basics, I want to tell you about some financial pitfalls I see when it comes to floral design. They each cut away at the profits of the designers that make them. So, were going to call them profit pitfalls and you’ll want to examine each one within the context of your business.

Do you find yourself participating in any of these behaviors?

10 profit pitfalls to avoid in your floral design business

1. Not budgeting flower orders and having too much waste

There are a lot of ways to create waste in the floral business. The biggest one is over ordering flowers. Budget your flower orders based on the flower math I mentioned above to avoid this pitfall. Please leave a little wiggle room for breakage, but don’t order more than you need just because you don’t want to sit down and do the math.

2. Not evaluating perceived value

A cost based pricing model is a great way to ensure you are making a profit on every order. But it does not directly address perceived value. So when an arrangement doesn’t live up to the client’s idea of perceived value, it could land you in trouble.  Your customer may complain because they think it doesn’t live up to the price they were charged.  This will end up costing you more in the long run. You’ll make it right by refunding or replacing the floral arrangement. The key here is confidence in your math. That confidence will translate clearly when you educate your customer. You can let them know that it is filled to value and you stand behind it. You’ll want to make sure you are managing the customer’s expectations upfront to avoid these situations. We’ll delve deeper into that concept in a future post!

3. Not including all your costs in your pricing calculations

That tape you used on the bridal bouquet last weekend? You need to make sure that is included in your hard-goods costs. Too many small items being left out of the costs in your floral pricing can add up over time. Do a double check frequently and ask yourself and your employees if everything is being included in the math!

4. Not educating your team

As an employee, working off a recipe is great, but it makes more sense when you understand the math behind it. First, take the time to master your floral design pricing strategy and formulas. Then teach them to your employees too. It’s very easy for small additions to an arrangement or wedding design to eat into your profits. An employee taking the liberty to add a few flowers into each design can significantly change your profit margins over the course of a year. As the leader of your team it’s imperative that you stay on top of your profit margins and keep an eye on your flower costs.

5. Not checking your wholesale prices

I see so many floral designers that do not check wholesale prices often enough. It’s their job to provide that information to you. So, don’t be shy. Ask for it! You must use accurate grower or wholesale pricing. Why go through this process if your prices aren’t up to date? Flower prices fluctuate frequently. So, make sure you are basing your math off the most accurate costs possible. Many wholesalers can send weekly emails with updated pricing. Make sure you’re on their email list and call them for specifics.

6. Not negotiating

When you buy 6 hydrangeas, you will pay full price. That’s okay with me. However, when you buy 600 hydrangeas you’ve got to ask for a reduced price or you’re just leaving money on the table. Compare a few quality wholesalers and go with the best combination of quality and price. I’ve negotiated deals with my main wholesaler for years. So, it’s a win for both. They get more business and I get to consolidate my orders with my favorite locally owned wholesale company.

The concept of negotiating also applies to other facets of your business. So, look around and ask yourself where else can I save on costs by comparison shopping or negotiating a better price? For example, your business cards and printing needs, rent or hard-goods and supplies. Start researching now.

7. Not comparison shopping the competition

Cost-based pricing is a great strategy used by most floral designers, but not all. As a business owner, it’s important to comparison shop your competitors. You may have a competitor that works off a lower profit margin than you do. How does their quality and service compare to yours?  Part of bringing value to your customers is being knowledgeable about your competitors. That way you can educate the customer about the added value you bring to their experience.

8. Not rounding up

$5 here and $3 there adds up quickly! If you are taking your pricing very literally, consider rounding up. As an example, I would sell a Bridal Bouquet for $350 when the math added up to $338. Rounding up offers a little wiggle room to play with especially on higher budget designs.

9. Not auditing your profit margin

You’ve taken the time to check prices from your wholesaler (see #5), now you need to make sure they charged you correctly. Wholesale invoice mistakes can eat into your profit margin. So, keep an eye on that. I also recommend checking your wholesale flower costs against your total sales every month. If the costs are out of proportion to your revenue, you’ll want to investigate and adjust quickly.

 
 

10. Not promoting less labor-intensive designs

Complicated floral designs can be exciting for you as a designer, but often they are not the most profitable options. Calculating the time it takes to create a design can be difficult and many floral designers underestimate the amount of time and labor a design may require. This often results in less than ideal profit margins.

When it comes to wedding proposals, giving your client multiple options is a great way to promote your most profitable designs.

So… Are Flower Shops Profitable?

Short answer: Flower shops can absolutely be profitable! 

Here’s a great example of making smart decisions when it comes to running a profitable flower shop. 

I created a proposal for a client a few years ago. Initially, she showed me two different bridal bouquet concepts. The first concept was an intricate mixed bouquet of about 7 different varieties of white flowers and accents of trailing greenery. The second concept was a large and luscious rounded bouquet of about 50 blush peonies. Well, the bride chose the peony bouquet!

The all peony bouquet was going to take significantly less time and effort to make because it was a straightforward hand-tied rounded bouquet. 

Think about this. Less design time = more profit! 

And because the peonies are a more expensive flower I made more profit based on my markup as well. 

She loved it and everyone lived happily ever after! So don’t let anyone tell you that you need to sacrifice running a profitable flower shop to make your clients happy. You can do both when you have the right clients. And that is an example of good product-market fit!

Conclusion

Once you and your team are solid on product-market fit, floral design pricing strategy, and cash-flow management, you can concentrate on working through the financial pitfalls that you identify with in your floral business.

My hope is that after reading this post you’ll be able to search out and find your own problem behaviors. I encourage you to take the time to discuss why owning a flower shop is profitable if approached the right way with your team. It will give them a better, more in-depth understanding of how your business generates revenue. This will in turn make everyone on your team more able to focus on what they can do to streamline your processes and increase the profits in your floral design business!

Until next time,

LuAnn

 
 
 

My profitable bridal bouquet. Over 50 peonies in this beauty!

 

FAQs

  • Yes! Flower shop owners can make money when they ensure their product offerings align with their clients needs, drive revenue, regularly use a sound pricing strategy, and manage their expenses.

  • Most flower shops aim for a profit margin of 70% on the cost of flowers and supplies. This goal can vary. Profit Margin variations depend on the floral business owner’s decision to sell more flowers at lower prices or to sell fewer flowers at higher prices. And this is why understanding your ideal clients and having a sound floral pricing strategy is so crucial to running a profitable flower shop.

  • There are so many ways to sell flowers. And I have seen some floral businesses fail over my years in the floral industry. But, I think overall selling flowers is a profitable business because it’s a growing industry based on the most important events in people’s lives.

    Special events like weddings, new babies, graduations, and celebrations of life are enhanced by the beauty of flowers. And I don’t think that will change anytime soon. The demand for skilled craftspeople to design beautiful arrangements for these occasions drives the industry and there is opportunity to start and run a profitable business selling flowers if you want to put in the work!

  • A small business’s selling price is typically based on a multiple of its cash-flow. And if you want to learn more about that, I recommend finding a local business broker to talk it over with you. A business broker is a real estate agent for businesses. They connect buyers and sellers and they often handle the business valuation process and recommend a selling price much like a real estate agent.

    The selling price of a floral business is tied directly to the finances of the business. So making a profit is key to selling your business when it’s time to exit.

    If you are the person on the buying side of the transaction, asking, “how much should i invest in a flower shop?” is a smart move.

    Let’s start by considering a business with little to no profits.

    Each floral business is going to have a unique valuation based on its financial history. Let’s think back to the two businesses I considered buying in 2006, they didn’t have any profits to show. So it took a very long time for those businesses to sell and they didn’t get a very good selling price.

    If you have no profits, you’ll have very little to no interest from prospective buyers.

    As a potential buyer, you can invest less if you buy a business with little to no profits. However, you’ll need to do a ton of work to dissect why the business isn’t profitable and to turn it around quickly.

    Alternatively, a profitable flower business requires more initial investment. But, you’ll already have a good customer base and most likely have income coming in from day one of your ownership. This is the boat I was in when I bought my flower shop and it worked well for me.

    My initial investment in the flower shop was tens of thousands of dollars. I got a SBA loan to cover the rest. The business purchase was upwards of $200k in total.

    I used some of my business profits to pay my SBA loan over the first few years of owning my floral business. After that, I was able to use that money to reinvest in the business by buying a new delivery van and other equipment.

    If you are looking to purchase or start a flower shop, I recommend talking to a CPA and determining your personal threshold for investment.

LuAnn
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Floral Pricing Guide: How Designers Price for a Profit…The Formula