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60 B January | 2024 COST-OF-GOODS-SOLD Typically, florists aim for a profit margin of 50 percent to 70 percent of the retail price of every fresh design created. According to Paul Goodman, MBA, CPA, PFCI, president of Floral Finance Business Services in Jenks, Okla., total cost-of-goods-sold (COGS) for fresh flower arrangements in a typical flower shop should be no more than 30 percent to 35 percent of the retail price of each arrangement, and that must include all the fresh materials ( flowers and foliage) and all the hard goods (mentioned in the "Retail Pricing Example" above) used in the creation of each arrangement. Keeping COGS within the recommended percentage range can help a retail flower business owner analyze and manage the shop's pricing structure effectively and ensure the shop's profitability and financial stability. However, keep in mind that each flower shop may handle COGS differently, considering factors such as the cost of living in one's marketplace, city size, overhead expenses, client demographics, supplier prices, business goals and level of competition, among others. Discovering the markups, labor charges and COGS parameters that generate the desired profit margin for your shop is critical, and they will likely be somewhat different for every flower shop. To help with all of these things, consider using flower industry-specific software to manage inventory, pricing and customer relationships. ese tools can help streamline business operations and pricing strategies. Sundaram Natarajan, founder and CEO of GotFlowers, a Fremont, Calif.-based florist software developer, says that GotFlowers' "Inventory Management System" software has features that can help florists, like the "recipe management" module, which makes it easier to control pricing. "e use of recipe calculators ensures profit margins," Natarajan explains "With fluctuating flower prices, it's important for florists to be precise and maintain profits. is calls for controlling costs and pricing products accurately. Pricing products based on intuition and design experience is obsolete." Similarly, Mayuri Parikh, owner of Mayuri's Floral Design in Garnerville, N.Y., and founder and CEO of True Client Pro, an event management software for florists, wedding planners and venues, emphasizes the importance of using recipes to help control costs and generate profits. "Florists need to account for every item they use in their finished designs," she states, "and software, like True Client Pro's "Recipe Management Tools," makes pricing easier and more efficient. PRICING TIPS AND STRATEGIES Diversify Your Offerings: Offer a range of products at various price points, to cater to a broad customer base and capture a wider market share by accommodating different budget levels. For example, offer three price points for every arrangement on your standard menu, such as standard, deluxe and premium versions. • Fresh flowers and foliage wholesale cost: $20 • Hard-goods wholesale cost: $10 (container, ribbon and other decorative accessories, floral foam, flower food, tape, wire, enclosure card and envelope, card holder, packaging materials, etc.) • Labor fee of 25 percent of the retail price of all materials used: • Retail price of the arrangement $20 x 3.5 = $70 $10 x 2.5 = $25 $95 x 25% = $23.75 TOTAL: $118.75 Once you establish your markups and labor charges, charge consistently for your work. Adding a few extra flowers here and there, on a regular basis, significantly takes away from your profit. Also, remember that designs that require significant labor will naturally cost more because of the artistic skill and effort that is applied. As a floral artist, you create designs that carry unique value, and you mustn't be afraid to charge for that value. d RETAIL PRICING EXAMPLE d

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