How much do you really get for wire ins

[Joe Mioux]

To continue,

two flower shops:

Flower shop A: is WS, Flower shop B is not. they are in same town.

one gets two orders, both are $100 sales, one is direct and the other is WS.

given some constants: Fixed Costs is 30 pct, Labor is 30pct, COGs is 30 pct, Net Profit is the difference between GS and Costs. (use your own numbers. this is just an example.

so A: Gross Sales is $200 and Gross Revenue is $165.

WS yields the shop owner an extra $30 ($100-$65-$35) see my previous post.

Direct order adds $100-30-30-30 =$10 Net Profit

and B: Gross Revenue/Sales is $100.

GS is not $200 because this shop is not WS affiliated so ALL inbounds are going to go to A.

So B earns $10 in Net Profit

and A earns $40 in Net Profit

Now, lets say WS only represents 10 pct of Flower Shop A's GS

Flower shop A: receives a $110 in GS with Gross Revenue being $106.50. Using the above math, Flower shop A receives $13 in Net Profit,

Flower Shop B: receives $10 Net Profit.

 

[bloomz]

So tell me 'Ole Wise One... You get in an order for $100.00 vase (no carns and mums) delivered, and using the high number of your scenario, that means you are getting paid $65.00.

Minus your Delivery, COGS and Labor how much is contributed to fixed costs? (Joe, what say you?)

Love to grasshopper but Joe and Goldie broke it down pretty well.

Labor doesn't count for us either. Nor should it. Ours if fixed and we always have the resources to fill a few more orders, even at busy holidays.

I'll take a contribution margin of 25-35% any day all day long, helps feed my family.:spin

But you knew that...:kuddle:

And Toto - I caught the bus, couldn't cook it, so will be diving in the morning 9AM sharp.

Want I should say hi to the fishies for you?

I'm in a little town on the beach, riding a little scooter (no not a harley), to the internet cafe, checking in here via satellite connection - wondering if life gets any better than this.

 

[BOSS]

$10,000 in incoming equals $2500 towards fixed cost. Is that enough?

Not for me.... I could so better at the casino.

Joe, Goldie and Eric...thanks for the breakdowns. I do understand, and was making an issue for other to read mostly.

To further the discussion, does labor remain a fixed cost (which I have a problem with) when designers come in at 8am and go home when oders are done? (ie: not staying all day)

Another way florists break it down:
$100.00 incoming order = $65.00 actual money

$65.00
-9.95 delivery
-33.00 COGS on $100.00 order
-22.50 labor on $100.00 order
-$0.45 (that's negative) not quite break even

Just saying...for the sake of debate....

 

[bloomz]

I think yer just sayin you choose to look at it as a money loser...

How many shops here send their employees home when the orders are filled?

I bet not many.

I'm just sayin.....

 

[BOSS]

How many shops here send their employees home when the orders are filled?

I DO!

And why would you not? Unless you do not have a separate design team I suppose...my designers design, process flowers and answer phones..that's it.

 

[Joe Mioux]

Not for me.... I could so better at the casino.

Joe, Goldie and Eric...thanks for the breakdowns. I do understand, and was making an issue for other to read mostly.

To further the discussion, does labor remain a fixed cost (which I have a problem with) when designers come in at 8am and go home when oders are done? (ie: not staying all day)

Another way florists break it down:
$100.00 incoming order = $65.00 actual money

$65.00
-9.95 delivery
-33.00 COGS on $100.00 order
-22.50 labor on $100.00 order
-$0.45 (that's negative) not quite break even

Just saying...for the sake of debate....

two points to look at Mark,

Example, if $2500 goes directly down to Net Profit, and say a shop expects a 10 pct Net Profit/GS pct.

Then how many more sales does a non WS shop need to make that $2500 back?

The answer is $25,000.

point #2: Mark your analogy of sending your designers home early, once their work is complete has nothing to do with accepting some additional wire business - unless you have designers who do nothing but WS production.

Why? because you can't predict when your next order will come in.

Also, if you find yourself sending staff home on a regular basis, that might mean you are overstaffed anyway. I don't know, but it is a thought worth considering.

Do you have designers hired specifically for WS business?

 

[BOSS]

Also, if you find yourself sending staff home on a regular basis, that might mean you are overstaffed anyway. I don't know, but it is a thought worth considering.

Do you have designers hired specifically for WS business?

No sir... but then again... total wire service INcoming for 08 was only $28,000.00 ($89.74 per day or bascially 1-2 arrs.).

And in my case, it's not over staffed, my system is designed for them to go home. Let say you have 30 orders for today, 2 scheduled designers, and you take another 10 orders during the day. Those first 30 should be done by 11am, the additional 10 plus 10 cooler arrs by by 1pm, staf out at 2pm or sooner. they come in at 7:30-8am.

What am I missing?

 

[BOSS]

Another way florists break it down:
$100.00 incoming order = $65.00 actual money

$65.00
-9.95 delivery
-33.00 COGS on $100.00 order
-22.50 labor on $100.00 order
-$0.45 (that's negative) not quite break even

Just saying...for the sake of debate....

???????????????????????

 

[Joe Mioux]

No sir... but then again... total wire service INcoming for 08 was only $28,000.00 ($89.74 per day or bascially 1-2 arrs.).

And in my case, it's not over staffed, my system is designed for them to go home. Let say you have 30 orders for today, 2 scheduled designers, and you take another 10 orders during the day. Those first 30 should be done by 11am, the additional 10 plus 10 cooler arrs by by 1pm, staf out at 2pm or sooner. they come in at 7:30-8am.

What am I missing?

I think you know this, but I wasn't making any type of suggestions on how you should run your business.

what about silk or home decor work? Merchandising? etc?, how about some cold calling?

That system works for you and that is a good thing.

FTR: I do the same thing. When the work is done, the staff is relieved.

Also, if I don't see anything on the horizon, I tell some of them to stay home and rotate bare bones staffing until we get busy.

If they don't like it, they are free to find other employment. I don't buy employees, I buy labor.

joe

 

[Joe Mioux]

Given your inbounds accounted for $28K in sales, I would suspect total WI business accounts for around what maybe 4 -7 pct, maybe even less.

You're not hiring staff to based on WI business, you are just running your shop more efficiently by accepting those few orders.

therefore: your labor is fixed and not variable so you need to subtract the labor from your costs of wire business.

joe

 

[BOSS]

I think you know this, but I wasn't making any type of suggestions on how you should run your business.

what about silk or home decor work? Merchandising? etc?, how about some cold calling?

joe

I know Joe...

Merchandising is done by sales staff, not design staff. Separate department.

Silks are done by an outside designer (former employee) at her cost, brought into the store and sold on commission (eliminating my exposure to seasonal left overs) and I take a 30% cut.

I hate cold calling, thus I don't do it to others.

I know what you're saying, and it applies to most probably, I just do things differently that work for me, they won't for everyone.

 

[TOTO]

Free labor + free delivery = $

So what I've gotten from the FILLER ADVOCATES is: As long as you're willing to gift the WS's with your FREE LABOR FORCE and FREE DELIVERY $ERVICE, it's all good to go into one pot, stir it up, and make a soup.

AHHH? Just wondering who came up with that rationale and how did WEE FLORISTS ever allow them to get away with it? (RHETORICAL)

Gives a whole NEW MEANING to the words: "USER FRIENDLY!"

NAW! Just won't float my boat since, NO ONE gets a FREE PASS on my watch other than POOR SENIOR CITIZENS, the INFIRM, and the DESTITUTE!

WS's and the DOG's and OG's they sleep with, don't fit that profile!

Nor am I willing to work and deliver for them for FREE!

Last I read, TOO MANY COOKS SPOIL THE BROTH, and they sure have!

And simply because, whenever $35 comes off the top and you're working with $65 less $7 for delivery, the recipient is surely not going to be happy with those leftovers at $58 when they spent $114.99 plus any applicable sales tax through the SKIMMERS.

Talk about a 50% off REVERSE SALES STRATEGY, oh my!

Bill is quite correct when he raised his question by asking if any of us knew of ANY OTHER BUSINESS who operates this way. I wanted to offer up LOAN SHARK, but he prequalified his question with REPUTABLE.

Hal understands the reality that, THEIR PROBLEM has BECOME OUR PROBLEM, especially when the MIDDLEMEN battle amongst themselves to see who can sink to the lowest SRP's, and finally undersell the florist's own $75 PREMIUM ROSES by $10, and then, try to sneak that very same $65 order through that same florist's back door via their WS printer.

 

[dhamil6490]

I think the thing to do about it is educate the public. I've written a letter to the editor, and an article that was published in my chamber of commerce newsletter. It's a small start, but it's a start. Those of us who have websites can add content about WS & OG ripoffs. Those who don't can deliver the same message in hardcopy form: type up a small card to attach to the order that explains the WS/OG evils and send it out with every order. Explain how the customer wins when dealing with a real florist. We can't expect things to change overnite, but we can make an impact if we try. So my advice is to put on your authors hat and get busy educating your customers. Here's some sample language you can tailor to your specific situation:

"This arrangement came to you through (TF, FTD, JustFlowers, whatever), a wire service (or order gatherer). The sender spent a lot of extra money in service fees to get it delivered to you. Give the sender our contact information, and ask that they place the next order directly with us. You will save your friends a lot of money, and cut out an unnecessary middleman. You always win with a real florist. No "buds" about it!"

Web pages can be more elaborate.

Someone earlier thought the customer really didn't know the difference between real florists and OGs, much less care. Our job is to educate them so that they know the difference & do care! No one else is going to do it, so get busy educating!

 

[Joe Mioux]

Not for me.... I could so better at the casino.

Joe, Goldie and Eric...thanks for the breakdowns. I do understand, and was making an issue for other to read mostly.

To further the discussion, does labor remain a fixed cost (which I have a problem with) when designers come in at 8am and go home when oders are done? (ie: not staying all day)

Another way florists break it down:
$100.00 incoming order = $65.00 actual money

$65.00
-9.95 delivery
-33.00 COGS on $100.00 order
-22.50 labor on $100.00 order
-$0.45 (that's negative) not quite break even

Just saying...for the sake of debate....

I just caught something here that may explain why you and I differ on design labor being variable or fixed.

You just charged out $22.50 for this $100 order. For me I could probably get this arrangement done in about 10 minutes but lets assume it takes someone 15 minutes.

Are you telling me that you are paying your designer $90 per hour? (15 minutes - 25 pct of $90 equals $22.50?

I don't think you are.

Your $22.50 represents not only the designer's time, but your other support staff's time as well.

Therefore, can you really cost out $22.50 design labor to this order and come up with an accurate profit/loss analysis?

joe

 

[oaf]

To answer why.

Why for me do i continue in relay....it's not cause it's fun, it's not cause it's cool,and it's certainly not cause it's amazingly profitable these things i know for sure...it's...and here it is .......














pretty blank page.....its like asking why are you still with the same bank,...you know you can move...but somehow you just don't!!!!...it's something that i just keep putting off.....go figure!!!

 

[BOSS]

Are you telling me that you are paying your designer $90 per hour? (15 minutes - 25 pct of $90 equals $22.50?

Therefore, can you really cost out $22.50 design labor to this order and come up with an accurate profit/loss analysis?

joe

Heck no, I don't even pay myself that much....

But are not industry standards 20% labor? (Mines a little higher, I do pay well) And I figure labor as a profit center for me, not what I pay employees.

So then, if (like you) I can do 4 of these designs an hour, am I only supposed to charge 5% labor? $100.00 x .05 x 4 = $20.00 that I am paying my designer? Even at 10% it would be a break even for the business adding in employer taxes, unemployment, workers comp.

Waht does a $20.00/hour employee actually cost the business? $45.00/hr ?

 

[Joe Mioux]

Heck no, I don't even pay myself that much....

But are not industry standards 20% labor? (Mines a little higher, I do pay well) And I figure labor as a profit center for me, not what I pay employees.

So then, if (like you) I can do 4 of these designs an hour, am I only supposed to charge 5% labor? $100.00 x .05 x 4 = $20.00 that I am paying my designer? Even at 10% it would be a break even for the business adding in employer taxes, unemployment, workers comp.

Waht does a $20.00/hour employee actually cost the business? $45.00/hr ?

Ah here is the difference!

When you cost out your ws labor (which I still think isn't necessary - given the volume of business you and I do) you have to assign ONLY the actual cost of designer's labor expense that you incurred while making that arrangement.

You can't cost out labor but then incorporate some profit in that labor cost. if you do you are not accurately analyzing your break even point.

if you are going to charge design labor then you need to do charge out only the designer's pay in that 15 minutes of design time.

That makes it more of a variable cost. If you add any additional labor expense to the equation, that labor is fixed.

 

[HeatherTuckey]

I agree with Joe. Using the same dollars... figuring a $100 wire order is $65 in actual $ I see it this way.

We will all take our $10 delivery right off the top. So the designer is actually making a $90 arr. ALL YOUR COGS AND LABOR SHOULD BE CALCULATED ON THE PRODUCT, NOT PRODUCT PLUS DELIVERY. At our shop we will charge 30% of that to go towards labor, standard vase or container and standard greens (say an 11" vase, like a synd 4042 or similar $3 cost vase and $3 in greens cost). My designer would charge $27, so $21 for her time and $6 in greens and vase. If this takes her 15 minutes and I figure it took another person 4 minutes to take the order and 2 minutes to pack, I have 25 minutes of labor, I am still in my $1 per minute range to be PROFITABLE on my labor, not break even. No one is making over $15 / hr... assuming all labor fees can fit into my $1/ minute rule, I am making a profit on that as well, not just a break even.

As for the COGS... excluding the greens, my designer would have $63 in retail fresh flowers. at MINIMUM my mark up is 3 x's. Some flowers are 4 or 5 x's. So my MAX FRESH COGS are $21

Actual $ received $65
Fresh COGS -$21
Vases and green COGS -$6
LABOR -$21
Delivery -$10
Profit in a worst case is $7 (plus I have some profit in the labor and my cogs is often less b/c many flowers I have better than a 3x's mark up on, like roses, lilies, carns, poms, fillers, etc.).

ALSO... on many items, like dozen roses, non picture mixed vases, etc... they can be made ahead of time to suit your expected everyday volume (or holiday volume), to be "pulled" for orders later, greatly increasing the profit on you labor. And for us we can put in the delivery pool for $3 sometimes and make another $6 or so on the delivery (after I pay the driver to go down there, but I am going there regardless).

 

[BOSS]

Ah here is the difference!

you are not accurately analyzing your break even point.

But...but...but....

I'll call you in a few minutes...

Added: Go take your wedding appointment.

 

[HeatherTuckey]

I should add.... no one is going to say that 100% orders are not by far more profitable, BUT... you have in most cases paid to get that "so called" 100% order in some way through marketing, advertising, sales rep commission, funeral home commission, YOUR TIME TO DO THESE THINGS TO GET ORDERS, etc.

IF YOU HAVE NOT REACHED EXCESS CAPACITY, which I have NOT except maybe on 2/13 and 2/14... I will take a smaller wire service profit margin. ESPECIALLY on a day like today, when I have 30 minutes to BS on Flowerchat - LOL!