I need some thoughts on this scenario....long a$$ post!

[lori042499]

Skimming through the royer book, I found some interesting info on pricing...He strives for an over all 2-2.5 percent markup of all items in his shop and then adding in delivery, design and all other aspects to that pricing, so that people get what they pay for and everything is paid for when purchased...so the bunch buyer isn't paying for the delivery driver, or gift wrapping, or design staff...he kind of pioneered the deconstructed way we price today...prior to this all flowers were assumed to be arranged and were price with a 4.5x markup and no labor included(some info I did not know)...some peole still price this way and it makes sense if you don't ever get a customer in buying loose cuts etc, so like wedding and event people...

He goes on to say that many shops need to sell their flowers at the 3-3.5x markup because of wire ins...that we basically are needing to supplement our markups to accomodate this service offering. My thoughts on this are like years ago when florists saw a change in consumer behavior to buying loose stems and had to change the way mark up was calculated and deconstruct it, maybe it is time that we all look at how we charge for things in-store and figure out what the new way of pricing things should be...We all have the right to charge waht we want and need to run our businesses, that has not been taken away from us...There are rules against skimming, but just what is skimming???I would say that taking a percentage off the top would be skimming but maybe reconfiguring our wire service sector of business is what needs to be done...

Ok, so hear me out...and this would take time and would need to be made main stream to even work or maybe wouldn't work at all...i don't know I am just kind of thinking aloud, because things must change to get the florist industry beck on center because it is being spiraled out into left field and florists just can't stop doing wire stuff nor can the afford to mark themselves up rght out of the game...

Now I know that some shops have a huge amount of wire in and wire out biz especially in places like boston, nyc, la all those really huge metro areas, and they just cannot let that business go because it is a huge part of the stakes...but the rising costs of those services are lowing their profits and ultimately ending up raising thier prices to all customers which isn't fair to them, they are getting less value so others can buy from nationals and save with their coupons...But what if we take the regular buisness out of the mix and figure out what we need to charge to make our bread and butter customers happy, make our livelihood grow and make our valued customers feel special because they are our stars...and say that we decide we can afford to give them a 2.75x markup on flowers, plants and hardgoods and a 20% labor and competative delivery charges kind of like a cash and carry special for your everyday customers the ones that you know and love...

and then take all the wire in stuff and determine what it is that that service costs to maintain and charge differently for that sector of business. I am not talking about taking the 27% off the top, not at all because we know that this is against the rules and not fair to the wire customers..but by figuring out exactly what delivery costs are and figuring out what needs to be charged for delivery of these outside orders and charging just those roders the correct amount, and charging the correct amount for your flowers to cover all the costs associated with the wire services and filling to value after all that isn't against the rules it is operation of a good health business. So say we figure that the wire service portion of our business needs to charge 12.50 for delivery and 4.5x markup on flowers and 30% labor, so be it, if the orders don't work they don't work...and get rejected..but if we start to main stream the findings and start teaching shops this method(once actually figured out and benchmarked), I am sure it could eventually be streamlined into the way things always were...just like our bench marks of 3.5x mark up 20% labor etc...

So does anyone have any thoughts on this? Do you all think I am wacky, its ok if you do? Lots of people thought Columbus was crazy for thinking the world was round...all I know is that things need to change, wire services need to recognize that we need to price their portion of our business differently and we do need to figure out ways to be competative with grocery stores...and I don't think the full answer is to dump the wire portion of our businesses, many of us are going after business(corporate) that requires us to have wire service and as of right now that comes with some ins as well as outs and the total bill for both services...I am ready for the naysayers and balloon busters, I am interested in hearing anything that you guys have to say on the subject...I am slowly learning that I do have good business sense and I am not just a silly florist and that I do know how to manipulate numbers...and I want to work out my numbers to make money and get them where they need to be...

 

[sandytf]

I don't think you're wacky! (Well, maybe just a little).

Really, we all price differently for weddings because there are higher costs to doing them.....I don't see why it should be different for another "costlier" aspect of our business. I think this is starting to happen already by florists refusing orders that are undervalued.

 

[Flowermomma]

The rules for the wire service state that you can not charge more for their delivery or flowers then you would for a walk in customer.

 

[bootcampguy]

I think you're wacky........No, just Lori I don't see how there's anyway you can adjust or justify any change until you know the true year of a store with salary and all overhead accounted for. At least twice a year I tear apart all the numbers and just never find any room for "wiggle". The Royer idea of the 3.5 because of wire services, perhaps Ok for the 90's but not in this new economy. We're not in a recession, we're in a "new economy" that's here to stay for the next 5 years or so. You have to divide your business into several areas and I applaud you for taking the time to look at each of them. But factor in what YOU want out of the business and then you might be able to make some adjustments. Floral welfare is not good!.................

 

[BOSS]

The rules for the wire service state that you can not charge more for their delivery or flowers then you would for a walk in customer.

First, there are NO rules for wire service business these days, most everything is fair game, and they reward those that market outside their delivery area much more than those that don't...it's a free for all...

Secondly, Lori, thanks fort the thoughtful post, it appears to following along the lines of my question regarding pricing of perishables... more thought needed.

 

[lori042499]

Rick, total agree..I am just trying to figure on what has changed and what needs to be deconstructed and factored into what to make a difference...I am definately adding in salary for me going forward, not waiting for anything to be left over...we all know how that goes..I'll keep you all posted as to what I find and how I go about finding it..Also one more thing, this is just one of those fleeting thoughs of probably something to add into my thinking (ADD brain), it may not get added in this year it may not even pan out, just an offer up to get people thinking differently..

as for rules...there are no rules with how the wire services price thing, nor any kind of bearing on real world pricing or consideration to us in their actions...Just like the cc companies have rules against charging people extra to cover their percents, there are no rules for giving a discount for cash...Sometimes the rules are just the jumping off point for fguring ways around them...I believe that most of us charge too little for delivery and don't know it and what the wire service allows or dictates for delivery is a gosh darn joke...we are free enterprise and I don't believe if push came to shove if you showed them your wire service cost structure and had a real menu for it and proff of how you have figured out how it affects your business and just not lopping of 27% from the top..it would prve that you are filling those orders to "value"...and I don't believe they could argue that they weren't filled to value...especially if you offer in store customers a percent off loyalty bonus that isn't applicable on wire in or wire out orders...department stores do this all the time, if tommy Hilfiger and Pfaltsgraft set the prices for the store, they hold the right not to offer the store 20% discount on those items, because they are not free to manipulate the pricing in the first place, basically the same idea is here, you are rewarding your local customers with better pricing and charging wire ins with competative nationally benchmarked prices...why should flowers sent today benefit from your securing the lowest overhead and your local customers be penalized for the tf overhead...it is effin backwards...to say the least...

 

[sandytf]

What I'm getting out of this is that it's time for the FLORIST to start saying what the RULES of engagement are instead of the other way around. What are we? Sheep? We do all the work, carry the inventory, and take the risk....WE should be able to tell them what we charge. FTLoG....I'm starting to sound like Boss!!!!

 

[lori042499]

Exactly Sandy...It is time to start letting florists know that the benchmarks that are there are to help them gauge what is customary for a typlical shop to charge...We really need to take into consideration that over the last 40 years a great deal has changed to business and adjust those benchmarks to reflect the changes...No longer can wire buusiness coexist with all other business and be figured the same, it needs to come out of the equation just like delivery needed to in the late 80's it could no longer be absorbed by everything and need to be analized and covered on its own....same is true with web costs and social media, we need to know how much it costs us and what percentage of business is derived from it and cost it ouot to that prtion of business not to business as a whole in order to stay competative on the local market if we want to...In my situation...a small neighborhood florist, I need to stay competative with grocery stores in order to survive, but I can't do that effectively if I sell everything at a mark up that is derived at counting all of my overhead in one lump sum and figuring out what I need to charge for mark up...that inflats the prices for c&c to labor intensive work and wire orders...maybe I will decide that my mark up comes down and my labor goes up to compensate..I have just begun this work so I am not sure where it is going but I have faith that once I do it once, I will have a better understanding of how it works and future tweeks will be easier and I will be happier with the outcome and get paid...I will not do this for 20 more years and settle for nice dinner once a month as payment..I would much rather give this place away than do that...

 

[Sprout]

I'm not in a wire service, so I can't speak to how to mark up for those, but my mark up on loose flowers and containers is 2.25. Arrangements are materials plus 50% of retail price of materials. I read Mr. Royer a zillion years ago and I'm with him on people not paying for services they aren't using and placing a value on my design talents. We sell plenty of interesting reasonably priced loose flowers I think because of our pricing.

That said, I don't think anyone any where charges enough on delivery to make a profit on delivery including myself. Ten years ago I looked into hiring a courier service to do my deliveries - the best price I found for same day in town delivery was $13. One town out was $25. This was 10 years ago! I assume this is how delivery needs to be priced to make a profit on it and I'm not even charging courier prices from 2001 in 2011!

I've often wondered if it would be worth discounting delivery fees for those who order early and charging a premium for those who want same day service. After all, I've had to think of things to keep my driver busy for 3 hours some days when there haven't been enough deliveries...

 

[lori042499]

All I know is that it is so good to see us doing some thinking around here...lots of great ideas and different thngs to think of...I really do think that if we are all to get paid and do what we do, the time is now to make the changes needed to succeed in all the areas we aren't, because if we just turn a blind eye and keep getting rid of things we can't compete with rather than change to be able to compete, we will have nothing left to sell...It is silliness and I have been guilty of it for a long time, but my eyes are open and the time for me is now to either put my nose to the grind stone and actually learn how to do it better or get out and just work for someone else willing to do it better...

 

[Simon Says]

On delivery charges, I take into consideration what the I.R.S. allows for business mileage expense allowance. Their published rate - amended 13th Dec 2010 - for 2011 is US$0.51 per mile. Therefore, if a delivery point is approx 10 miles, one-way, I can justify $10.20 for the round-trip should it come down to a "discussion" on the matter. On a day-to-day basis, handling each delivery charge on such a basis is not practical but I use it as part of the thought process behind the fee, especially for "rural" or long distance deliveries, especially for wires which can mean rejecting but, for the true cost of delivery, I'd rather reject than fill a wire.

 

[anytimeflowers]

Lori,

Great thread!

So here is a thought for you. Possibly, it's where the labor charge benchmark came from, I don't know.

Anyway, I'm wondering if this might work best for you since you are the only designer. Figure out how much you want to take home weekly and also the related taxes. Divide that into the hours you are open and that gives you the dollar amount to shoot for as a minimum.

Add everything you design in a week, each segment such as wedding, funeral, corsage, everyday, high-style, hand-tied bouquet, etc. Also take note of how much time those realistically take.

This is also helpful for figuring out when you can realistically afford more help. If your labor charges are far exceeding what you wanted for an income, you should at that point be able to afford help.

For me, I charge very little labor for funerals, but corsages get charged 60%. That's because I can expect to do $1000 funeral in an hour or so, but $1000 worth of corsages will take over EIGHT hours of my time. That's NUTS to charge the same labor!

Same goes for different products in my store. A 10-stem bunch of tulips gets a mark-up of 2X. If they want two tulips, they get marked 3.5% because I have to split the bunch and also figure out how to sell the other eight. They want those two tulips in a vase, they get charged 20% labor plus the container and foliage.

I most definitely agree that the wire services have dictated for too long what pricing would be and it seems that most of their pricing is....uhm...pulled out of their <insert your favorite naughty phrase here>.

You have the right idea as far as charging a different set of mark-ups but unfortunately it would have to be done through the wire services, not the individual florists. The wire services would have to adopt a new pricing structure because they are also dictating the recipes, not just the prices. A dozen roses in a vase is a dozen roses in a vase, there is no wiggle room for a different mark-up once it hits the shop.

Just FYI - I just attended a show with Kevin Ylvisaker and he concurred that there needed to be differences in labor according to what was being made. He also said that everyday labor should be at 30%, and corsage prices should never be less than $35.

 

[RWK]

Being in the area I am in now......I am going to throw what could be a monkey-wrench into the equations...........There is real benefit to "Looks like pricing" - Primarily in terms of customer perception.

For instance, Does a 60.00 arrangement of roses and lilys arranged in a 4 inch cube LOOK like it is 60.00 in value?

Our basic 50.00 arrangement consists of this recipe - 3 gerbera, 3 alstroemeria, waxflower as filler, plumosa and pitt for greens, 1 asiatic lily, 2 carnations OR 3 stems of poms/daisies/ and 2 40 cm roses arranged in a 6 1/4 inch ginger vase.

It take some real attention to placements to maintain a good visual look for the arrangement.

 

[Mikey the Flower Guy]

The rules for the wire service state that you can not charge more for their delivery or flowers then you would for a walk in customer.

I actually don't care what the "rules" are.....UNTIL they are on a level playing field!

 

[BOSS]

For instance, Does a 60.00 arrangement of roses and lilys arranged in a 4 inch cube LOOK like it is 60.00 in value?

Um...nope.... but for me, the cube's quicker to make, and lately has been outselling the vase outa the cooler...it's all about style.

 

[lori042499]

I think for those of us that have been making arrangements for 30 or more years get stuck on what the value of certain things are because we have grown to "know" what a 50 dollar vase looks like or what a 30 dollar plant looks like....This is the biggest problem with looks like pricing and one of the biggest problems with florists who never leave their shop or attend a design program...The fact of the matter is that prices go up everywhere all around us, yet the way most of us operate we don't go up on prices out of fear. This fear coupled with the florists innate ability to let their style get stagnant makes the harbinger of I can't sell that in my area really ring true for those particular florists....they really can't sell that because they don't know how to make it, they don't believe in the product and they can't carry off the existance because of their outdated style...

This was just proved by Steve Sorrell, House of Flowers....He hadn't changed his 80's farm and caountry look and was unable to get his clientele to buy the stuff he wanted to sell that he was seeing at design programs...He overhauled the shop and all of a sudden he was able to sell the newer styles...His loyal clientele that likes his fuller 80's style colonial bouquets will still shop with him and still spend the same tired dollar amount that they always did because they are loyal and trusting of his store, but what will happen is the new clientele will come in and instantly believe that he can and will be able to pull off the new styles because they see the store is updated..The cahnges we make gradually are not for our old customers they are to entice new customers and fresh clientele, you cannot get fresh clientele with old tired outdated designs...nor can you up your price when your old clientele wants what they've always gotten and he new doesn't see what they want...

I am amazed every single time I make a cube at how expensive they come out..For valentines day, I made 2/3 cubes and 1/3 regular mixed arrangements..I took a chance...I was left with the cheaper bigger regular arrangements at the end of it all and all the cubes sold even the ones for 75-100 bucks in a 5" cube....it shocked me into believing that people will buy what is hip and new over what is tired and old...I gave them choices and they told me in no uncertain terms what they wanted, against what I felt as not to value in my mind..This leads me to believe that Tim Huckabee really know what he is talking about when he says, give the customer real descriptive choices and they themselves will tell you wnat they want and will end up choosing something they are comfortable with in terms of price and value...the way we sell and value things leaves 20-30% of the money they might haveor would have spent on the table and that in the end is our loss...


This is the exact reason why so many successful flower shops run this cycle, they start up, the grow, they prosper for 5-20 years, then they decline and close not worth a dime...it is all because the owner opens with fresh ideas, changes regularly because it is all fresh and young, gets settles in and knows it all for many years, gets complacent and lazy, then is left with an outdated store with no life left and struggling to make the bills....sound familiar, I am sure we all know a store or two that has gone through this cycle...this is the cycle that I want to avoid.

 

[BOSS]

BOSS's Quote of the day!

I think for those of us that have been making arrangements for 30 or more years get stuck on what the value of certain things are because we have grown to "know" what a 50 dollar vase looks like or what a 30 dollar plant looks like....

I am amazed every single time I make a cube at how expensive they come out..For valentines day, I made 2/3 cubes and 1/3 regular mixed arrangements..I took a chance...I was left with the cheaper bigger regular arrangements at the end of it all and all the cubes sold even the ones for 75-100 bucks in a 5" cube....

Right on Lori... and me too...

Testing via "cooler designs" has amazed me, that many consumers WILL buy a $75.00-100.00 cube design, that has way fewer flowers than a $50.00 mixed vase....

Gerbera outsell Carnations, Hydrangea compete with roses....

Yes, like in Steve's case it took some changes (mostly in my mind) to make this happen, and it did take some time for consumers to see the value, and get used to "new ideas", but now, they order them by name. It seems, for us anyway, that style outsells quantity, no matter the price or "perceived value".

 

[Mikey the Flower Guy]

we "left" 3.5 in the middle of 2005........

 

[concord]

I have had the experience with cubes that side by side a $60-75 cube next to a $60 -75 vase if a man is shopping the tall vase wins. If it's a woman it can go either way. On $35-45 cubes with a couple of gerbs and green hydrangea with alstro , next to a larger basket of daisies and alstroe for the same price, the cube almost always wins except with lil ol ladies. On line, the cubes sell great because the compact style photographs so well.

 

[Flowermomma]

I have had the experience with cubes that side by side a $60-75 cube next to a $60 -75 vase if a man is shopping the tall vase wins. If it's a woman it can go either way. On $35-45 cubes with a couple of gerbs and green hydrangea with alstro , next to a larger basket of daisies and alstroe for the same price, the cube almost always wins except with lil ol ladies. On line, the cubes sell great because the compact style photographs so well.

Interesting! My town must be stuck in the dark ages!
I have done a cooler test too and have a traditonal all round, a cube and a funky one sided at the same price and the traditional sells!
I am trying to pull the town shoppers out of the dark ages but its a slow go!