Rhonda
Well-Known Member
We also charge $4.00 due to the same reason, two shops that advertise free delivery and one that has Free delivery Friday.
Making sound business decisions
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BOSS
FlowerChat Administrator
Regarding "Free" Delivery:
We have one shop here in town out of the 7 of us that advertises "free delivery", they even have it on their sign. In the last 4-5 years I have hired two different designers from this shop, and in both cases they stated that...no delivery was not really "free"...
"We were instructed to remove the delivery charge prior to making the design"
So you decide... looks like ws math to me....
I have decided, I do not care what my competition charges, for they know best what their product and service is worth. I charge what I need, and produce a superior product that can carry it's own weight against the competition.
We have one shop here in town out of the 7 of us that advertises "free delivery", they even have it on their sign. In the last 4-5 years I have hired two different designers from this shop, and in both cases they stated that...no delivery was not really "free"...
"We were instructed to remove the delivery charge prior to making the design"
So you decide... looks like ws math to me....
I have decided, I do not care what my competition charges, for they know best what their product and service is worth. I charge what I need, and produce a superior product that can carry it's own weight against the competition.
You're right BOSS, nothing is FREE. NOTHING!
I wonder if the floral business will learn anything from what has been going on from the auto industry. They have been doing the same thing. A competitor introduces a new car model and the rest have to come up with something that has the same market appeal and is competitively priced. Doesn't mean that they can make any money at that price, but if the competitor is selling that new model at $24.999, then they must also sell a similiar unit at a very competitive price. No sense letting your competition get a leg up on you, right? In many cases to cover some of the short falls of these new models, profit from more established car models would subsidize the new less profitable ones. This has been going on for years. Now, the new owner, THE GOVERNMENT, is forcing GM and Chrysler to get rid of some of those losing situations.
The problem of subsidizing one portion of your business with another is that after a while, you lose track of what is profitable and what's not. As has been mentioned, you can subsidize wired incoming with wired outgoing and convince yourself that you're making money as long as the ratios are favorable. You can convince yourself that becasue gas just went up .50 a gallon, you must raise your delivery charges across the board. Yet a .50 cent increase on a vehicle that gets 20 miles to the gallon (example) only increases your cost by about 2 1/2 cents a mile. Some will even raise their minimum order for delivery to offset what appears to be rising delivery costs. Too many times one assumes that if they are not making money, they must need to raise prices. If you can't determine the true reason, it is most difficult to fix the problem. Many times, raising prices just makes the problem worst by chasing more customers away..
I wonder if the floral business will learn anything from what has been going on from the auto industry. They have been doing the same thing. A competitor introduces a new car model and the rest have to come up with something that has the same market appeal and is competitively priced. Doesn't mean that they can make any money at that price, but if the competitor is selling that new model at $24.999, then they must also sell a similiar unit at a very competitive price. No sense letting your competition get a leg up on you, right? In many cases to cover some of the short falls of these new models, profit from more established car models would subsidize the new less profitable ones. This has been going on for years. Now, the new owner, THE GOVERNMENT, is forcing GM and Chrysler to get rid of some of those losing situations.
The problem of subsidizing one portion of your business with another is that after a while, you lose track of what is profitable and what's not. As has been mentioned, you can subsidize wired incoming with wired outgoing and convince yourself that you're making money as long as the ratios are favorable. You can convince yourself that becasue gas just went up .50 a gallon, you must raise your delivery charges across the board. Yet a .50 cent increase on a vehicle that gets 20 miles to the gallon (example) only increases your cost by about 2 1/2 cents a mile. Some will even raise their minimum order for delivery to offset what appears to be rising delivery costs. Too many times one assumes that if they are not making money, they must need to raise prices. If you can't determine the true reason, it is most difficult to fix the problem. Many times, raising prices just makes the problem worst by chasing more customers away..
Joe Mioux
Well-Known Member
Bill, One of the resources that I have at my disposal every day is my dad. He is 90 years old and outside of college and WWII he has spent every day of his life in a flower shop. Prior to that his mother spent everyday of her life in a flower shop because her father started the business. So his history of the floral industry is pretty deep and it pre-dates the U.S. Wire Service industry.
The whole reason and purpose behind the 80/20 split and to fill to100 pct value was that florists' discounted incoming would be offset, somewhat, by the outgoing commissions. . Obviously, it wouldn't always be 100 pct, but that was the initial intent of the split, according to my 90 year old florist resource.
Remember, the WS business began before telephones so the florist had to go to the telegraph office to transmit orders, the outgoing commission helped offset some of costs, both financial and time and it provided an incentive for florists to send out of town orders. It expanded the U.S. flower market.
In today's world, with telephones, credit cards and the internet; the Wire Service business is antiquated, but it still survives. Since you are not in the retail flower business, you don't have the benefit of seeing WS order volume and its trend in a real world flower shop environment. Volume is not going up, it is going down. If the trend continues, it will be less than 5 pct of my business in a few years and that is hardly a reason to spend an inordinate amount of time here debating the pros and cons of WS affiliation.
Do you have a point to make about WS delivery fees?
thanks, joe
Trying to establish ourselves in the New England market has been interesting. There seems to be a resistance to our 20% delivery fee, and our minimum. Although I can justify it cause it is expected from us in the two metros DC and NY. But hey we got that when we implemented the policies 2 years after we started or company. After 2 years in this area, we are finally attracting clients that can meet our requirement. Sure it would be nice to have it all, but that means rapid uncontrolled growth that is sensitive to the market's swing. Been there, done that, don't work well.
I know what I need to make to break even, so why would I accept a negative cash flow? You need to set your honest acceptable terms and stand on them. If you think your losing business to competitors then so be it. Your customer base will evolve around your policy. At least your bottom line will improve.
I know what I need to make to break even, so why would I accept a negative cash flow? You need to set your honest acceptable terms and stand on them. If you think your losing business to competitors then so be it. Your customer base will evolve around your policy. At least your bottom line will improve.
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