Randy, my reason for being FTD is for incoming business.
you're only FTD, yes?
WS Break-even calculator
- Thread starter Joe Mioux
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Randy, my reason for being FTD is for incoming business.
you're only FTD, yes?
redundant? it was but not anymore. I am not saying this is a reason for having FTD and TF but FTD does come in handy when we need to send to a non-tf location, thus the reason for 19 outgoings last year.
joe
RC in Dayton and Cincinnati
New Member
Joe spent over $4,500 to receive $7,200 in orders. These orders present no opportunity for repeat business, no investment in building future business.
What Joe could have done instead is spend that same $4,500 on a good marketing plan. Not only would he gain additional sales by doing this, he would be investing in potential new repeat business at 100% sales for the future.
You see, incoming wire orders never result in future 100% sales, but a proper marketing plan is an investment not only for the present but the future as well.
RC
What Joe could have done instead is spend that same $4,500 on a good marketing plan. Not only would he gain additional sales by doing this, he would be investing in potential new repeat business at 100% sales for the future.
You see, incoming wire orders never result in future 100% sales, but a proper marketing plan is an investment not only for the present but the future as well.
RC
Randy, this isn't the point of the thread. Although if you can tell me how to spend $4500 and earn $15,000 in sales, I will listen.
I mean, I can easily take $4500 buy a bunch of plants like hydrangeas and do the same thing with no marketing plan. They sell themselves. You really need to send a box truck over to me sometime and buy 1000 pots.
The $4500 isn't proprietary money, I can do both.
LJVF
Well-Known Member
RC, according to Joe's numbers, it appears he made a small profit on incoming. Shouldn't this be treated as supplemental income? Now his case is unique to his shop, others may not fair the same.
It seems he could still contribute $4500 to marketing if he so chose. It's not like he put these funds into FTD and lost it all.
RC in Dayton and Cincinnati
New Member
Joe only thinks he made a profit on those incoming wire orders. Actually his WS Break-even calculator is broke.
Those orders didn't pay for the labor to make the arrangements, nor the supportive labor associated with the arrangements, nor the drivers who delivered the arrangements, nor even the gas in the vans that transported the arrangements.
In fact the small amount of money above his COGs wasn't near enough to contribute anywhere near it's fair share of overhead.
Joe lost money on those orders.
RC
Those orders didn't pay for the labor to make the arrangements, nor the supportive labor associated with the arrangements, nor the drivers who delivered the arrangements, nor even the gas in the vans that transported the arrangements.
In fact the small amount of money above his COGs wasn't near enough to contribute anywhere near it's fair share of overhead.
Joe lost money on those orders.
RC
LJVF
Well-Known Member
Randy, when we're talking strictly wire service profitability, this is what it comes down to, determining what costs are fixed and what costs are variable. I think this is an impossible debate to conclude, because 1, most won't be completely truthful or 2, it is very difficult to measure or 3, the florist is just plain clueless.
Being the accounting wizard that Joe is, I really do believe his numbers. For the rest (who are low senders), it's a different story and may be more trouble than it's worth.
Joe -
I so do appreciate your candor, and your openness to discuss this process. When thinking about the numbers earlier today, one thing that struck me was the cost to acquire (buy) each incoming order. Based on those numbers, the cost per order is just shy of $17 (and that figure does not include commissions and receiving fees.)
We ask how WSs afford $10/order rebates for the very top senders, and the answer is that florists are willing to buy the orders for higher costs than the WSs are willing to pay rebates. They make their $ in the difference.
They truly are the ultimate flower order brokers.
But with those costs, I'd ditch my broker.
Randy, this is where you are flawed in your thinking, re: design and delivery labor, if my staff or myself isn't arranging flowers or delivering them, we are doing something else either in the shop or in the greenhouse.
In other words, the cost of that labor remains irregardless whether these 154 orders come in or not.
The labor is fixed and is accounted over the total revenue, not on the incoming ws revenue. Again, in my initial post or a few posts into this thread, I said shops need to look at their own costs, not mine. I don't have a full time delivery staff and my design staff certainly doesn't spend the entire day arranging flowers.
Cathy, that $17 is exactly why I created this thread. Break even analysis shows us how many orders we need to break even. knowing the fixxed costs per order is important.
Actually, my fixed cost per order is $20.61, we knew this from the initial thread and that number is needed for this analysis.
Had I received 308 orders my fixed cost per order would be $10.30
Had I received 616 orders my fixed cost per order would be $5.15.
This is not a thread about rebates, but since you brought it up, yes fees assessed shops go towards paying rebates. That money has to come from somewhere, it probably comes more from low sending fees, reciprocity fees, and quality assurance fees than it comes from membership fees. remember I don't pay those fees.
Again, in my opening thread, I said that the profit is marginal and I have several options
I can...
1: drop WS membership
2: renegotiate my WS membership fees
3: renegotiate the number of .com orders I receive
4: recalculate my COGS for orders
5: raise my prices
6: raise my delivery fees on these orders
With the numbers I have, I have a lot more bargaining power that without them.
If I decide to stay with FTD, at least my negotiations will be based on numbers and not on a feeling.
I am not married to FTD and I don't have any strong need to stay.
joe
RC in Dayton and Cincinnati
New Member
Joe,
Basically, you are telling us that being paid over 30% of full value is potentially a profitable order to fill. Any percentage over 30% can go towards your overhead costs.
For example if you receive a $50 incoming wire order as long as you net over $15 you're OK because the remaining money over $15 can contribute to your overhead costs.
Is that what you are saying?
Basically, you are telling us that being paid over 30% of full value is potentially a profitable order to fill. Any percentage over 30% can go towards your overhead costs.
For example if you receive a $50 incoming wire order as long as you net over $15 you're OK because the remaining money over $15 can contribute to your overhead costs.
Is that what you are saying?
yes this is true, but as we can see, being a FTD member is - maybe - just barely profitable for me.
again like the bold text in my very first post, I said I didn't include other costs.
this thread has never really been about the WS business but rather discussing profitable departments and unprofitable departments.
I could have substituted Candles or Greeting Cards in place of WS's.
joe
RC in Dayton and Cincinnati
New Member
OK Joe,
Substitute candles as an example so we can understand what you are trying to say.
The title of your threat is "WS Break-even calculator", so what's the break-even point?
Substitute candles as an example so we can understand what you are trying to say.
The title of your threat is "WS Break-even calculator", so what's the break-even point?
Correct me if I am wrong......but it is not a good idea to KNOW YOUR BREAK EVEN POINTS on each and every facet of your business.
How many deliveries do you have to make to break even on the costs of the truck, the gas, the oil and servicing costs, the driver salary, insurance, etc.
How much dollar value does a designer have to generate from his/her design table to break even on their salary, the lights for them to see to work, to keep thendesign bench in good repair, etc.
If you carry bears, candles, pay rent, use electricty,any and all manner of things including marketing and wire services.......should you not know the figures that you BREAK EVEN ?
As I understand the concept of break even - You did not lose any money and you did not earn any profit.
How many deliveries do you have to make to break even on the costs of the truck, the gas, the oil and servicing costs, the driver salary, insurance, etc.
How much dollar value does a designer have to generate from his/her design table to break even on their salary, the lights for them to see to work, to keep thendesign bench in good repair, etc.
If you carry bears, candles, pay rent, use electricty,any and all manner of things including marketing and wire services.......should you not know the figures that you BREAK EVEN ?
As I understand the concept of break even - You did not lose any money and you did not earn any profit.
Joe,
If the w/s was barely profitable for me, here's what I might consider doing if I had a shop. I might drop the w/s and substitute it with a more profitable incremental product. Get the latest seller, (once was Beanie Babies, then Webkins, etc.) and promote and make as much hay as I could while the item was "hot" and then move on to the next latest and greatest.
Plus, it wouldn't be as much work going thru the monthly statement from that company. You have to watch your w/s statements like a hawk, and comb thru each one, because they are always creating new fees, or upping their current fees. Also, some shops I have visited have said they went thru rigorous motions of getting their lsf and recip fees waived, and then lo and behold the charges magically reappear on their statements the following year.
Less work and more profit is a good thing.
RC in Dayton and Cincinnati
New Member
Thank you Joe.
So, you are saying your break-even point is 30% of full value.
Using your example and 126 orders as a break-even point.
$2610 (membership costs) divided by 126 (# of orders) = $20.71 per order in membership costs.
$48.16 (avg. order value) X .27 (commission & clearing fee) = $13.00 per order in commissions.
$48.16 - $13.00 - $20.71 = $14.45 is what you net per order.
$14.45 is 30% of $48.16
RC in Dayton and Cincinnati
New Member
Joe,
Basically, you are telling us that being paid over 30% of full value is potentially a profitable order to fill. Any percentage over 30% can go towards your overhead costs.
For example if you receive a $48.16 incoming wire order as long as you net over $14.45 you're OK because the remaining money over $14.45 can contribute to your overhead costs.
Is that what you are saying?
Basically, you are telling us that being paid over 30% of full value is potentially a profitable order to fill. Any percentage over 30% can go towards your overhead costs.
For example if you receive a $48.16 incoming wire order as long as you net over $14.45 you're OK because the remaining money over $14.45 can contribute to your overhead costs.
Is that what you are saying?
TOTO
New Member
PHEW! Dat's a whole lotta work to hit the mark.
Just between MEE, U, and the lamp post, knocking out 126 orders just to meet the break even point, is a whole lotta work.
At which point, I would have to ask: "WHAT FORE?"
Like having 126 PUSH HANDS in a row at a Black Jack Table, and finally winning the 127th hand, but still NOT GETTING ANY BLACK JACKS.
You certainly had a lot of PLAYING TIME, but you never made any money!
Unless they offer you FREE MEMBERSHIP with NO DUES and FEES, I think ONE WIRE SERVICE has GOT TO GO JOE!
126 Orders is a heck-uv-a bar to have to meet, until ya begin to make that rather small marginal contribution to your operating expenses.
My vote is: "TAKE YOUR MONEY AND RUN!"
lol
Just between MEE, U, and the lamp post, knocking out 126 orders just to meet the break even point, is a whole lotta work.
At which point, I would have to ask: "WHAT FORE?"
Like having 126 PUSH HANDS in a row at a Black Jack Table, and finally winning the 127th hand, but still NOT GETTING ANY BLACK JACKS.
You certainly had a lot of PLAYING TIME, but you never made any money!
Unless they offer you FREE MEMBERSHIP with NO DUES and FEES, I think ONE WIRE SERVICE has GOT TO GO JOE!
126 Orders is a heck-uv-a bar to have to meet, until ya begin to make that rather small marginal contribution to your operating expenses.
My vote is: "TAKE YOUR MONEY AND RUN!"
lol
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