There were 3 flower shops for sale in Austin when I decided to buy a flower shop back in 2006. And when it came time to look under the hood of those businesses, I was shocked!
The sellers did everything possible to put lipstick on the pigs, but two out of three of the flower shops I considered buying were not profitable at all.
The third flower shop was profitable. It had a great team, a loyal base of customers, and it was in an ideal location. I knew I had to become its next owner.Verbena Floral Design is the flower shop I bought and ran for over 12 years! And I am proud to say it was highly profitable every single year that I owned it.
Now when I look back 18 years later, I can clearly see what separated these three flower shops and what made one flower shop profitable and the other two profit-less!
Now when I tell people I was a flower shop owner, people frequently ask me “Is owning a flower shop profitable?”And like most things in life the answer depends more on the people behind the business than the business itself.
Let’s dig a bit deeper into small business profitability and the factors that drive success.
Are flower shops profitable?
Here’s the short answer. Flower shops are profitable when the owners and managers make smart business decisions that drive revenue, control costs, and yield advantageous results. In fact, this goes for any type of business.
Flower shop owners who are profitable typically have 3 important things.
Good product-market fit
A sound pricing strategy
Smart cash-flow management
But if you landed on this post and have gotten this far, I think the question you really want to ask is “how can I make my flower shop profitable?” because you know it’s possible!
The answer lies in learning from other’s mistakes. So let’s look at a few things that create a strong foundation for a profitable flower shop and a few things that need to be avoided if you want to be profitable in the floral business.
How Much Do Flower Shops Make a Year?
Most flower shop owners don’t want to share how much money they are making each year, but I am happy to share what I made in my flower shop annually.My business revenue was right around $500k and my profit was usually around $85k after all my bills, expenses, and payroll (including myself) were taken out.
So I know from personal experience that it is possible to make a healthy living and that owning a flower shop is profitable! And the keys are having a good product-market fit, a sound pricing strategy, and smart cash-flow management. But of these 3 the most important is a sound pricing strategy because without it revenue often falls flat and can be the cause of lots of serious issues in your floral business.
Do you want to get the scoop on floral design pricing so that you can run a profitable flower shop?
Let’s talk pricing!
Floral design pricing strategy
Being a creative person, you may not love the math involved in running your floral design business. I understand that completely. However, if you want to become a more profitable floral designer, you must make implementing flower math pricing a priority every day. Then you can take it to the next level by avoiding the top 10 floral design profit pitfalls I'll discuss below.
The fundamental structure of floral design pricing is a cost based model. Why use it? It’s simple and it works! You’ll calculate the total costs it takes to make your product and then add a percentage margin to determine your final retail price.
Your goal is a 70% profit margin on your flowers and hard-goods.
The mark-up on your flowers is typically 3 to 4x your wholesale cost. The mark-up on your hard-goods is usually 2 to 2.5x your cost. The design fee is calculated as a percentage and needs to be in the range of 30 to 50% depending on the complexity of the design.
And what about the other costs of running your business? Rent, phone, internet, etc.? We’ll call that overhead and it’s covered by your profit margin.
Of course, these are guidelines and as a small business owner, you must decide what formulas work best for you. Don’t undercut yourself. Be sure to keep these suggested numbers as your starting point.
