Floral Business Pricing Foundations.
Okay, do this with me. Shut your eyes….. Tighter.
The tighter they are shut, the better your wish will come true.
Okay, now say this with me, “I wish, I wish, I wish, I could just make pretty things and create memories and the money part will just… work out.”
(pause…. did it work? ya, me neither.)
Aw crap, well, so much for money magic. I guess we’ll just have to do some real work to make sure we are making a profit and covering our butts.
Raise your hand if you’ve searched for pricing formulas and financial advice with dismal to so-so results? (woosh) Whoa, I need to reposition my eyebrow hairs from that breeze you created. Ya, me too.
And I get it. PRICING IS PERSONAL. It’s based on so many tangible and intangible things. It’s in some ways math, in some ways marketing and positioning.
The only real thing your pricing and financial plan has to do is cover YOUR needs and your businesses needs.
For the first 7 years of my business, I searched and searched for the golden nugget of a pricing plan for a business as weird as wedding floral and event design.
And then it occurred to me… I have 7 years of details expenses and price data and can directly relay those into what they yielded in money to my pockets. I can figure this out.
Hindsight is 20/20, right? so I literally can go back, see if there were any “purty deeds done dirt cheap”, revise to my preferred scenario, and apply that data to what is going on now.
So I did. And, well, I like it.
Everything I’ve found is oversimplified, incomplete, or just irrelevant.
“Just multiply your materials by 4.5X” they say…. Ya well, what do I charge for that botanical armature thing that is made from what’s in my recycling bin that will take forever to not look like trash?
What about the linens and vintage furniture I am renting for my client? That’s a lot of money that looks like my revenue but just flows through my business?
What about the hours I am spending figuring out what this is even going to look like.
What about the people that I am going to hire last minute but didn’t charge for because I am so freaked out that I don’t have enough setup time and would rather pay more people than allow more eyeball twitching stress than is absolutely necessary?!
Ya, I get this pricing formula is set up to reap massive profit but that doesn’t help me determine sales goals and whether or not I can experiment with that new high end wedding show.
Where’s THAT pricing plan?
Well, there isn’t one. But now I see that there is YOUR pricing plan.
Because what’s success looks like for you is different from the other gal who has three kids under school age.
Success for the farmer-florist isn’t going to look like the success of an event designer and producer.
And success for you now isn’t going to look like what success will be for you later.
But there are some shared foundation principles that we can all agree upon. AND surely for all of us. Success is NOT being in survival mode.
And HOLY FLAMING FIELDS OF FRUITFUL FREEDOM FLORAL FRIEND, when you know YOUR pricing, so much of the mental gunk that causes uncertainty and doubt just goes away. And your hustle has direction.
Your beginning of the year looks like this…
“Okay, what do I need in order to be able to go to that floral workshop in Cabo?”
“What do I need in order to make more than the embarrassing national average salary for floral designers?”
“What do I need in order to buy a plot of land in Snohomish, and grow flowers, and feed my friends from an outdoor pizza oven at a long, long raw edge table under grape vines and next to a field of wildflowers where my miniature donkeys play… (gaaaaassssspppp?… okay, that one is mine.)”
Or maybe it’s simply,
“What do I need to do in order to convince myself that I can make this work? That I shouldn’t bag it, work for someone else, and reclaim my brain for Netflix and vacation planning like normal people.”
What if you knew this:
Oh, I need to get X number of jobs with an average of X for a total of X in revenue while maintaining my goal expense metrics which are X, X, X, and X.
And my Comfort boundary is X.
Before the comfort boundary, we hustle. We hustle with focus. In the comfort zone, I am MY sort of successful. And outside of that comfort zone, things get really fun and I go shopping for sun dresses and start shortlisting miniature donkey names.
The beauty of knowing this about your business is the confidence and clarity you have in making financial decisions, marketing decisions, everything.
Can I participate in that open house/ wedding show opportunity for which I’ll likely be shelling out $700.00 for questionable results? Nope.
Can I buy that $2000 floral retreat that I have not budgeted for? Probably nope.
Can I discount your wedding floral so it is magically less expensive without doing less premium flowers? So much nope.
Can I take that job that is not going to bring in much money but is really really going to take a lot of time? Maybe nope.
Can I redo the electrical in my shop so that we don’t have a leaf collecting nest of electrical cords tripping me on the daily? Nope… (okay, so that is really happening and it’s a hazard, so maybe I need to make that happen- it’s bad).
Can I take that $200 floral contracts course by that lawyer turned florist that’s going to nail it? Maybe, but I’m going to have to add it to my ‘education’ budget in my operating expense metrics and that will mean I’m pushing out my comfort zone.
Maybe it’s fine.
Hey, maybe it’s not fine, but you are going to do it anyway! No prob! It’s all good because you have clarity and you are a grown up and when you are a grown up, you can hoard Cadbury mini eggs in your car so you can stress eat them all year even when it’s not easter!!! (oh, ehem, anyways…)
The fact is, you are making a clear decision and accept the consequences because you know how it’s going to affect you.
I’m pretty sure this is what the kids call #adulting…. #adultinghard.
Okay so here’s the framework:
- Know your need: This means YOU, the owner of your company. She who bears all responsibility and receives all glory. What do you need in your life-life, not your business life, to contribute to your family, to not be eating no-brand cheesy poofs and white bread for dinner, to go visit gramma twice a year, to relax and have a coffee at a coffee shop once a week (ha, just kidding. Who does that?) twice a day. Whatever your NEED is. I don’t care what it is. It’s YOURS!
Ideally, this is based on real information about what it costs to be you in your life-life.
- Track your business expenses: In order to make this work, you are going to have to get some software (free is good) that will allow you to categorize your expenses. I use quickbooks, but you can do this with mint.com, or even through a bank or CC if it’s what you use to do all of your business purchases and if they track this for you. You need data.
- Project your business expenses for the new year/ rest of the year: If you have historic data, great! You can fiddle with what you did in year’s past to reflect what you would like to do. This will be easier for you, but if not, you can still use your noodle to think up all the little ways in which the money piranhas will want to nibble away your hard-earned moolah.
- Put those expenses into your business expense buckets. Here are my buckets:
- Operating Expenses (OPEX)
- Marketing Expenses (MAREX)
- Cost of Goods (COGS)
- Extra Labor (XLABOR) – not YOU
- Owner’s Compensation- YOU– this is greater or equal to what you figured out in #1. If you have a salaried staff, add them here too. If you are on payroll and have a salary, your before tax salary should be your NEED PLUS the 15.3% you will pay in federal taxes (we are in the US here). If you are a sole proprietor, no need to add. You’ll do that in the next bucket.
- PROFIT (you will notice that this is not the same as owner’s comp)
You will notice that it is easy to project operating expenses, fairly easy to project marketing expenses, your compensation, a percentage for tax. Cost of Goods, extra labor, and profit may be a mystery. If you’ve never planned for profit outside your own compensation and are not where you want to be, I would recommend going low to start. (like 1%).
COG and XLABOR are not obvious because they are based on what you bring in.
Cost of Goods (COGs) are literally all the costs that you have because you have a job to do. Contrast that with operating expenses which are all the costs you have regardless of whether or not any work comes in the door. So if you have a wedding to do, all the costs that you wouldn’t normally have are a cost of good. The gas to go get the flowers to process, the lattes and donuts you feed your contracted labor that is helping you schlep all this stuff, the ladder you have to rent to get to that 12’ tall beam, and my favorite (not favorite) the credit card fees for the privilege of having your client pay by credit card.
Extra Labor (XLABOR) is similar to COG in that if you don’t have the job, you can handle it yourself or with your core team, so this is based on how much work you bring in. I like to keep this metric separate so it becomes painfully obvious when I just need to hire a regular staff member.
Tax: (for the US peeps) If you are a sole proprietor, this is a percentage of your combined owner’s compensation and profit. You can look up your tax bracket online and come up with an actual figure
If you are an LLC Scorp like me, taxes are probably mysterious. My compensation tax is removed each month just like any employee. I am taxed on profit only in whatever tax bracket I am in. So if I am only making 1% profit, that figure may be pretty small and likely less than the 25 or 28% than I would be paying as a sole proprietor.
PS, if you are a sole proprietor, and CAN take even a somewhat regular paycheck and have less than 90K ish at the end of the year from your biz, you will probably benefit from becoming an LLC Scorp. Pretty sure at least. Taxes are mind-numbing so ask an accountant. If you are an accountant and I am talking ridiculous words, please email me and school me in that.
If your biz isn’t in the US, your tax stuff will be different.
So you’ve put all your business needs/ wants/ expenses in buckets.
We just sent a cheat sheet for what sorts of expenses are included in each bucket to our special inner circle. Our inner circle of biz owner’s get special stuff like that. If you want this, sign up and I’ll make sure you get a copy too.
From here… folks…
We are puttingt together a course that will walk you through these steps, and
REVERSE ENGINEER YOUR numbers to figure out your OWN SPECIAL PRICING FORMULA.
Because you don’t have the luxury of knowing the future. You can only deal with what you know or can estimate well. In the short term all you have to work with on the individual job level is what you expect for your time and materials. And that is AOK!
So we want to show you how to plan your year for beautiful shining clarity, what metrics to follow to make sure your biz is healthy, and
At the end of this you’ll be able to:
Be able to say no with confidence to things that don’t fall within your plan.
You are going to be able to spend with confidence and not total fear that you are hurting your business,
You will know that the prices you are giving are what they need to be.
You will be able to be generous to others but not at the sacrifice of your own business health.
You will give yourself a giant kick in the ass, a focus. A tangible goal to achieve.
No more emotional pricing.
Because there is no need to worry about anything if you can do something about your situation right.
There is no need for misplaced financial anxiety.
Not when you can do something about it.
This sort of clarity and confidence is something I wish for every one of you.
Do you want this?
I want you to have this.
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