Pricing is tricky business, with no one-size-fits all solution. Nonetheless, a good pricing strategy can make or break a business.
That’s why Paul Goodman, CPA, PFCI, turned his attention in this month’s Floral Management to laying out best practices and proven approaches to better, more effective pricing.
“Setting a price is a matter of taking the cost of the product you are going to sell and marking it up to adequately cover your labor and overhead, leaving enough to make a reasonable profit,” he writes. “Most non-floral retailers utilize a formula close to a double markup. If a shirt cost $10, they try to sell it for $20. A double markup is called a ‘keystone’ markup.”
The catch? “Retail florists are different from other retailers,” Goodman explains. “Most retailers buy finished goods, products that are already made. They simply put them on the shelf, mark them up and sell them. A retail florist, on the other hand, takes raw products, manufactures (designs) the finished arrangement and then sells it. Consequently, the retail florist must mark up their products more than the regular retailer in order to cover the extra cost of designing.”
Find out how to carve out a new strategy that works for your business.
