As a wood flower florist, your creations are not just arrangements; they're expressions of beauty and craftsmanship.
To ensure the profitability and sustainability of your business, it's essential to establish pricing strategies that accurately reflect both the actual and perceived value of your creations.
In this guide, I will help you understand the intricacies of pricing for profitability, including understanding costs, knowing your market, and strategically managing your inventory to calculate the cost of goods sold (COGS).
If this sounds overwhelming, don’t worry—I promise it will be worth it! Stick with me:
Understand Your Costs
Before setting prices, it's crucial to have a comprehensive understanding of your costs. This includes both direct costs (materials, labor) and indirect costs (overhead, utilities, marketing). For wood flower florists, direct costs encompass the price of wood flowers, paints, dyes, wire, glue, and other supplies. Additionally, labor costs, including your own time spent designing and crafting each arrangement, should be factored in. This time can be valued anywhere between $15-50+ per hour, so use a placeholder that works for you. Remember, you can always raise your prices without increasing your direct costs, allowing you to take home more per hour.
Know Your Inventory
A thorough understanding of your inventory is necessary for accurately calculating your cost of goods sold (COGS) and, ultimately, your profitability. Maintaining detailed records of the materials used in each creation, including the types and quantities of wood flowers, paints, and other supplies, is essential. Implement a system for tracking inventory levels to ensure you have adequate supplies on hand without overstocking. Remember, less is more. Keeping track of fewer items makes it easier to be detailed and truly understand your inventory. Consider using limited styles of greenery, flowers, and containers until you have your systems down. Then, you can branch out and scale.
Manufacturing Recipes
Develop manufacturing recipes or formulas for your wood flower arrangements to standardize production processes and ensure consistency in quality. These recipes should detail the materials and quantities required for each design, allowing you to accurately calculate the cost of goods sold for each creation. By following established recipes, you can streamline production, minimize waste, and optimize profitability.
I know, I know! Don't come after me with your artist's heart saying "I caaaaaan't make the same thing twice, Andi!" 🤣 Don't worry, I see you. I hear you. I love you. I am you! If this is you specifically,
I need you to have a very deep conversation with yourself with what is most important to you and if your business model aligns with your prices and your artist's heart. You cannot be making a single one-of-a-kind design EVERY time and expect to make hundreds of products for a show and sell them for a bargain price.
If you are making one-of-a-kind pieces every time, you may want to reconsider how many you are making for which price point and for whom. This is an ideal client and market pivot... more about this below! Keep reading!
Strategic Calculation of COGS
Utilize your knowledge of inventory and manufacturing recipes to strategically calculate the cost of goods sold for each wood flower arrangement. Factor in the direct costs associated with materials and labor, as well as any indirect costs allocated to production. By accurately determining the COGS, you can establish pricing that covers your expenses while generating a desirable profit margin. This means considering the margin you need to cover your overhead expenses. I have a more detailed blog about COGS here 👀.
When I started in my dining room, I wasn’t keeping track of COGS. I began when I moved to my commercial warehouse, and that was a rude awakening! I received a grant that was gone in no time because I didn’t strategically change my prices to match my growth. Either you need to sell more volume, or you need to increase your profit margins by raising your prices. If you don’t do either, you won't earn any money as you see growth. Start an operating expenses account now and add to it based on a percentage of your sales. Thinking ahead will benefit you in the long run.
Value-Based Pricing
In addition to cost considerations, emphasize the value your wood flower arrangements offer to customers. Highlight the benefits of wood flowers, such as their everlasting nature, lightweight design, and customizable options. Communicate the quality of craftsmanship and the ability to create bespoke arrangements tailored to each client's preferences. By focusing on value-based pricing, you can justify your prices while differentiating yourself in the market. As a luxury wood flower florist, your unique value proposition is essential. Clients can order from bulk websites, so what makes them pay more for your creations? It's the unique artistry and personal touch you bring.
Market Analysis and Competitive Pricing
Conduct thorough market analysis to understand your target audience's preferences, buying behavior, and willingness to pay. Evaluate competitor pricing to ensure your prices are competitive while still reflecting the value of your offerings. Consider factors such as quality, customization options, and unique selling points when positioning your wood flower arrangements in the market. Remember to compare yourself to businesses targeting the same ideal client as you, NOT to those with different markets or business models. The best advice here is to ask your ideal clients what they value most and what they are willing to pay. Their feedback is invaluable.
Regular Price Reviews and Adjustments
Pricing is a dynamic aspect of your business. That means it changes often. It requires regular review and adjustment.
I personally review prices with every launch and make changes based on feedback from my insiders' Facebook group, attendees of local events, and networking conversations. Keep track of your costs, market trends, and customer feedback, and be prepared to revise your prices accordingly. By staying proactive and responsive to changes in the market, you can maintain profitability and effectively meet the needs of your target audience.
When all else fails, you can always mark items down, but raising prices can be challenging. I highly recommend pricing slightly above your comfort level. This will either bring you gratefulness as sales roll-in or allow you to adjust prices to find the sweet spot.
By incorporating all of the above in your pricing strategy, you ensure the profitability and sustainability of your wood flower floristry business. Our artistry is detailed, time-consuming, and creatively taxing. You will not be sustainable if you are not seeing positive financial returns. I also know that you cannot expect to grow without "extra" money to invest back into your business. With careful attention to detail and a commitment to quality, you can confidently price your luxury wood floral creations to reflect their value while delighting your customers and driving business growth.
I’m rooting for you!
—Andi
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