Welcome to my summer vacation info dump, where I'm sharing my thoughts on some FAQs I have received from new and aspiring growers. One that I see floating around in every single flower farming and/or floral design group I'm in on Facebook is, “How much should I charge for this?” Whether you are curious about pricing for wholesale or pricing your farm-grown arrangements, you’ve come to the right place! In this post, I’m going to break down my methods for conducting market analysis, determining wholesale rates, and calculating fair retail price points.
A solid, thorough market analysis includes four main components: (1) your target market size, (2) customer analysis, (3) competitive analysis, and (4) regulatory restrictions. When it comes to pricing, customer analysis and competitive analysis are the most relevant, though regulatory restrictions do apply in some ways.
While this should be part of any standard business plan, when it comes to farming, you really need to do this before you do any crop planning and price breakdowns. This includes a description of your target customer (including wholesale vs retail, location, values/beliefs) and an analysis of their specific needs relevant to your business. For example, as my farm is primarily a small-scale wholesale farm, our target customers are professional floral designers located within 25 miles of our site whose values may include a desire to support local businesses, especially woman-owned businesses; a belief that all people are entitled to a living wage; and a willingness to employ ecologically sustainable practices to their own businesses. Our target customers’ needs may include convenience (i.e. delivery options), volume (3-5 bunches or more of a given product available at one time), and education (they may wish to make choices that support their business values listed above, but may also be very unfamiliar with locally grown products and therefore require some level of support in their planning process). If your farm is focused on sustainable wedding florals, community-supported agriculture, fresh markets, or everyday retail designs, your description should look very different from mine.
Two important disclaimers: first of all, I think that one of the best anti-capitalist things we can do is to run our businesses with a community-driven mindset rather than a competition-driven one. Secondly, and this relates to regulatory restrictions, price fixing is illegal. Therefore, the reason to do a competitive analysis is not to pick apart your fellow business owners nor to precisely copy their pricing, but rather to check if others are finding success in your desired business model, determine where and how your business will fit into the equation, and make sure you aren’t undercutting anyone. (More on that shortly.) While I will not be sharing mine publicly here, it is crucial to take the time to analyze 5-10 farms who are closest to you and offer the same or similar services that you hope to offer, including their location, the longevity of their business, and any pricing available. Finally, pick a few competitive advantages you can offer compared to your colleagues at other farms. Again, I’m not saying that you need to tear anyone down. In my case, I noticed that there weren’t many farms growing primarily for wholesale and even less who were offering substantial options for locally-grown foliage. That has nothing to do with the quality and efficacy of the other businesses in my region; it’s just a fact! The first business plan I ever made back in 2017 has now become irrelevant to our current market as quite a few of the businesses have dissolved, and as such this competitive analysis needs to serve as a living document that you revisit every few years at least.
When it comes to pricing, the most important things to consider are, again, that price fixing is illegal, and also that retail cut flowers of any kind require you to have a sales tax ID in New York State (and possibly a resale certificate, form ST-120, if you’ll ever be purchasing goods from someone else and reselling them as taxable retail products later on).
DETERMINING WHOLESALE PRICING
After you have completed a thorough market analysis, you can then dig into your individual product prices on a deeper level. How you go about this is very personal, but I do think one of the best advantages we have compared to our import wholesaler is flat pricing. What I mean by that is that while the wholesaler may charge different rates on different colors or different rates from week to week, because we are growing things ourselves, we are able to have flat rate pricing all season. Zinnias from my farm, for example, are always $10/bunched 10, no matter the series or color. I may sneak in a few extra stems on the smaller varieties, but it’s just $10. Easy for me to invoice my florists, easy for my florists to predict for future weddings. Win-win! Beyond that, there are a few levels that I go through to determine pricing.
While there are a few exceptions, I tend to categorize my crops and set a price range for crops that meet the category’s criteria:
Easy-to-grow common annual flowers and low-value/smaller perennial flowers such as zinnias, QIS scabiosa, helenium
Specialty, less common annual and biennial flowers such as foxglove, delphinium, Scoop scabiosa
Premium annuals such as lisianthus, ranunculus, tulips, dahlias <6” diameter
Medium to large herbaceous perennials, perennial foliage, and woody foliage including lupine, veronica, specialty daffodils
Flowering and fruiting woody branches such as lilac, mockorange, quince
Luxury blooms such as peonies, dinnerplate dahlias, garden roses
I like working with easy numbers so, in general, my prices generally jump in increments of $2.50. You will also want to consider your personal threshold* for the lowest possible price per 10 stem bunch. Based on my calculations, accounting for my experience level and the living wage in my area, I never charge less than $8.50 for a bunch (whether that equates to 10 stems or a grower's bundle).
Detailed Cost Analysis + Example
I’m not necessarily recommending that you have to do this for every single crop, but it is a good idea to do this for a handful to make sure you are meeting your minimums. Determining the cost to grow a crop includes the following components:
Direct materials (growing medium, trays/flats, field compost, seeds/bulbs/plugs)
Direct labor (unpacking, seeding, bed prep, transplanting, bed maintenance, harvesting)*
Indirect materials (rubber bands, t-posts, landscape fabric)
Indirect labor (passive planning, marketing, clerical work)*
Other overheads (taxes, rent, depreciation, etc.)
Other factors that may raise or lower the cost: exclusivity/market saturation, size, field time, rare color, etc.
Take Allium schubertii for example. The cost to grow 100 bulbs includes $120 for bulbs, about $12.5 for compost, about $40* of direct labor for unpacking/inspecting/planting/bed maintenance/harvest/postharvest, about $5 for assorted hardgoods like rubberbands/t-posts/landscape fabric/fertilizer, about $20* of indirect labor for planning/shopping/clerical/marketing. This equals $197.5. Other factors to calculate include loss, which we always assume is 20%, meaning that it costs about $197.5 to produce 80 stems, or 8 bunches of 10 stems. We can assume that it costs $24.69 to produce a bunch of 10 stems. There are always other costs that are harder to calculate rigidly like utility usage, so it costs slightly more than that.
From here, I also consider depreciation, stem length, bloom size, vase life, and market saturation. Perennial bulb crops will provide an average of 3 years of marketable blooms. This particular flower has long, thick stems; massive, unique 10” firework blooms; vase life of 3-4 weeks; dries well; and is available during the “flower gap”. For these reasons, I charge $20/bunched 10 for Allium schubertii. A rate of $20 is a very easy number to work with, I feel like I make a completely adequate profit for my time and effort, and it’s just slightly lower than comparable wholesale offerings.
Checking wholesale lists of other local farms or your local wholesaler is important for a few reasons, but as fellow small business owners, it is especially to ensure you aren’t undercutting anyone based on your calculations. It’s bad for our industry as a whole. Going cheap to try to entice people to buy from you is never going to attract the right types of customers to your business, and cutting into your profits will tamper with your operation’s longevity. Furthermore, it reflects poorly on other businesses who are charging significantly more than you, and this can negatively impact your relationships with other business owners in the future.
Other sources of comps may include checking online wholesalers such as Florabundance (with a word of caution that I do find them to be quite overpriced compared to our region) and/or checking the USDA Market Reports from the Boston Terminal Market when the crop is in season.
*A Note on Charging Enough*
It can feel difficult to charge market value when you are still learning the ropes, especially when thinking about inflation and the ways our communities are feeling budget stress. I truly hate money, but we all need to make a living wage in order for this to be an economically sustainable career. We can honor our community’s budget restrictions while also paying ourselves adequately.
Be sure to check your region’s living hourly wage - not the minimum hourly wage - and calculate your time accordingly. For seed starting and field labor, I pay freelancers (and myself) $20/hour. For design work, $20-30/hour or more is typical depending on experience level. If you can’t afford to pay employees a living wage, as harsh as this sounds, you need to go back to the drawing board and rework some aspects of your business.
DETERMINING RETAIL PRICING
The most important thing to remind yourself is that you are firstly paying yourself for being the person who grew the flowers and secondly for being the person who designed the flower arrangement. You are getting paid for two separate jobs with separate skill sets. Want to go above and beyond with your loyal customers? Go for it! I know I love to do that. It feels really good to be generous to our supporters. Just be sure to indicate that you treated them to an upgrade so they know not to expect the volume and luxury blooms every time or from every florist for the same price tag.
Custom Floral Designs
The standard formula for converting wholesale ingredients to retail pricing for custom floral arrangements is: [(wholesale cost * 3) + (hardgoods cost * 2)] + (total * 0.3 for labor/design fee). Traditionally, a client might request specific flowers for their event and a florist can calculate an estimate based on their vision, or a florist may have pre-designed recipes on hand with predetermined prices.
Many growers who also design (a.k.a. farmer-florists) work backwards from flat rate pricing with whatever is in season at a given moment. For example, a spiral hand-tied bridal bouquet in mid May. With a flat rate price of $250 (not including sales tax), that equates to roughly $60 for the design fee, $10 for hardgoods like ribbons/tapes/wires, and $60 (the remaining $180 divided by 3) for wholesale flowers and foliage. Truth be told, this bouquet's ingredients exceeded $60 wholesale, including two kinds of specialty tulips, two kinds of specialty narcissus, lilacs, black cherry flowers, and assorted seasonal foliage. It was so lush, especially once those tulips and daffs blew open! May flowers are my favorite.
Market and Grocery Bouquets
The standard formula does not work well for market bouquets because they are whipped up efficiently in a streamlined manner and sold in high volume, unlike custom floral designs that require a higher level of training, mechanics, and time. Market bouquets are sold at a lower price point because they aren’t as intricate to put together and often include long-lasting but low-value flowers. However, you must still compensate yourself from wholesale to retail pricing for the flowers and any hardgoods you utilize from jars to sleeves to stickers.
A typical market bouquet will probably have approximately 15 stems in units of 3 per ingredient. Customers who purchase casual retail bouquets like this are typically drawn more to color and perceived value (volume/fullness and height relative to the dollar amount). The average person doesn’t know the wholesale rates for the flowers you grow and probably doesn’t care. I don’t sell market bouquets anymore and wholesale rates have gone up since I did. But if I were doing this today, I would probably determine an approximate flat price by the stem, determine the price point at which customers will actually bite on the bouquets, and go from there. For example, maybe your 15 stem bouquet (or size equivalent) is always $20 (avg $1.33 per stem), and maybe you have a miniature bouquet and/or some straight bunches for $10 and a jumbo for $30 or $40 depending on your clientele. I think you could check your work if you calculate your hourly design rate (~$30/hr), determine how long it takes you to put together a market bouquet (five minutes?), calculate the design fee per market bouquet (if you can make 12 in an hour, then your design fee is $2.5 per bouquet), and then add the approximate wholesale value of the bouquet to see if it comes up about the same. In this way, you are paying yourself both for growing and arranging. Don't forget that if more than one person is working, you will need to ensure you're paying everyone based on your hourly rate. In the table below are a few quick examples of something I might put together by myself in August.
Coming Up Next:
I will explore my approach to crop planning, including determining your farm's plant needs, succession planting, flower functions, and color theory. If this series is helpful or if you have a specific topic you'd love to explore, get in touch!