Jenny (00:28)
flour pricing can be tricky to navigate and understand. So I'm doing a special two-part series on flour pricing for profit, starting with this episode. If you've ever felt confused about what you should charge, why prices seem to vary so much and how flour pricing works in the flour industry and how much you should charge, then this episode is for you. This is part one of two and the next episode will be the second part in this series.
Also side note, if you were at the ASCFG Canadian conference this past summer in 2024, this will probably sound pretty familiar to you since I gave a presentation on a very similar topic then, but it will be a great refresher for you if you were there. But pricing can be a really tricky and confusing part of your business to nail just right. So over this episode, I'll be going over
basic flower market pricing industry standards, understanding why prices vary so much in the flower world and understanding your costs and how affects the prices that you charge. And then in the next episode, I will be covering part two of pricing, including pricing strategies, factors outside of costs of production that will affect your prices, like things like brand positioning, and then also your local market and how that might affect your pricing.
So let's just dive into it. Pricing standards. Let's talk about those in the flower world. And in most places, flowers are sold by the bunch size. And generally most flowers are sold in 10 stem bunches. Like some flowers are sold in 10 stem bunches. Other bunches can be sold as a quote unquote growers bunch, which is sort of by volume. And foliage is often sold by volume often.
So it can be kind of confusing when you're just kind of getting into this industry. Like I know I was kind of confused by it when I first got into flowers, but what you should know is just in most cases, flowers are sold in 10-stump bunches when we were talking about how like big wholesalers buy flowers from farmers and sell flowers to florists. But that all being said, it shouldn't really affect the way that you sell your flowers through your business. You can sell your flowers.
Anyway that you want, like we used to sell a lot of things in 10 stem bunches, but now with my business, we change up the bunch size and it's all kind of based on the pricing. So an example of this would be that we sell our vernacular at our farmer's market for about $25 a bunch. And that bunch has seven to eight stems inside of it. And that comes out to about $3 and 12 cents a stem.
If I were to stick with the basic 10 stem bunch standard, that means that my price per stem would be the same, but the bunch would cost $31.20. Just by putting less stems in a bunch that I sell, I'm making the bunch way more affordable, or at least like appear more affordable to my customers. And it's in a price point that they are comfortable spending within. So they're going to be spending $25.00.
for a beautiful bunch of flowers instead of $31 and 20 cents. And I think that that price point just makes it a lot easier for us to sell them. So all of this to say that despite industry standards, you can sell your flowers any way that you want to, especially if you're selling retail or direct to a consumer through a farm stand or a farmer's market or CSA or subscription program or weddings or whatever. If you're selling direct to florists or wholesalers or
large flower buyers, maybe even grocery stores. It's helpful to understand the industry standards since these kinds of customers are used to buying in certain flowers that typically come with a specific STEM count in a bunch. But you can find a lot of this information through your local wholesaler if you sign up for an account with them. And you can also find information like this in this new floral standards book that the Seattle wholesale growers market just recently published.
I highly recommend that as a good starting point. And you can just go to the Seattle Wholesale Growers Market website to order that floral standards book. But let's get back to selling your flowers however you want to.
The first thing you need to understand when you are setting your prices is that you have to understand your costs. in my opinion, this is a huge issue that I see in the cut flower industry all the time. People are just asking, what do I charge for this? What do I charge for this? And it's like, you really
can't ask somebody else that and expect to get a good answer because they don't know what your business model is like. They don't know what it costs you to produce your flowers. So of course there are like industry standards, but you just have to understand what it costs you to produce those flowers.
And this is a classic example of this. Just think about zinnias, for example. One farmer, let's call her farmer Jane. Let's say that she has about a half an acre farm on the coast of Rhode Island and she sells retail through her farmer's market and a flower stand and maybe a CSA or something like that. She is going to charge, let's say $17 a bunch for those zinnias. Whereas farmer Ruth,
A different farmer might have a five acre farm in central Ohio state, and she might sell the grocery stores and she might be selling her zinnias for $8 a bunch. then lastly, let's just look at another example, another farmer in maybe California who has a 75 acre farm. Let's call this person farmer Anne and she sells all of her zinnias to a major floral wholesaler and she's selling them for about $4 a bunch. This
all reflects economies of scale here. So you have little small scale flower farmers who are selling retail at a much higher price at about $17 or $18 a bunch for a bunch of zinnias versus somebody who is growing a massive amount of flowers on 75 acres and wholesaling all of them. And they could be selling their bunches for as little as $3 or $4 a bunch, sometimes even less than that.
And so this all depends on who you are selling to, where you're located, what your local market can bear. Generally, if you're in a big city like Boston or New York city or Houston or Dallas, or I don't know, something like that, or LA, you're going to be able to get a lot more money for your flowers because there are people there who just have money to spend. Whereas if you're rural, like I'm pretty rural and we drive to our local, um, city to sell flowers, like I can't charge those prices. My market just won't bear it.
So your economy of scale, like how big your farm is and where you're located are factors that will determine your pricing.
But then what about in your own local community? Because I know there's probably people who are selling bunches of zinnias for like $3 where you are somewhere, because this is just how it goes. There's always people selling things for super cheap and undercutting the whole industry. But then you know that like, you can't make a living doing that if you understand your cost of production. So I know if I did that, I would lose money. So in one area.
If you had three different farmers, they were all in the same area and they're all selling at the same local farmers market. One person could be selling for $18 a bunch. One person could be selling for $12 a bunch and one person could be selling for $6 a bunch. And then sometimes there's like an old lady in there who's selling her flowers for a dollar a bunch, because she just has no freaking idea. So this varies because all of these different farmers.
have different costs of production, or they just might not know their costs of production and they're just guessing as to what they should sell their products for. So we're gonna uncover different factors that go into determining that pricing and why that happens. Your farm is super unique, okay? You need to do the work and uncover what your costs of production are. Because when we talk about pricing, the basic model is you have to know your costs, you have to add up
And that's called markup and that is your price. And that is how you make a profit. But the first piece of that, the bottom of the period is understanding your costs. So you can know your break even price at a markup. So you know, you're earning a profit. So this brings us to the question, like, what is your cost to produce something like a bunch of Dahlia is, or a bunch of zinnias. Well, you have to discover your cost of production through something called an enterprise budget analysis.
That's just a fancy term for listing all of the expenses associated with producing one crop of flowers, along with either your projected or your actual revenue or sales. And this is, can be a pretty in-depth process. It's something that I teach in my online course called Six Figure Flower Farming. We have an entire module dedicated to this, but the basis of it is just understanding your crop expenses and you have to track those.
So you have to keep good records. Good record keeping is essential for this. And it's really just like a habit that you need to get into. And so I like to track my expenses by crop where I just have like basically a sheet of paper in my crop journal for let's say, Ranunculus. And every time I do anything with Ranunculus, I just jot down how long it took. So I know my labor costs and then any supplies or materials that I used. This is a really simple system and
It's really basic and anybody can do it. does not take a lot of time to keep track of these kinds of things. So I just keep a sheet of paper in my journal and keep track of it that way. And then at the end of the season, I know that all I have to do is go back to that sheet of paper and add up all the supplies and materials I used and calculate the number of hours that I spent on that crop to calculate my labor costs. And I will know exactly how much it cost me.
to produce that crop of flowers. Now this doesn't include your overhead, which you also need to factor into that cost of production. So your overhead are things that are expenses required to run your business that are not directly related to producing flowers. So things like general liability insurance, vehicle insurance, know, marketing, your mortgage, all the things, your website, all the things that you need to run your business that aren't directly.
related to actually growing the flowers.
But if you want a record keeping template to use to be able to keep track of your costs per crop, it's a great starting point. I have a free template you can download at trademarkfarmer.com forward slash help. So feel free to head on over and download that expense record template. And I think you'll be really glad that you did again. It's trademarkfarmer.com forward slash help. So when you're tracking these costs,
using this template, there are obvious costs like your seed and supplies like landscape fabric and weeding tools and inputs and soil trays and labor and stuff like that. And so that's all the things that you'll keep track of there. And then I also recommend that you keep track of some of the other like hidden costs, like your infrastructure, high tunnels, greenhouses, your utilities, packaging, like tractors, tools, equipment, and then your overhead as well. I recommend keeping track of that separately. So once you
have done that for a season and you have calculated your costs of production for, let's just say you pick two crops like zinnias and dahlias or something like that. Add up all of your expenses and then you will see your break even price. So you add up all of your expenses to produce that one crop of zinnias or ranunculus or dahlias or whatever.
factor in your overhead and then that is what your break even prices. So let's just say, for example, one bed of dahlias costs you $4,000 to produce. Okay. And I'm saying like a 30 inch by 100 foot bed of dahlias. This number is pretty close to what it costs us to produce one bed of dahlias. So like, don't be shocked by that number. And let's just say that you would yield 200 saleable bunches from that one bed.
That means that my cost to produce one bunch of dahlias comes out to about $20
And that's because the $4,000 that it costs us to produce that bed divided by 200 saleable bunches means it costs us $20 to produce one bunch of dahlias. Now this is our break even price. So if we sold this one bunch for $20, we would not be making any money on it. We'd be simply be breaking even, which means we need to add a markup to make sure we are earning a profit.
So we need to add more money onto that price and sell them for, I don't know, $25 a bunch to make sure that we are earning a profit on it. Now, so as you can see here, it is essential to know your costs so you can price for profit. And the cost to produce is going to vary for every farm. It's gonna vary based on your growing practices, whether you are really efficient at them or not.
your labor rates, your farm size and your scale, your supply costs, your location, your customer base, your sales outlets, and a bunch of other things. So I really encourage every single flower farmer to understand your cost of production. If you fail to do this, you most likely are just going to end up guessing at your prices and what you should charge and A, not earning the profit that you need to B, not running your farm as efficiently as you could be because you
are not making a profit, even though you think that you are. Or third, you might be just under charging and therefore under cutting the whole industry. And these price races to the bottom only hurt you and the entire rest of the industry. So the key takeaway here is to know your costs.
Now, a lot of people ask about industry standards for like markups and things like that. And there are some like pricing models out there about this, but I think it really depends on what you want to earn as a proffer, what you feel is fair and what your market will bear. So an example that I could use here is that
I'm really good, like not to toot my own horn, but I'm pretty good at producing snapdragons for a really low cost. Our price to produce snapdragons is only about $2.75. So that's my break even price. So technically if I sold my snapdragons for three bucks, I would be making a small profit on it. But my market and sort of like what my customers are used to paying for a bunch of really nice snapdragons, especially florist customers,
is anywhere between 15 to $18 a bunch. So when I sell direct to florists, I'm usually selling my snaps for about $15 a bunch. And that's for a 10 STEM bunch retail. I'm selling between 16 and $18 a bunch. And if I'm using them in like a wedding design, which I really don't do a lot of anymore, I would charge about $20 a bunch for those snapdragons. And so as you can see here, like even though
my costs to produce them are really, really low. My market will bear higher prices. And so obviously I'm going to charge more. So I know I'm earning a profit on them. Now the flip side of this is that with our dahlias for my farm personally, our dahlias are extremely pricey to produce. They cost a lot of money to produce. There's just a lot of labor and extra work involved with them compared to some of the other crops that we grow. And so because of that,
Our costs to produce are really, really high. And I'm always working really hard at trying to get really efficient at growing them and get my cost of production down. So I can make a bigger profit on those delias because I'm not making a huge profit on them all the time, especially compared with a crop like snapdragons. And so I never would have been able to do these things and make these kinds of decisions. If I didn't have the data to back it up.
And that's why understanding your costs of production are so important. And it just kills me because honestly, like so many people in the industry just kind of like graze over this like super important information. And if you're going to be a business owner, this is what it entails. You have to know your cost of production. So you know that you're making a profit on your pricing. And if you don't do that, like either you're going to get lucky hopefully and make a profit or.
You're just going to be like swimming around in the fog, not understanding what's happening with your business. And you're not going to be earning the profit that you need and you want, and you're eventually going to go out of business. So to summarize here, you have to understand your costs. You should probably understand basic flower industry standards just to know how things work.
And you really need to understand why prices vary so much in the flower world. Like those are all the things that we just talked about. And then you need to look at your own business model and decide what pricing is right for you and how to charge in a way that feels good and is profitable for your business. And in the next episode, I'm going to be going over pricing strategies, different factors outside of cost of production that might affect your prices and how to like,
position your business so you can charge prices that you need to be profitable and then also your local market and how it also can affect your pricing.
So I would love to see you next time in the next episode of the Six Figure Flower Farming Podcast. I'll see you next week, same time, same place.