Our survey said:
• 36% of respondents (the largest grouping) charge 100% of cost price as a standard mark up, excluding VAT.
• 16% of respondents charge 300% of cost price, excluding VAT.
• 11% do not charge for labour in an order. • 15% do not charge for packaging. • 19% do not charge for foliage. • 10% do not have a standard delivery charge.
on a bouquet, that means that you have to eff ectively sell 120 bouquets a day just to cover your fi xed costs. “The only profi t that is worth
having is what you have got left after you have paid for all of the costs of the business, and frankly paid yourself a salary as well,” says Adrian.
Employee overheads
A lot of people will often take the employees hourly rate and multiply this by their hours worked per week or month, thinking that this will equal the employment costs. However, any organisation will be adding between 10-15% on to that basic cost just to cover National Insurance Contributions, pension schemes and any additional outlay such as training. “Employers also need to think
about holiday and sickness cover. These are often the hidden costs of employment,” adds Adrian. A classic pricing strategy will
help you carefully pass on price increases, and the fi rst step in doing this is charging for all the extras.
“The low cost airline industry
has become very good at pricing very cheaply, but they then charge for the extras separately. The price of your seat on the plane will be much lower than a rival airline, but you are then given an additional fee for baggage and other extras. It is this technique that makes them a lot of money,” explains Adrian. Most retailers will also sell
products where they can generate very good profi t margins, but they will also have what Adrian calls the eff ective ‘loss leaders.’ He explains: “This is exactly
what supermarkets do – they have the loss leaders which are designed to get people into the store, and they do not make any profi t on these products, but they then have the attractively positioned stock which people will buy on impulse, and that is where the much higher margins are.” Putting together small bunches
of older stock for a few pounds will draw customers in. They then
“The only profi t that is worth having is what you have got left after you have paid for all of the costs of the business, and frankly paid yourself a salary as well”
have the opportunity to browse your best products. Even if they do not impulse buy, they may come back now they have seen what you off er.
Doing the math
Ed Scanlan, a sales consultant at Heemskerk Flowers, was a fl orist and fl ower shop owner for 15 years, employing 12 staff , before becoming a wholesaler. He highlights the importance of confusing mark up price with profi t. “To get profi ts and margins
correct there are a few notions you may have to throw out. Firstly, there is no such thing as 200%, 300%, 400% profi ts, percentage means part of 100. “If you buy a rose for 50p and
Ed Scanlon, sales consultant at Heemskerk Flowers
F&wb Summer 2013 93
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