Navigating Cost Increases
Hello- In light of increases in the cost of just about everything in our industry, from the rent or mortgages we pay to the cost of seeds and bulbs, I wanted to take some time to share ideas for how we can navigate forecasted changes and protect our businesses.
Since I started my business in 2017 cumulative inflation has been 28.71%. Which means that at the very least (not including extra inflation in our own industry) a market bouquet that I sold for $18 then should now cost at least $23.16. A bridal bouquet that was priced at $195 in 2017 should now be priced at $250.98.
If you last adjusted your prices in early 2024, they should now be increased by 2.75% to account for the change between 2024 and 2025.
Remind yourself:
When our costs increase, so must our prices. It’s the beginning the fiscal year. Now is a good time to make price adjustments to your goods. If you don’t increase your prices to customers along with the increasing costs you are paying, you’re dooming your business to failure over time.
Remind yourself:
When we invest in less of a product or supply that we need for production because it is a higher cost, we increase our prices for the quantity we do grow. Logically, we will have fewer sales. We will have fewer sales because we have less of that product to sell, but also because we will have fewer customers at our new price point. The more we charge, the less buyers we’ll have.
But fewer sales does NOT mean less income. It can actually mean more. So I think it’s important that when we hear news of scarcity, we don’t jump to the conclusion that we should quit something.
Creative Pricing:
One way to increase prices is obvious. Increase the prices on the products. Just bump them up.
Another could be less jarring for buyers if you’re worried increased prices could put your product out of reach: change your product.
You can use fewer stems than you might normally use. For example: we are using only 7 stems of tulips, instead of 8 stems this year if we a remaking straight bunches for wholesale.
You can use different stems than you might normally use. In this case, we are using 5 stems of tulips this winter, plus other ingredients like boston fern, holly fern, foxtail fern, pussy willow, curly willow.
We can offer different products or ingredients in our designs all together.
Offering Alternative Products:
To avoid paying scarcity prices and increasing prices for the same products, growers can learn how to grow other kinds of flowers that are less affected by scarcity. For example: we can grow more plants like Dutch iris, or cut flower amaryllis, or daffodils instead of the same quantity of tulips we used to grow.
Succession Planting:
We can also make sure that we are practicing season extension in as many different ways as we can think of. Season extension relieves growers of the risks of “boom and bust” flower cycles.
Succession planting
Micro-climate diversity plantings
Bulb forcing
Multi-use flowers that are productive before, during, and after bloom.
Product Add-ons:
We can make up for additional prices increases by pushing out customers to purchase add-on products like vases, gift cards, ribbons, or other hard good items that come together to offer a more impressive gift or design, and allow us to take advantage of mark-ups from hard goods that we didn’t offer previously.
New Customer Bases:
And thirdly, we can offer our products to a different audience. For example: Instead of selling wholesale, we can offer our products retail. Which offers a 3-4 times mark up compared to wholesale pricing. That means we can make the same as much money for 1 retail sale of just flowers (no design work) as 3 or 4 wholesale sales. That’s far fewer flowers to grow for the SAME amount of income. That’s a lower cost of goods and less labor to make the SAME amount of money.