Most florists lost their wedding and event business during COVID-19, but in a twist for many, their profitability went up. How? Floral Management contributor Paul Goodman examines why in the July/August issue. Here’s a recap.
Weddings and events were not as profitable for many florists as the regular arrangement business that replaced them, and for one simple reason: Florists are not charging appropriately for non-design labor, according to Paul Goodman, founder of Floral Finance Business Services in Tulsa, Oklahoma.
First, What Does It Cost?
Before you can determine what to charge, florists need to know how much labor costs, Goodman says. In addition to the basic hourly wage rate, payroll taxes, unemployment, and workers compensation insurance — which will add at least 12.65 percent to your payroll cost — should be included, plus Social Security and Medicaid, and optional benefits like health insurance or retirement plans.
Goodman says most firms that bill for professional time by the hour, such as attorneys or accountants, usually figure they can only bill out about 75 percent of a person’s time, or about six hours a day. For example, start with a designer making $15/hour. Assume taxes and minimum benefits will total 20 percent, which will add $3, for a total of $18, or $144 for an eight-hour day. Since you can probably only bill out six of the eight hours, you will need to charge $24 per hour just to break even, says Goodman.
Don’t Forget Your Profit
“Make sure you charge enough to cover the rest of your overhead and make a profit as well,” advises Goodman. “It is not unreasonable to charge double your actual wage cost.” In the example, that would be $36 to double the actual hourly cost; a florist would need to charge $48 per hour to receive enough in six hours to cover eight hours of cost for this employee.
Florists can calculate a separate rate for each employee or strike an average. Goodman says establishing an individual rate for each employee ensures the customer will be paying for the actual talent being used.
Get more details, including how to apply a fixed charge for the extra setup labor in the July/August issue of Floral Management.
Molly Olson is a contributing writer for the Society of American Florists.
