The costs of goods are rising everywhere these days, and we’re certainly feeling it in the floral industry. Rio Roses’ Director of Sales, Oscar Fernandez, recently shared some hard, cold facts about this: Packaging prices are up 30 to 40 percent. Mandated labor costs are up by 7.5 percent in Ecuador and 10 percent in Colombia. Freight is up between 30 and 35 percent. And this is just a partial list. So, how do you protect your profit margins with all these rising costs? Here are four important ways:
Pass Costs on to the Consumer
Consumers are aware that prices are going up everywhere, so they won’t be surprised when they see the price of their flowers rise. And frankly, if your cost for flowers has gone up by 20% or more, then you have no choice but to pass that cost on to your customers. And keep an eye on your profit margins: If they start dropping below a minimum target markup, it’s time to raise your prices.
Focus on Quality
Quality and service are the most important factors when consumers are making buying decisions, and quality will always sell. If there is one constant for repeat customers, it’s product quality. You have many ways to lower overall costs but buying cheaper flowers will get you nowhere fast. All consumers want is a great value for their purchasing dollar. Therefore, cutting costs by using a lower quality product will backfire, as customers won’t come back. Plus, they’ll tell others about their experience, which will harm your reputation. By keeping quality and service high, you’ll have far more return customers and excellent word-of-mouth advertising.
If we’ve learned anything from the pandemic, it’s that technology is vital to succeeding in our floral businesses. And it’s not just updating your website and shopping cart but also making sure that your sales, ordering, and customer management processes are as automated as possible. Plus, with so many new, far simpler ways to update your systems, you can embrace technology without worrying about learning a whole new “tech language” when doing it.
We hope these tips have been helpful. And we know that you’re most likely doing one or more of these things in your business already, so let us know what’s working best for you!