Cost of goods percentage for florists
Cost of goods percentage is the same relationship as margin, read from the other side. It is the share of what you charged that went straight back out to buy the flowers.
The Florist Heaven desk / Chapter 3 of 5
What counts as cost of goods in floristry
Cost of goods sold is the direct cost of the things you sold. For a florist that is stems, foliage, and the hard goods consumed by the piece: ribbon, wire, tape, foam, mechanics, and the vessel when it goes out the door with the arrangement. Freight belongs here too, because it is part of what the flower cost to have in your hand.
What does not belong here is everything the business costs regardless of whether this particular job existed: the cooler running, the van insured, the studio rent, your accountant. Those are overhead, and mixing them into cost of goods makes the percentage useless for the one thing it is good at, which is comparing jobs.
Where your own labor sits is a genuine judgment call and different books do it differently. Whichever you choose, choose it once and keep it consistent, because the percentage only means anything when compared against itself over time.
Computing your own percentage
cost of goods percentage = cost / price
$162.40 / $519.68 = 0.3125, which is 31.3 percent
Divide what the goods cost you by what you charged for them. On the worked example running through this pillar, just under a third of the price went back out to buy flowers.
cost of goods percentage + gross margin = 100 percent
31.3% + 68.8% = 100% (rounding aside)
The two always sum to the whole price. If you know one you know the other, so there is nothing to track twice.
| Markup | Gross margin | Cost of goods |
|---|---|---|
| 2.0x | 50.0% | 50.0% |
| 2.5x | 60.0% | 40.0% |
| 3.0x | 66.7% | 33.3% |
| 3.2x | 68.8% | 31.3% |
| 3.5x | 71.4% | 28.6% |
| 4.0x | 75.0% | 25.0% |
Working back from a target
The percentage is more useful as a target than as a report. If you have decided that flowers should not exceed a given share of the price, you can turn that into the price directly.
price = cost / (target percentage / 100)
$162.40 / 0.30 = $541.33
Divide the cost by the target expressed as a decimal. At a thirty percent target, that recipe has to be quoted at five hundred and forty one dollars and thirty three cents for the flowers to land on thirty percent of the price.
The second tool on the calculator page runs this in both directions, so you can read a percentage off an existing quote or work back to the price that holds a target.
Open the cost of goods calculatorWhat actually moves the percentage
When the number drifts, it is usually one of a short list of causes, and they call for different responses.
- Wholesale prices moved and your quotes did not. The percentage climbs. This is the one that creeps, because no single job feels wrong.
- Shrink went up. You are paying for stems you are not designing with, and it lands entirely in cost of goods.
- Freight changed, or you switched to smaller more frequent orders and are paying shipping more often.
- The recipe changed toward more expensive material while the price stayed anchored to what you quoted last year.
- You discounted. A discount comes off the price and not off the cost, so it moves this percentage more than it feels like it should.
new cost of goods percentage = cost / (price x (1 - discount))
$162.40 / ($519.68 x 0.90) = 34.7 percent, up from 31.3
A ten percent discount on that quote moved cost of goods by three and a half points, because the whole discount came out of the part you keep.
Questions this chapter answers
- What is a good cost of goods percentage for a florist?
- We do not publish a benchmark, because we have no sourced figure for one and inventing a target would be worse than leaving the question open. What the chapter gives you instead is how to compute your own, what it means against your margin, and what moves it.