Gross margin, net margin, and what sits between them
Gross margin is what the job earned before the business happened to it. Net margin is what survived. The gap between them is where most of the surprise in a flower business lives.
The Florist Heaven desk / Chapter 4 of 5
Gross margin is not what you take home
The sixty eight point eight percent from the pricing chapter is a gross margin: price minus the cost of the flowers, over the price. It has not yet paid for the hours anybody worked, the vehicle that moved the flowers, the cooler that held them, or the phone call that won the job.
net margin = (price - all costs) / price
($519.68 - $162.40 - $112.50 - $40.00) / $519.68 = 39.5 percent
Subtract everything the job consumed, not just the flowers. Here that is the recipe at cost, two and a half hours of labor at a rate you set, and a delivery cost you would have to know for your own van. The same job that looked like a sixty eight percent margin is a thirty nine percent job once two of its real costs are on the page, and it has still not paid rent.
The labor and delivery figures above are inputs we chose to demonstrate the subtraction, not costs we know anything about. Your rate, your hours, and your vehicle costs are yours, and the arithmetic only tells the truth when the inputs are real.
What sits in the gap
Between gross and net sit the costs that are easy to leave off a quote because they do not attach neatly to any single job.
- Your hours and anybody else's, including the ones spent on consultation, sourcing, and cleaning up.
- Cold storage, running whether or not you have a wedding this week.
- The vehicle: fuel, insurance, maintenance, and the time spent driving.
- Studio or bench space, and the buckets, tools, and consumables that are not billed to a job.
- Insurance, licensing, accounting, banking and payment processing fees.
- The jobs that did not happen: proposals written for clients who booked elsewhere.
The last one is the one most often missed. Time spent on a proposal that does not convert is a real cost of the jobs that do convert, and the only place it can be recovered from is the margin on the work you win.
Per job margin and season margin are different questions
A single job can carry a healthy margin while the season loses money, because overhead runs continuously and weddings do not. Reading one job's margin as the health of the business is the arithmetic equivalent of judging a year by one good Saturday.
season net = total revenue - total cost of goods - total labor - total overhead
Add up everything that came in and everything that went out across the whole period, including the months with no weddings in them. This is the number that tells you whether the pricing works, and it is the only one that does.
It also tells you something a per job margin cannot: how many jobs of the kind you are quoting it takes to cover a year of running the business. That number is worth knowing before you decide whether a quote is too high.
A note on who this chapter is for
Search results for wedding flower pricing mix two completely different readers: the florist setting a price and the couple deciding whether one is fair. This chapter is written for the florist. If a figure here is useful to a couple, that is incidental, and none of it should be read as what weddings cost.
Questions this chapter answers
- What profit margin can a wedding florist expect?
- We publish no expected margin, because we have no sourced figure and a made up one would be actively harmful to somebody pricing real work. The chapter shows the difference between gross and net margin, what sits between them, and how to compute both from your own numbers.