Analyzing Profitability for the Flower Farmer
Profit analysis may sound intimidating, but it’s your most powerful tool for growing a thriving flower farm business. By analyzing your numbers, you can uncover the financial story of your farm—what’s working, what’s not, and how to make better decisions moving forward.
In this post, we’ll break down what profit analysis means for flower farmers, why it’s crucial, and the three key ways to improve your profitability:
Adjusting your price point.
Cutting costs.
Selling more.
You’ll also learn how to use ratio formulas like Gross Profit Margin (GPM) and Operating Profit Margin (OPM) to guide your business decisions. Whether you’re a seasoned farmer or just starting, this guide will help you create a financially sustainable flower farm.
What Is a Profit Analysis for a Flower Farmer?
Performing a profit analysis means taking a deep dive into the financial decisions and results of your flower farming business over the year. It’s a hard, honest look at the numbers—stripped of feelings or justifications. This process requires you to examine all spending and sales, question every decision, and identify patterns.
The goal is to uncover a trail of breadcrumbs that reveals which choices worked well, which hold potential, and which need to be rethought entirely. By doing this, you gain the tools to repeat successes, reassess strategies, and eliminate costly mistakes.
Why Perform a Profit Analysis as a Flower Farmer?
The purpose is simple: to make smarter financial decisions that lead to increased profitability for your flower farm.
While the idea of improving profits might seem straightforward, the reality of managing the many financial variables affecting your bottom line can be complex. Don’t let that intimidate you. This process is about breaking things down into manageable parts.
After years of working with small business clients, I’ve found that profitability boils down to three key areas:
Price Point – Are your products priced to maximize profit without discouraging sales?
Cutting Costs – Are there areas where you can reduce expenses without sacrificing quality?
Selling More – Are there ways to increase your revenue by reaching new customers or offering more value?
Each of these plays a vital role in your farm’s financial health. Let’s break them down further.
1. Price Point for Flowers
Oh, pricing. It’s a love-hate relationship, isn’t it? Pricing is one of the most impactful areas affecting your flower farm’s bottom line. Set prices too low, and while you may sell out quickly, your profits will barely cover your costs. Set them too high, and you risk scaring off potential customers, leaving you with unsold blooms headed to the compost pile.
This blog focuses on analyzing your current pricing to understand its impact on your profitability—not on how to set your prices (you can find that guidance in our Part Two: Pricing blog). After all, profit analysis needs profits to analyze, and those profits can only happen if your products are already priced, right?
Supply Versus Demand: A Real-Life Pricing Lesson
When we first started selling flowers, we were approached by a farmer’s market manager to fill the shoes of a retiring flower farmer. Excited but unprepared, we relied on the advice of the market manager, who suggested we mirror the previous flower farmer’s pricing and bouquet sizes: a “small” $5 bouquet and a “lavish” $14 mixed bouquet.
But here’s the thing—the previous flower farmer’s business model was completely different from ours. They operated on a larger scale, had additional sources of income, and didn’t rely on flower sales for profitability. For us, a young family with limited space and no walk-in coolers, profitability wasn’t optional—it was essential.
Adopting their pricing structure resulted in bouquets flying off our table every Saturday morning. While this may sound like a success, it wasn’t. We sold out by 10 a.m. but had to stay until 1 p.m., per market rules, with little profit to show for our efforts. After a few weeks, we made the tough decision to raise our prices.
The result? We sold fewer bouquets but made significantly more money. The demand was still there, but the higher price point attracted customers willing to pay more, balancing our workload and improving our profits.
Reflecting on Your Pricing Strategy
Supply and demand influence every sales outlet, whether you’re selling at markets, weddings, or through farm stands. However, determining the right price point requires thoughtful reflection:
Are you selling out quickly but barely covering costs? Raise your prices.
Are customers frequently balking or ghosting after receiving your price list? Consider lowering your prices.
Do you struggle to keep up with demand but feel satisfied with your revenue? Raise your prices to reduce demand while maintaining profitability.
When adjusting prices, avoid dramatic changes. Instead, ease into them gradually, observe customer reactions, and refine as needed.
If pricing isn’t the issue, it’s time to look at the next way to boost profitability: cutting costs.
Need help setting prices that work for your farm?
Explore Part Two of our Marketing Series: Pricing for the Flower Farmer for a deeper dive into effective pricing strategies.
2. Cutting Costs for Your Flower Farm
Reducing costs often means looking inward and exercising self-control. For many of us, that’s easier said than done—especially when it comes to the allure of beautiful flowers.
Jessica, for instance, hasn’t met a pretty flower she didn’t want to grow. I’ll give her credit: the diversity of flowers and components we cultivate has saved us more than once, enabling her to craft truly stunning arrangements. But not all of those flowers translated into increased profits.
A critical part of cutting costs is analyzing your spending to identify areas of bloat or outright loss. Some expenses simply need to go.
The Perils of Overgrowing
When Jessica first wanted to start our flower farming business, I asked her two key questions:
How are you going to sell the flowers?
Who’s going to buy them?
Her confident response? “I don’t know, but they’ll sell.”
She was both right and wrong. On our previous, smaller property, we sold nearly every stem we could grow. But when we moved to a larger property with greater production capacity, we occasionally overgrew certain varieties that didn’t sell.
Take cosmos, for example. Overgrowing them isn’t a financial disaster—cosmos seeds are inexpensive, and the opportunity cost of using that space for something else is minimal. It’s not ideal, but it’s not a dealbreaker either.
Now, overgrowing high-cost crops like tulips or ranunculus? That’s a much bigger issue. Not only are you out the expense of seeds, bulbs, or corms, but you’re also losing the significant opportunity cost of using that space for a more profitable crop.
A key strategy for reducing costs is growing fewer of the varieties that didn’t sell well or didn’t justify their cost.
Beware the Unicorn Varieties
Chasing the latest “unicorn” variety can also inflate your costs unnecessarily. While that trending dahlia may be breathtaking, ask yourself: does your market demand justify the investment?
Instead, consider more affordable, un-patented varieties or those that have been around for several years. They often offer similar beauty at a fraction of the cost, helping you protect your bottom line.
Broader Cost-Cutting Strategies
Reducing costs isn’t just about seeds and bulbs. Here are additional areas to evaluate:
Advertising: Did you invest in campaigns that didn’t deliver a solid return? Reassess their value.
Subscriptions and Memberships: Cancel services or memberships you no longer use or that don’t provide enough value.
DIY Solutions: Make your own bouquet sleeves or packaging if pre-made options eat into your margins.
Every expense, from tools to marketing, should be scrutinized to see if it can be reduced or eliminated.
When Costs Are Lean but Profits Still Lag
If you’ve analyzed your expenses and feel confident they’re under control, but profits remain elusive, it’s time to turn your attention to increasing sales. And that brings us to the third way to boost profitability.
If you’ve already tackled pricing but want more ideas on streamlining your operations, check out our Flower Farming on a Budget blog for practical cost-saving tips.
3. Sell More
Sometimes the simplest answer to increasing profitability is selling more product. This can be achieved through various strategies like increasing sheer volume, offering value-added items, extending your season, or exploring additional sales outlets. While we’ve written extensively about ways to boost sales—and have more on the way—this section focuses on understanding when more sales are the solution.
Using Ratios to Assess Your Profitability
To determine if selling more is your key to profitability, we turn to two essential ratios: Gross Profit Margin (GPM) and Operating Profit Margin (OPM). These tools help evaluate how your sales stack up against your expenses, particularly your Cost of Goods Sold (COGS).
What is COGS?
COGS includes all expenses directly tied to producing your product. For flower farmers, examples include:
Seeds, bulbs, corms, tubers, plugs
Soil and amendments
Packaging materials
Direct labor
Garden supplies (e.g., irrigation, weed cloth)
These are the essential costs that, if removed, would prevent you from growing and selling your flowers.
Gross Profit Margin (GPM)
GPM measures how much profit you make relative to your COGS. A healthy GPM generally falls between 65-90%, meaning it costs you only 10-35% of your revenue to produce your product.
If your GPM is below 65%, ask yourself:
Is my product priced correctly?
Am I spending too much on COGS?
Do I need to increase sales?
If you’re confident in your pricing and spending, increasing sales may be the answer.
Operating Profit Margin (OPM)
OPM takes GPM a step further by including general and administrative expenses—everything beyond COGS. A healthy OPM typically ranges between 30-60%.
For example, if your GPM is 80% (healthy) but your OPM is only 20% (unhealthy), your growing practices may be efficient, but your operational costs need refinement. Areas to assess could include advertising, dues, subscriptions, or administrative wages.
If both your GPM and OPM are in a healthy range, your focus should shift to increasing sales.
The Bottom Line
Ratios like GPM and OPM allow you to pinpoint where your profitability needs improvement. Whether it’s pricing, cutting costs, or selling more, these tools help you make informed decisions.
Final Thoughts
Your numbers tell the story of your farm. They answer key questions every flower farmer should ask:
Am I hitting my profitability goals?
Am I maximizing my farm’s potential?
Am I pricing correctly?
Am I overspending?
Am I selling enough?
If the answer to any of these is "no," the tools and strategies in this post will help you pinpoint the problem and take actionable steps to improve.
Analyzing your profitability isn’t just about reviewing past decisions—it’s about creating a roadmap to repeat your successes and grow your business sustainably. With a clear understanding of your numbers, your flower farm can thrive.
Ready to dive deeper into managing your numbers? Check out our Bookkeeping for Flower Farmers blog for more tips and tools.
We are looking forward to sharing more blooms with you soon.
Graham & Jessica
