This type of loss should be in your budget as a cost of doing business, and factored in when you are pricing your plants. There's no reason to lose your shirt if you have some leftovers; what you get in a big sale should be extra $$$ in your pocket.

Best to never compare yourself to the BB stores, in any way. They toss their leftovers without regrets....they've already made their money.

Do your market research and grow what you know is popular....plus a nice selection of what customers cannot find at the cookie cutter BB stores. Find creative ways to market/advertise your business, too.

Thank you Rhizo. Quick follow up. Im curious how much should I mark up my plants to account for these losses?

I always marked plants up 50% of what I paid for them.

Zzackey,

Thanks for the info. If you had to break down the 50%, how would you allocate it in different cost centres? For example

Overhead: i.e. rent, utilities, marketing, etc. 15%

Direct costs: i.e. labour for handling, watering, etc. 15%

Discounting/Waste: 10%

Net Margin: 10%

Total: 50% markup

I understand that these costs would be different for different locations, products, etc. but to get a general sense would be very helpful.

Nick, your markup for loss should be minimal but based partly on what the market will bear in your location. The most difficult thing to figure out is how much product to produce. If a grower grossly overestimates the customer's desire for a black petunia, for example, the grower will have to eat them for breakfast, lunch, and supper. A few mistakes like that and a grower will learn to supply a lot of what the customers want and just a little of something he/she thinks the customer should want.

Ideally, you want to have enough to make your customers happy and not walk out empty handed after a couple of weeks but not so much of something that you have loads left over.

The other part of loss is due to disease, insects, and other pests. I don't believe in selling infested or infected plants, even at a steep discount. I don't even like to see those plants given away for free.

Nick, what kind of business are you planning? Will customers come to you or will you sell your plants at a market?

Thank you Rhizo,

This mismatch between supply and demand (that is the product assortment in terms of quantity and price) to me feels like the biggest risk in this business.

That said, I'm surprised to hear you say that this type of loss mark up is minimal. I bet growers can smarter with time and match supply and demand well. I wonder what a natural/normal amount of product loss due to this type of waste would be in terms of percent markup?

Our greenhouse will be just outside of a town of about 150 000 people. Pretty convenient off a major highway. We are still in the planning/feasibility stages. It's just my wife and I, so just trying to get smart before going all in. I got a few experienced managers coaching along the way, but this cost breakdown stuff can be a bit tough to uncover!

Does anyone have some resources/books/papers they could share on the economics?

Look for a copy of "So You Want to Start A Nursery" by noted plantsman and extremely successful nursery operator, Tony Avent (Plant Delights Nursery). Available from the nursery, Timber Press or on Amazon. A great many start-up nursery/greenhouse operations consider this the novice's 'bible' with regards to the economics, finances and business details of starting and running a successful nursery operation.
So You Want to Start a Nursery