Revisiting Your Pricing Strategy
One of the most important decisions you make a as a business owner is pricing your services. Most of you have probably set them too low. If you struggle with cash flow, stress over your bank balance or avoid making big purchases we encourage you to revisit your pricing strategy. Even if you don’t do any of those we encourage you to follow along this month and perform a pricing analysis to confirm your top three revenue streams are profitable.
We know many of you dislike the financial side of the business, but this month our goal is to make it as easy for you as possible. Many of the guides and templates that we’ve created at The Dog Gurus make managing your finances easier. I’ll be sharing information from these items to assist you in having confidence in your pricing.
In an effort to make the process easier, I’m going to follow Robin’s lead and record very short videos. You will be guided step-by-step to using one of my favorite tools to perform an analysis of pricing in your business. Pet Profits: Know Your Numbers is a workbook and excel template that actually got it’s start as a member bonus item several years ago. That bonus is replaced this month with an easier to use version. You can download the workbook by clicking here and the excel template here.
Refer to the workbook after you watch each week’s video instruction as you replicate my steps for your business. The excel template makes it easy for you to plug-in your numbers and spend most of your time on the analysis or prep work. You will need a few reports and other business information to get started. These are listed and described in the workbook Checklist that starts on page 6.
The Pet Profits: Know Your Numbers template provides you with your cost plus profit pricing details. This is the most important information you need in setting your prices. However, there are two other inputs that need to be considered. Value pricing and Competitor pricing are two other models or inputs to determining your final prices.
We recommend you definitely spend time listing the value components of your services to your clients. This is another aspect of pricing that we feel our members sell themselves short. The fact that you are a member is valuable to your clients and should make your list. If you invest in formal training for your staff this should also be on the list. These investments are valuable to clients as it contributes to the great care their dog gets.
Not every business makes these investments. So if you set your price based on a competitor that is not a member or does not train their staff you need to revisit your prices. We feel strongly your rates should be higher and your marketing describe the value of these investments to your client.
To help you revisit your pricing once you’ve completed the Pet Profits: Know Your Numbers exercises download this excerpt from another product, Financial Health Check-up Series Workbook. In the last video there will be an example of making a pricing decision based on all three pricing model inputs.
I look forward to you joining me this month in a revisit of your pricing. Following are the steps you will follow for your top three revenue streams:
- Calculate Revenue per Pet & Impact of Discounts
- Calculate Fixed Cost per Pet
- Calculate Variable Cost per Pet
- Review Your Break-even Point, Profit per Pet Service & Current Prices
Access the videos here:
1 Revenue Per Pet from The Dog Gurus on Vimeo.
3 – Variable Cost Per Pet from The Dog Gurus on Vimeo.
2 – Fixed Cost Per Pet from The Dog Gurus on Vimeo.
4 – Pricing Analysis from The Dog Gurus on Vimeo.
