Let’s face it, we all want to eliminate the stress in raising rates because we all stress out when we need to increase pricing. However, raising rates is a requirement to remain a profitable pet business long-term. The key is to know your costs and profitability by the key services you offer. This method of setting rates is called cost plus profit and is one of the three inputs to a rate adjustment decision. The others include an analysis of what competitors charge. However, it is really important to ensure you are comparing apples to apples within your services. The third method is the value provided to your client; how much are they willing to pay? This is probably the rate you underestimate as in reality most clients never comment when you do adjust rates.
One way to increase profitability without adjusting rates is reducing discounts. Our rule of thumb is setting a maximum discount rate no higher than 10%. For most pet businesses you do not have high enough profit margins to justify discount rates as high as 20%.
One of the most challenging aspect to raising rates is communicating with clients. There is no need to share rate increases in social media or an email blast. Quietly letting them know with a counter poster of new rates effective on a specific date and a mention in your email newsletter is really sufficient.
We provide more examples on ways to eliminate the stress is raising rates including information on the best timing to raise rates in our video below. Keep in mind that for you to earn higher pay and provide raises to your team will require rate increases so this is an important action you need to take as a pet business owner.
Eliminate Stress in Raising Rates
I'm Robin Bennett and Susan Briggs over there.
We're the co-founders of The Dog Gurus. And The Dog Gurus is a pet care business consulting and staff training company. We help pet care businesses, launch, grow and profit. So we are excited to have you here on our Facebook page. If you haven't joined the page, be sure you like it or follow us. And we're happy to talk to you anytime.
But this Facebook Live today, we're going to talk about pricing increases. And I know this is a topic that comes up a lot. We get a lot of questions about it. There's a lot of anxiety around it, and I think the anxiety has gotten worse during this pandemic, that people are worried about raising prices during the pandemic.
So that's what we're going to talk about today. We love to have any questions that you have. So if you're watching this and listening live, feel free to comment in the comment section, and we'll try to answer any questions that come up during the Facebook Live. What do you want to start with though Susan?
[00:01:00] Well. Raise your rates. Here's our tip, raise your rates. That's right. That's the bottom line. Well, my tip really is, raise at least one rate in your business every year. And I, of course, you know, I'm kind for you guys that don't know me, I am the little financial guru and nerd that I had a spreadsheet when I had my pet business with all the different services I offered, what the rate was and the date that I implemented that rate. So it was easy for me to sit down every year and look at what rates hadn't I raised in one or two years and I did, we did a lodging daycare, grooming ,dog training, and then we had add-ons. And so there were a lot of different rates for me to select from, to raise every year.
And that way I didn't have to raise everything, but something would go up every year. And then that just made sure that you're keeping up with cost of living. Because all of you [00:02:00] like to give your staff raises every year, you've got expenses that go up every year. And if you aren't raising rates every year, you likely are making less as a business owner because you're not keeping up with your expenses going up.
So that's my first thing is just to set up your own system so that some rate is going up every year. The other thing that does is take away some of that anxiety about raising rates. Because you kind of get your happier clients in the habit and yourself in the habit that something's going to go up. And your rate increases, if you're going up every year or every other year on like your core services, don't have to be as big usually because you are in that habit of raising rates.
Yeah, and we would say to look at all your services, and for those that have heard us talk about pricing at all, you probably hear us say this all the time, that you should know your costs by service and your expenses by service. So if you have [00:03:00] daycare, training and grooming, and maybe you do retail, you should know how much each of those individual services by service, how profitable they are, and that will help you to understand where your rate increases should be as well. Uh, Susan and I have worked with facilities where they don't break out their expenses and their costs by revenue stream, and a lot of times those companies are losing money in one particular revenue stream, but making money in another one.
And so overall the business is profitable, but they don't know that one revenue stream is actually losing money. So you really want to do the work to make sure you understand each revenue stream. And again, as Susan said, if you don't want to raise rates across the board, which is stressful I will admit, um, if you only have a couple of services, not as stressful, but if you have a lot of services, just raising the rate of everything is, is hard.
So look at that, you know, what's the one service that [00:04:00] is most in need of an increase, raise that rate for this year and then maybe raise a different rate six months or 12 months from now. So you're not doing it all at once. So that's a great, I think that's a great tip. And I do think that a lot of facilities, wait and wait, and wait, and wait.
And I think the most anxiety happens with facilities that haven't raised any rates in three, four or five years, because you are stressful stressed out because your clients have been paying the same thing for years and years. But I will tell you that that's even a stronger reason to raise your rates. If you haven't raised your rates in four or five years, just ask your clients, like, what are they currently buying that the rate has not gone up in four years? I mean, cost of living goes up every year, regardless of where you live, regardless of, you know, what type of facility you have. And I know during the pandemic, uh, Susan and I were just talking about this right before we jumped on the call, the pandemic [00:05:00] prices have gone up on a lot of things on a lot of services.
So, and a lot of products too. So don't feel like your customers are going to think, Oh, they're raising their rates. That doesn't happen anywhere else in my life. Cause they know it does. It's a, it's a fact of life to be honest. And a lot of you put in extra cleaning protocols. So that's taking more staff time and maybe even more product.
And so you really do need to reflect that in your rates. And people will understand that for the health, safety, and well being of themselves and their pets. They will appreciate that. So BJ asks this question, please address how to raise rates in light of cheaper other services in the local market. That's a really good question.
And that gets down to looking at, and actually I would make a list of the how your service is valuable. The value to the client of your service versus the [00:06:00] cheaper one, because often the cheaper one is like comparing apples and oranges instead of apples to apples. So you have to be prepared to talk to the clients as to why the value of your service is worth more than the other person.
Um, for most of you, you're going to be able to find something. It may be your investment in your staff. You may be certified in that service, it could be the extra cleaning steps you do. It may be your operating hours. It may be your customer service. Just focus on what you do and why the value is there for you to charge more than your competitor.
Yeah, I would say this is one thing that Susan and I. Get on our soapbox about, because if you're just comparing your prices to others in your market, and you're trying to stay within the range of your market, that's not a bad strategy in terms of understanding what your market looks like. [00:07:00] But that's not a good strategy in terms of ultimately pricing your services.
Because as Susan said, if the daycare down the street is charging $5 less than you for daycare, or maybe $10 less than you for lodging. Number one, you don't know if they're profitable, so that's either we may be going out of business in a couple of years because they're not profitable. But number two, you also need to be able to tell your clients why you're priced higher because people are not just paying for, Oh, I'm going to drop my dog off.
What they should be paying for all of the value that you're telling them that you're providing. And so all of the things that Susan just mentioned, which for our clients and most of us, most of the folks that listen to us or work with us, they do care about continuing education. So their staff is trained.
Many of their staff are certified by PACCC or if they're a trainer, they might be certified by CCPDT. Many of them have industry standards that are better than the [00:08:00] baseline industry standards that exist. Some don't have standards at all. So obviously you want to be pricing yourself because you're providing a higher value, a higher standard of safety, a higher standard of fun for the dogs, a higher ratio, maybe of staff to dogs. Maybe you provide more interaction with the dogs. I mean, huge or just better. Like you guys know that, right. But you have to really explain that to your clients and explain the value and believe me, they will pay for that. They are going to pay for better quality service and better quality care for their dog.
But it's up to you as the business owner to explain why that value is there. If you don't, they are just going to say well, why are you $5 more? I'm going to go down the street. And frankly, if you've provided the value, you've explained the value to them and they're still saying that, it's probably not your client anyway.
I mean, that's one of the other things Susan and I say is that you're not going to cater to everybody. You want to cater to [00:09:00] the people that have the same goals and vision and values for their dog that you have, and that you're going to provide. So, but that question comes up a lot. So, yeah, that's a good question.
It's a good exercise maybe to do with your team. You know, a lot of your team members have worked at some of those other places and, you know, they can provide some great input and it's good for your whole team to be on page and understand, um, why the value is there for your service. And what is actually, I think you'll find most of your clients won't even comment about the rate increase because they know that I use them.
They trust you and they want you to be in business. Um, it may be new prospects that are price shopping, and maybe not understanding the difference. For the most part, your existing clients, are going to be willing to pay more. And I will say for I'll just [00:10:00] touch on those folks who might have a wait-list and I know things are opening up now.
So for a lot of us, the COVID affected some of those wait lists, but as things get busy again, and you might end up with a waitlist again, that's a perfect time to look at raising rates. So in terms of you know when to do this because we got a lot of questions of like, when should you raise rates? And the number one thing I would say is you should raise rates anytime you're not covering your costs and taking home a good enough paycheck for yourself.
So, because as Susan mentioned, you need that in revenue to make sure that you're profitable as a business owner and profitability for a business means you're taking home a paycheck that is worthwhile compared to all the hours that you're spending on your business. So hopefully you're making more than $5 an hour and try, and I would do that
math. How many hours of work do you week and what's your work a week and what is your take home pay? And if it's like 5, 10, 15, 20, $30, I would look at [00:11:00] bumping that up. And the only way you're going to do that is decreasing expenses or increasing your revenue and raising prices is one way to do that.
What typically happens is we will make sure that our staff is paid, and vendors are paid, and we're taking care of the clients and whatever the dogs need, we're going to pay for all that. And then we use the leftovers to pay ourself. That's not the way we would look at it. We would look at what is your pay?
What do you want to make? And then look at what are your costs? What are your expenses? What, you know, what is involved in running your business and then set your prices to where that's going to all work out. So when you should raise rates is when you need to make more revenue for one thing. But another really good time to look at raising rates is when you have a wait list, if you have a wait list, you could probably raise prices.
You might lose some of your clients, but you're going to bring new clients in on the wait list. And, we all have those clients that we love, like those ideal clients. And wouldn't it be amazing if you had a facility [00:12:00] full of just the ideal perfect client, you know, the client, that's got the really sweet and easy dog, the client that loves you guys, the client that's always raving about you to their friends.
They're not causing any problems. I mean, wouldn't it be great to have all clients like that? Well, when you have a wait list, you have that opportunity to start filtering out some of the clients that you have and bringing in the clients that you really want, A membership type program does the same thing as well, where you can work that around your membership program too.
But if you have a wait list, that's a really good time to look at raising prices. Because even if you lose some of your current clients, you've got a waitlist to come in and refill that, those spots. So I would definitely look at that as well. Angela would be making more money, which I know Robin, you always talk about that.
Look at how much you're raising your rate by. And he won't need as many clients. We've worked with a lot of clients that feel like they've got too many pets for the size of their facility and the number of staff members they have. [00:13:00] So again, you can raise rates to actually call a few clients out and have fewer dogs and making more money.
Unfortunately for most businesses, they find that only work short term. Yeah. We just got an email from someone yesterday that said I raised my rates $2 a day, um, for daycare because I wanted fewer dogs. And, uh, she said that worked for like three months and now she's got a wait list again. So it is always interesting to see when we finally do take that leap to actually do the price increase. Number one, far fewer clients ever complained. I have never ever had a single person that I've worked with who said, I thought tons of people are going to complain and there was way more than that that actually complained. Every single time the fear is so many people are going to complain and people are going to leave and they're going to be upset.
And some of that does [00:14:00] happen, but every single time, it's way, way, way, fewer than what you've thought about in your head that it's going to be for every single person we've worked with, including that's how it worked for me too. I mean, I was always nervous about raising rates, but every single time, the fear in my head never played out.
Even, even, even half of what I thought it was always like one or two clients said something. And I had an, I had an accountant tell me once that if you raise your rates and nobody complains, then you probably didn't raise your rates high enough. So you actually want a couple of people to say something about it, otherwise you probably didn't raise them high enough.
So that's something consider as well. All right, let me go to questions really quick. So Debbie said, do I judge my pricing increase on my area alone? Well, there's actually three kind of inputs to looking at what your pricing is. The most important one is the one Robin talked about earlier, which is cost plus [00:15:00] profit.
Um, you need to know the costs for providing the service and then build in the profit. The other or the second kind of input to setting pricing is what are competitors charging in your market. But again, you gotta be real careful that you're doing an apples to apples comparison. You know, what do you include in an overnight of lodging versus what are they including?
And it can be really hard for you to even ascertain that and you understand the industry let alone for clients. So really knowing, you know, what's included in your service and the cost plus profit is better. But you probably do want to look at, um, what competitors are charging and consider how much is apples to apples comparison.
And the third then is really understanding and being able to speak to the value. And the value is what are people willing to pay for what you're offering. And that can share change based on your client [00:16:00] base and also the value. That I wouldn't say, just because maybe you're in a more rural area, you can't charge as much as someone in an urban area that may not be true.
It really does depend on your target market and what, how they value the service of what you're providing and what they're willing to pay. Yeah. And I think that's a, I think that's a really good point is really saying, I feel like a lot of our clients. I think this is human nature. Really? I don't even know that it's specific to the pet industry, but I feel like we tend to think about what we're willing to spend for something, for anything, not just pet care, I mean anything.
And then we assume that others won't pay more than that. And guess what? We all know that's not true, right? Like I would love to go to the Ritz Carlton every single time I travel. I'm like a Marriott con person right now. Like I would love to get to the Ritz Carlton. But when the, when I hear the Ritz-Carlton talk about their pricing, I'm like who would pay for that?
[00:17:00] Well, obviously there was a whole boat load of people that will pay for that. And it's the same thing in any type of service in any type of industry. So you have to be really careful about saying, well, I would never pay for that because guess what some of your clients will and, um, Laurie Davis, who we work with a lot she's has Paramount Success Group, she always says there's 20% of your client base that will spend higher than anyone else. And so we all, when we talk about pricing, we always do look at giving them some options or not saying like, these are the only things available because you may have 20% of your clients that are willing to pay a little bit more for a little bit more attention for their dog, a little bit more customized service. So make sure you have that. You don't just have, like, here's the base price, this is all we do. You want to have other options because you will have that 20% of any client base is going to pay a little bit more. So you want to look at that as well.
Um, Whitney said we've considered moving to having a higher walk-in [00:18:00] price versus a book ahead price, because right now we take walk-ins and they book a lot and then they have, they book up, fill up and then they have to tell people they're full, which she doesn't like doing. Um, which I think is actually a great idea.
And when it goes to, I'll throw this back over to you, Susan, cause this kind of goes into the whole, should you do discounts when you're doing your pricing and. So another soap box issue for me and Susan to talk about discounts, but one of our general principles is if you're going to do discounts, then you actually do want to make sure it's beneficial to your business.
And that's a perfect example, Whitney is that if you're giving a lower rate, because they're booking in advance, that's helping you to manage your staff and to manage your day to day operations. So it's definitely a benefit to your business. So I think that's a great idea. Yep. Absolutely and make the walk-in price high enough, more than the other one to incent people, to make those reservations.
[00:19:00] And speaking about discounts, it is what are the hot button issues while you're looking at other questions? Um, some discounts are okay again, make sure you know how it benefits your business and not just your client. But also consider what the max discount you're willing to give, because I think you may lose sight of how discounts can add on like day care packages.
You're giving a discount for buying a number of days. You may be giving a discount for multiple pets. Um, we would really say based on what we've seen profit margins in the industry, that it's hard to justify more than a 10% discount. And that would be in total, um, because usually people are struggling to have profit margins that are from 10 to 20%, and we think you should be getting to that 20% range and the higher, um, versus at the lower, um, 10% profit margin.
So if you're not making, you [00:20:00] know, 20% profit, then look at your discount percentages. And one way to raise rates is to reduce your discount amounts. And, you know, the reason why we love talking about and helping people, price profitably and, you know, reduce discounts is because that extra revenue can go straight into your pocket or into your business and your employees pay.
There's no expenses that are going to go up. It it's strictly profit that you can spend and invest for you, the business or your team. And I would say a really good exercise to do. If you're doing discounts at all, whether it's discounts for rescue group or a shelter, dog, or discount for giving for packages or discounts you're giving for multiple pets, none of which we say you have to do, but we know a lot of people do that.
But as Susan said, I would keep total discounts less than 10% of your overall [00:21:00] costs revenue, but a really good exercise to do is track those discounts. So if you're not actually tracking this in your P&L, just get out a piece of paper and track it on an Excel spreadsheet on a piece of paper just for a month or two say, okay, this person, I gave them the discount for multiple dogs because they had more than one dog and that was worth $10 or whatever it was. Just write that down $10 or track it in your P&L track that over several months and look at how big your discount is. At the end of a year you might see $7000 to $10,000 in that I gave away for free $7000 to $10,000 of money. And that might be fine if you, you know, again, if that's less than 10% of your overall profit, maybe it doesn't matter to you, but I'm telling you most of the time, when we tell people to start tracking how much they give away, they think twice about it. Because as Susan said, that discount amount is money that you have just taken out of your [00:22:00] pocket.
And if you reduce that, even by like one or two percentages, that's going to add a couple thousand dollars back right into your bottom line without doing anything. So discounts are, are really an interesting thing in our industry because we really do tend to give discounts because we are trying to be nice to our clients, nothing wrong with that.
I love that we're a nice industry, but if the discount's not helping your business in any way, Why are you giving it? And this has been, you know, the last couple of decades and Susan and I have been in the industry. This is starting to change a little bit, but it's still something you really have to be conscious about because you might not even need to raise your prices.
Maybe you just stop the discounts and that effectively is going to raise your, your bottom line and raise your profit. So I wouldn't be looking at that as well. Okay. So just because competitors are giving a discount doesn't mean you have to either. Exactly. Um, so BJ said profitability comes from [00:23:00] volume, a profitable staff to dog ratio is dependent on the right number of dogs coming in.
But if there are only two that formula's trash, which has been the COVID lockdown experience, I mean, I would definitely agree to, uh, to that to some extent, and we actually did. And during COVID have some people that did the cost benefit of, if I can't get X number of dogs, it's actually better for me to close for those days.
We had a lot of facilities that started saying I'm only going to open two days a week instead of five days a week for daycare, because the one or two dogs that would come on an individual day, they would combine them all to come on a specific day of the week to do exactly what you're talking about, BJ, which has had more dogs there.
But you do have to weigh how you're scheduling those dogs. And this is for COVID, that's a totally different thing. COVID obviously hurt our industry a lot because we weren't having the same number of dogs, but then it also, now that things are starting to open up, you want to look at how are you [00:24:00] scheduling and how are you making sure that your staff to dog ratio is, is correct?
And this is one of the reasons we do like memberships because a membership program can help you to fill those spots on a consistent basis, mainly because of the owner is paying, whether they show up or not with most memberships that we work with for people. So it's similar to, I always use the example of a preschool where if you're in the Tuesday, Thursday, preschool for your three-year-old and you go out of town, your three-year-old is still , you're still paying for your three-year-old to attend class, even though you might not be there and you can set up memberships that way, too. That actually helps some of that as well. I don't know if you have anything else on that topic Susan. No. I think the one key thing is knowing how many dogs you need to have for service to break even, and then be profitable because then you need to work on your marketing to fill that capacity.
And if you can't fill it, then maybe you need to reconsider whether that's a [00:25:00] service you want to continue offering because it's not paying for itself. And when I first opened my daycare, I started just Monday, Wednesday, Fridays, because of that same reason. So it was after a year, I had to go to five days a week because I had too many dogs for those three days, but it is something to consider. And that's true with training. You know how many, when I did my training classes, my group classes, we had a minimum of, we would not hold a class if we didn't have at least three dogs, because it wasn't profitable. Um, some of that changed when I converted over to Levels Training, but when I had the six week program, I wouldn't do a class.
So we, what happened instead is we just did a really good job of marketing to make sure that those classes had, you know, four or more dogs so that it would be profitable. Um, so Courtney said, going back to what we were talking about a minute ago, we used to have a frequent boarder card that gave one night free after 10, the total amount for one year was $26,000.
That's amazing. Yeah. Well, I love that [00:26:00] you used to have that Courtney. We used to have that program, but $26,000 is better in your pocket, hopefully. So, but that's. Yeah. And I think the other thing that a lot of pet businesses are facing right now, there's like two things we've talked to a lot of people because we haven't talked about hiring and finding staff and we're hearing that's a real challenge in that people are having to increase their pay range scales to even get enough applicants in to find staff. We're also hearing, even though we're coming out of COVID, there's a lot of municipalities and States that are doing mandatory minimum wage increases.
You need to plan for how you're going to cover those cost increases. And to do that, you're probably going to need to raise rates, but you want to raise rates enough so that, you know, it does pay for, if you're having to increase your [00:27:00] staff ranges either for minimum wage or even just to hire the team, you need to take care of the dogs.
Yeah. And I think, I think where with a lot of companies voluntarily going ahead and raising their rates before anything mandatory, getting closer to that $15 minimum wage, um, that's a huge jump if you're at a much lower minimum wage right now, but that is if your competition in your area is that people can come and work for you, or they can go and work somewhere else for, you know, twice as much money at an entry level job that does make it hard for you to be recruiting people.
So I do think that our industry is being forced to raise their rates higher anyway, because even without the mandatory, across the board, across the country, at least in the United, in the United States, $15 wage increase because you do have a lot of, a lot of bigger box stores, not necessarily in the pet industry, but I'm just saying in general, that are increasing that rate, that entry [00:28:00] level rate.
So you do have to plan for that. And I think rate increases are going to be one way to do that. So when we talk about, um, one of the things we said we would cover is the best time for raising rates. I would say, as Susan said, at least once a year, raise some rate. In terms of timing, I think if you haven't raised rates at all, since COVID started do it now, I think now is the time, um, if you haven't raised rates in the last, you know, since last March, I would raise rates now I wouldn't wait for any other better timing. Um, there are a lot of people that will raise rates at the beginning of the year, and that is a way for them typically to make money in January, February. Where it's usually slower. Um, we know some people that will raise rates just before I mean they'll raise rates for peak seasons.
So they might raise rates like in the holiday period, Thanksgiving and Christmas, and then they'll just keep those rates. So they'll initially say these are our peak rates and then when January gets [00:29:00] there, those become the normal rates. And so they basically have raised rates through the winter season, into the, into January.
And then we know some people that raise rates right before summer to take advantage of the summer, um, busy season typically. So I don't, I don't know that there's like a best time. Do you Susan, I think it's really any time? Right. And I played around with different rate increases. I tended to avoid January, just because I felt like, um, clients were coming out of holidays.
Um, but I definitely raised rates before, peak season. And then sometimes I raised rates like in September after peak season, because I needed more cash flow. So there's not a right and only time to do it. Determine what works for you. You may raise some rates in the spring and then some in the fall, you may do it in January.
You may do it before peak season. [00:30:00] There's not a one time that it's the best time to do it. Yeah. And that, I feel like people always want that. Like, what's the perfect time. And I also feel like if you keep waiting for the perfect time, you're never going to raise rates. So I would just say if you haven't done it since the pandemic started, then it's time to do it because we know for a fact, as Susan mentioned, your cleaning protocols are different.
Your staffing might look a little bit different. You're doing different things because of COVID that you're probably paying for more cleaning solution because you're planning more frequently. Um, you're cleaning things that you might not have cleaned as much before because of COVID you, if you're using masks or sanitizer you're paying for those supplies that you never had to pay for before for your staff. So your costs have definitely gone up in during this period of time. So I would definitely be raising rates just for that point alone. Um, okay. A couple of questions. So Karen said we're going to change our footing in the play [00:31:00] arena, which has major money, so that she's doing an investment to that area.
How do we make up the cost through pricing? We're going to talk a little bit about that, Susan. Yeah. I mean, that's kind of a one-time and improvement project or the, although, you know, every year I would have an improvement project wishlist, um, but you know, look at how much that is going to cost you and then think about what's in it what's the value to the clients or the dogs for you doing that. Um, and then you can divide by the number of visits to see, like how much per visit you would need to add to your rates to cover that.
Let me see here the other. Well, the other thing really quick I'll go back to with Karen's is a lot of times that money, you can also look at setting aside. We always set aside a portion of our profits that just went into [00:32:00] like future renovations type of a thing. So we weren't always looking at getting a hundred percent back through a price increase or through charges.
Some of it was the profit that we made years prior. There's a percentage of that kind of like a savings account, a percentage of that, that we just put towards maintenance and renovations and that kind of thing. So that's another way of looking at it as well. Um, McKayla asked about how we're gonna, how we're going to talk to clients.
We're going to talk about that in a second. So I'm going to come back to that one. I'm going to just run through the other questions really quick. Um, so BJ said California is opening up, maybe June 15th, according to the governor, July 4th was once my busiest day good or bad to start a rate increase on July 1st.
I would actually, I would actually start the rate increase now, so that by July 1st, it's like old hat, old news people know about it. Um, I would just get it out on your website and start selling packages [00:33:00] or lodging or daycare, whatever at the new price now. So I don't think, I don't know that there's any reason to wait until July 1st, but I would definitely do it by July 1st if July 4th is one of your busiest days too. And I would say if you've been in, you know, real shut down with your clients and services that you've been able to offer because in your community you've been shut down. I would just raise rates and when people start asking, I would just tell them what the current rate is.
I don't even know that I would share that it's now higher. I don't think people will remember. Yeah. Um, so Kiersten said she normally raises rates in February by then people are over the Christmas expense and we get the new prices will before spring break, which is a great, a great strategy as well.
And I, I do like the February timeframe just because you're not shocking people right after maybe they're paying their Christmas bills off in January. So I think that's a great strategy. Yeah in February was always one of [00:34:00] my lowest months. So I was always looking for what I could do to raise cash in February.
Yeah. Um, so here's, this is a great question. Cause we know a couple of clients that this has happened to. So Victoria said many of my clients paid during the time they were closed a thousand to 1500 each just to support the business. Now I feel like I can never raise rates out of loyalty. You are so nice.
And I definitely understand why you feel that way. Um, however, they made the choice. You did not twist their arm to give you the money while you're closed. I mean, and I know you're very grateful for that, and I'm sure you've expressed that. Um, and maybe you have something that you want to give them a hundred dollars credit or something.
At the time you raise rates for those that did that, but I wouldn't let the few that did donate to you, keep you from raising rates for everybody else or new clients. And that's what you have to [00:35:00] weigh. How can you take care of the ones that did keep you going and feel good about it and still get your rate increase from the others?
Yeah, and I think we've actually had that situation with, uh, several of our clients where people, their clients really did pitch in to help them stay afloat because they love your business, which I, I love that. And obviously you're doing something right. If you have those kinds of clients that are giving you that type of, um, funding to help you stay open.
But a couple of things I would look at, like Susan said, number one, if, if it's a few clients that you really want to show, they showed loyalty to you so you want to show that loyalty to them. Maybe you just say your rates aren't going to go up for three months or six months after everybody else's rates go up. And you can pull them aside and just say, look, my prices are going to increase on whatever date, but I'm going to grandfather you, and you're going to stay at the old rate for six months.
I wouldn't do it [00:36:00] forever though. That's the thing is it's. I wouldn't say we're never going to raise your prices, but I would maybe say for those couple of clients, I would say maybe your rates aren't going to go up for awhile. Um, but, and anybody, even if you didn't have that kind of a donation, we all have clients that for one reason or another, we love the dog maybe it was the first client that ever did business with you or whatever. There's that emotional tie that you just want to not raise rates for them. Hey, if you really have a valid reason for doing that all, you can always grandfather those people in for a temporary period of time. When you raise rates for everybody else, just pull them aside and say, we're going to keep you at this lower level.
But even for those people, I would have a deadline for that because for a couple of reasons, one is it becomes a logistical tracking nightmare for the billing, to be honest, to try to remember that they're being billed at a different rate, especially if you have multiple people in that category. [00:37:00] And also I think doing it for six months, three months or six months, I think is plenty of time to give them a special benefit and then they go back to the regular price after that. So, but I do think we get a lot of people. I feel like who don't want to raise rates and the, they have like one person in mind as to what's blocking them.
I just don't want to lose that person. Or I just don't want to, you know, upset that person. I just love that client so much. Okay. Just talk to them and say, you're going to keep your rates. For three more months or for six more months or whatever. So don't let that stop you from raising rates, I would guess that a lot of those clients wouldn't expect you to do that. And in fact would want you to charge them the rate you need to charge. And it's kinda like my hairdresser was, I remember the first time she was like very apologetic for raising rates and I don't know, it just hit me. It's like, no, you need to raise my rate because I want you to be here because I'm kind of fussy [00:38:00] about who does my hair and I didn't want her to go out of business. And they want you to be there for them to take care of their pets because they trust you.
So, I would guess if they were generous and donated money, they aren't even expecting that you never raise rates again for them, that didn't cross their mind. Victoria said it was 80, 85% of her clients and they're still clients. But again, I would say, raise your rates. And if you want to give them a month or two at the old rate, fine.
But I don't, I really don't think that they are not thinking you're ever going to charge him again, um, for that. Yeah, but I would definitely go up for new clients because they don't not raise rates on new clients, just because you've got 85% of existing that you don't want to raise rates on right now.
We're going to jump into talking to your clients about this, but before we do that, I just put in a link to a document called Pet Profits, [00:39:00] which is a document that will help you to understand your pricing. And it's, I don't remember how much it is. It's not very much though Susan, like $49 or something.
Um, but if you're, if you're just going to say I'm just going to raise my prices 10% or whatever, that's fine. But what I would ask you first is do you know, by service, how much each service costs for you to offer that service. And are you priced right before you even look at raising rates? Like, are your prices actually generating revenue for you in the first place by service?
And that Pet Profits document will help you get there. The other thing, and we'll mention this again at the end is Susan's actually going to be doing a webinar on Tuesday. Yeah, the thirteenth. Lucky 13th. We're going to talk pricing. So on Tuesday, it's a free webinar. You can sign up and she's actually going to walk through the way, the best way to price your [00:40:00] services.
So again, before you raise your prices, make sure you're basing it on actual cost plus profit, which is the best way to price your services. And if you've never done that exercise to make sure you know, your cost plus profit, then go to the webinar and it's free and you'll learn about how to do that. And then you'll have a better idea of how to set your prices so that you're not just taking, we find a lot of people just like grab a number out of the air and go I'm to raise it this much. And we're like, why? I don't know. It seems like a good number, which okay. It's at least you're raising your prices, but we really want you to base the numbers on something realistic and something that's actually a proven method for businesses, any businesses to operate. So. I just put the link to that registration so you can sign up for that for free as well. All right. So I'm going to jump back to that question, cause this is where we are going for the ending of the Facebook Live. Anyway, if you've never raised rates before, do you make your clients [00:41:00] aware when you're doing it?
If so, how? So this gets into the whole, how do you raise your rates and how do you tell your clients about it? So I'll let you kick that off, Susan. Yeah, I think the first thing is not to make a big deal about it. What we did is we would post a sign up, near our checkout and just say new rates, effective, whatever date we're putting them in and list them.
And I didn't put with the old one was so they couldn't do a comparison and I was put with the new one was going to be, and when. I did that because I would allow people to buy some packages in advance that, um, if they wanted to like, if it was a daycare, um, just to give them notice, but maybe it was 30 days notice at most.
I might mention it if I do a newsletter that effective whatever date, these are the new rates. And again never said what the old ones were. It can be a time where you might remind them [00:42:00] of the value of your services, so that little brainstorming exercise you did about why your services are worth that rate, you might just reiterate, you know, the staff training that you do, the extra cleaning protocols, um, and that, you know, the rate adjustment is going to ensure that you can continue the health, safety, and wellbeing and investment in being their long-term providing great care quality for you and your pet. I wouldn't make , a big deal out of it. Whitney said, if you raise rates, Um, wait. Yeah, if you raise rates, you can let the clients know that those rate increases helped to pay for higher quality play areas, et cetera. And I, so I wouldn't just say rates are going up, you know, whatever I would, as Susan said, remind them about all the things that you're providing, all those valuable things that you're providing, and that this is your way to continue to operate in that high level of excellence that you're operating in.
And it really is [00:43:00] not going to be a surprise that the cost of living goes up and so your costs go up as well. So I would just explain that in a, in a non-emotional way, just to say, this is what's happening. Again, if you have those couple of clients, you want to pull aside and do something special for them, you can do that.
If it makes you, you know, if it's better and helps you to get over this hump of raising rates. But I would still give them a time where their rates going to increase too. Maybe it's a couple months later or whatever. Um, typically I didn't ever give more than 30 days notice either. And the other thing is if you've done anything different because of COVID.
So maybe we know a lot of people started Daycare 2.0 during the pandemic, or some type of enrichment activities that they were doing as an add on service. Anytime you're rolling out anything new, let's say you like Karen was going to redo her flooring. You could actually raise rates in conjunction with all of that to say, you know, we're raising rates because we've started all these new [00:44:00] programs and we have better options for you and for your dog.
And we're doing a lot more one-on-one and a lot more, um, higher staff ratios and that kind of thing. So anything you've done that is rolling out something new is a great time to raise rates because you can easily justify it with the new programs that's coming out. So you want to look at that as well.
Yeah. When, when we increased lodging rates, if someone had already made reservations and it was at the old rate and our POS system would allow us to keep and honor that rate we would. But then as new people called, we were quoting the new rate. Um, and so the new reservations were made under the new rate.
Work with however, your point of sales system works. Um, if you can't have two rates, what you might be able to do is manually calculate what the difference is and give them a discount on reservations that are already booked, that would then get them to that old rate. [00:45:00] Um, if you've had a lot and you feel like I just can't afford to give it, then I would call and let them know so it's not a surprise, um, that the rates going to be higher. Yeah. And that was actually somebody just asked a boarding rate. If it's the boarding rate increasing, do you still give, do you still just post a sign and I would still just post the sign. The only thing you do have to be sensitive to is those people who have already made a reservation and may have made a reservation right now that's actually not as likely because of COVID that's a one advantage of COVID right now is that you probably don't have a lot of those, but, um, as you start getting busy again, and we, you know, people might be booking five, six months in advance, and then you're going to change your rates. You do have to be mindful of those people who might already have reservations to either let them know their price is going to increase or honor the old rate, like Susan said, Um, so Jean said, we raised our rates February 1st, had it posted from December 1st, it went over great.
Took Susan and [00:46:00] Robin's advice it was spot on. Thank you. Um, don't make a big fuss analyze how much each service will increase and post as much in advance as you can. And she said she can share her poster. So that would be helpful if you, uh, wanted to share that we would appreciate it. And Karen said, do you have a letter, a sample letter, of price increases?
I don't remember if we have that in the library or not. I don't know if it's. We, we have it because we did it during the 7 Day Challenge. Charlotte wrote kind of a script. Um, so we could add it. Okay. All right. So it might already be in the library. Could wait. I'm writing myself a note here. Because Charlotte Biggs that works with us is great at sales.
And so we have started, um, asking for her help in, you know, scripting some of this because we know that it's hard for you guys because you're so nice. So Charlotte and Charlotte words, it in such a nice and kind way that it, it does feel easy, but we have, we do have a lot of sample letters in this one we'll add if it's [00:47:00] not in there, if you have access to our library, it's a $39 a month subscriptionand our library contains just tons and tons of resources and blogs and documents and videos of content that help you to help you and your staff operate a safe business. And if you have Knowing Dogs, that if you purchase Knowing Dogs, in the past, like six months that Knowing Dogs subscription includes the library, that's the $129 subscription and Pet Guru College also includes the library subscription. So if you have questions on that, just email us and let us know. But I think the biggest thing really to think about in terms of talking to your clients is not to make it such a big deal and try not to be as stressed about it.
And I know that's easy to say because I've been there. I know we, when I would increase rice prices, I would have that same anxiety. But when I finally started to say to myself and I. I'm very analytical. So I liked to do [00:48:00] the math to prove to myself that what my emotional self was saying was not what was actually reality.
And so I would always do us a little scenario on paper that showed, Oh my gosh if I raise my rates this amount, I'm going to have X number of clients. Cause you know, how many clients come on a daily or monthly or yearly basis. So you can do the math. This is how much I would make at my normal rate. This is how much I'm going to make if I increase my prices. So I would have that comparison and I'd always be like, Ooh, that's great. And then same number of dogs, but you know, just an increase in price. But then I would always do this scenario where I would say, but what if I lose 20% of my clients and nobody fills their spot. And then I would do that math and I would say, okay, 20% fewer dogs at that higher rate.
Guess what? I was always still making more money when I would do those scenarios. I mean, usually if I got up to like 25 or 30% loss in, in clients, I would start to [00:49:00] lose money, but I never came anywhere close to losing. I would lose like less than 1%. So that always helped me just to say, even if I lost 10% of people, they went away, I'm still making more money.
So how that was going to work out anyway. Yeah. And think about all the different services you use for yourself or your family. If you, you know, if you do have go to the hairdresser, if you, um, get manicures, pedicures, massages, how many of those places notify you when the rates go up? I can tell you very few.
It's just, when I go now, the rate is X. And I pay it or I don't. Um, and they oftentimes don't even tell you when you're making the reservation, you don't know till you're checking out. So I don't think, I think we're kind of unique in this need to this, that we feel so strongly about giving notice and communicating well, and again, it is because we're nice.
So [00:50:00] I think, um, posting something is fine. But I wouldn't feel the need on just a rate adjustment to have a lot of conversations and posted everywhere for everybody to know. Yeah. Especially for people that you don't see very often anyway.