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.