One of the best pieces of advice I received as a new pet business owner was from a veteran during a trade association meeting.
He told me to raise my rates every year. The increase does not need to be a big amount, but the consistency would condition clients to expect rates to change on a regular basis. The best part of this advice was it removed all the angst I felt raising rates!
It’s a smart business practice as every year we give staff raises and other costs go up. Yet many pet business owners are reluctant to increase rates. In fact, this is a topic that many agonize over.
There is fear that clients will get upset or stop coming. Once the difficult decision is made to raise rates it’s usually followed by more agony on how to communicate the increase.
Following a policy of raising some of your rates every year eliminates this emotional agony for you and conditions your clients at the same time. This is the time to wear your business owner hat and create a system for reviewing rates and communicating changes every year.
Keep in mind that your clients want you to stay in business and care for their pets. They trust you, appreciate the service value and will accept rate changes every year.
You do not have to increase all your rates each year if you offer multiple services. One way to soften your increase is to announce the adjustment 2-4 weeks in advance or set a time period for clients to pre-purchase and lock in existing rates by buying a package at current rates.
If you have certain months when cash flow is low, then this may be a period you want to announce a future rate adjustment and boost package sales. Select a time each year to evaluate rates using this easy step-by-step system.
Step 1 – Create a Rate Roster in excel of services you offer and your current rate for each
Step 2 – Highlight your Key Services – the ones that generate over 50% of your revenue (e.g., Dog Daycare, Lodging, Dog Training)
Step 3 – Perform a pricing analysis for your key services to check how much each contributes to business profits
Step 4 – Prioritize the Key Service rate to increase in current year and update your Rate Roster with new rate and date
Step 5 – Review list of other services in the rate roster and select a category to increase in current year (e.g., Lodging Activities, Bath Rates, etc.). Update your Rate Roster with new rate and date
Step 6 – Establish an implementation and client communication plan that offers advance notice or package sales
Step 7 – Next year repeat the process and increase a different key service and other service category. Your Rate Roster provides a history of your rates and increases so it’s easy to see which area is due for an adjustment.
Keep in mind you can increase revenue without raising rates by reducing the amount of a discount. Multiple pet discounts need to be viewed based on saving costs so sharing space in traditional lodging is valid. However, each pet does require labor to feed, exercise and keep accommodations clean. Make sure you run the numbers on multiple pet discounts to confirm profitability, especially if they exceed 25%.
Once you implement your rate change monitor the feedback. If no one complains you probably did not adjust your rates high enough. During the year focus on providing great quality pet care and excellent customer service and your clients will happily pay a little more to keep their pet healthy, safe and happy.
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