Friday, Nov 28, 2014
News

Don’t let beliefs limit your pricing

Business beat
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As many of the readers of this column know, I compete in dog obedience trials with my wonderful lab, Sophie. I would not be nearly as successful in this as I have been without the assistance of my incredibly talented dog trainer and coach, Ann Summers.

I have been so pleased with Annís training and support over the years. She clearly realizes that it is me who really needs the training but always humors me and pretends that it is Sophie who needs it.

Ann is a wonderful lady and great at what she does. She has become extremely well-known for her dog training, and her client list continues to grow, which is precisely what you would expect as word of her skill spreads.

The downside of a growing client list for Ann is that class sizes are getting harder and harder for her to manage. Knowing she needs to downsize some to keep from sacrificing the quality of training she is able to provide, she recently asked me what I thought about raising her prices.

In fairness, I have actually been encouraging Ann to up her prices for over two years now. Since I have been working with her, she has never once raised her rates. She still charges just $10 a week for a 60 to 90-minute class every Saturday morning, and she has always resisted making a fee change because deep down, I think she is concerned her customers will leave her or think poorly of her if she does.

Dog training is not her main source of income, but she still wants to ensure that the fees she charges are fair to both herself and her customers. I did some quick research on her behalf and found that most dog trainers in this area are charging about $25 a dog per class. I also asked some of her other clients what they thought about the value and price of Annís training, and they all said they would gladly pay a higher fee. They each felt the benefits to both their dog and themselves would easily justify paying a higher price.

I explained to Ann that many people relate value with price and, if she was too cheap, people would assume the service is cheap as well. Though, this clearly does not seem to be happening here, I recommended to Ann that she concentrate on her customersí perceived value and suggested that she raise her rates to $15 per class. While she might lose a few customers, the additional revenue would more than make up for any losses. As a bonus, class sizes would be smaller, and she would be better able to provide a higher quality of training to those who remain.

She is still concerned that her customers will leave if she raises prices. As a consultant and friend, there is only so much I can do to convince her that this fear is unfounded and it is preventing her from making a necessary change, but I have persistence on my side. I will continue to work on persuading her that raising her prices will be good for everyone.

Now go out and make sure you do not have any beliefs or fears that are limiting you from raising prices. If you do, make sure you address them. Otherwise, your business will suffer.

You can do this!


Jerry Osteryoung is a consultant to businesses - he has directly assisted over 3,000 firms. He is the Jim Moran Professor of Entrepreneurship (Emeritus) and Professor of Finance (Emeritus) at Florida State University. He was the founding Executive Director of The Jim Moran Institute and served in that position from 1995 through 2008. His newest book co-authored with Tim O'Brien, "If You Have Employees, You Really Need This Book," is a bestseller on Amazon.com. He can be reached by e-mail at jerry.osteryoung@gmail.com.

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