Do You Wait Too Long to Raise Prices in Your Horse Business?
By: Doug Emerson, The Profitable Horseman
There is an old story about pricing that you may have already heard. It makes an important point about how some business owners think about pricing.
It goes like this:
Farmer Bill stopped at the local diner for lunch and parked his truck, loaded to the max with baled hay, next to the front door. At the diner counter, he was seated next to the local hardware store owner, a prosperous businessman.
The businessman asked him where all of the hay was going.
Bill answered, “I’m delivering it to Smith’s for $ 2.50 a bale. I buy it downstate and truck it to here for sale and delivery.”
“Wow, $2.50 is a good price”, the hardware store owner says, “How much do you pay downstate for it?”
Farmer Bill replies, “$2.50 a bale.”
“Buy for $2.50. Sell for $ 2.50! You can’t make any money doing that!”
“I know that, I’ve got to get a bigger truck.”
Too often, I talk with professional horsemen who have profit margins similar to Farmer Bill’s. They ignore their operating costs and price boarding, lessons, and training based on the “going rate”or slightly less because they are fearful about losing business or not getting enough business.
Your escalated expenses for hay, feed, and bedding need to be offset with a price increase. If you’ve already adjusted for this in your boarding, lesson and training fees, pat yourself on the back.
Here are things to consider when increasing prices:
· Unlike Farmer Bill, you can’t make it up with volume.
· Your clients are sympathetic to your increased costs of doing business.
· Small increases each year are much easier than huge jumps after years of unchanged prices.
· The fees don’t have to end in 5 or 0. Examples: board can go from $325 to $347, group lesson rate from $30 to $34.
· Long term clients don’t need special consideration with discounts. You’ve given them good service and loyalty for years as well.
· Give reasonable notice; surprises about money aren’t welcome.
· Experience has proven after a reasonable increase in fees for services, the only clients that leave are those you are happy to lose.
If you’re in business, remember, the purpose of a business is to make a profit. Adjust your fees to compensate for increased costs of doing business.
You invest in horses, tack, equipment, trucks and trailers. Do you ever make an investment in yourself? At a Profitable Horseman horse business workshop, you can learn about raising prices in your business and strategies and daily practices that will make 2019 your best year yet..
Now is the time to begin to get your year in gear! If you’re interested in hosting or attending a one day workshop, email me here: doug@profitablehorseman.com or call 716-434-5371.
Doug Emerson helps professional horsemen struggling with the business half of the horse business.
Visit his website: www.ProfitableHorseman.com for more articles like this one and to subscribe to his free electronic newsletter about being profitable in the horse business.
