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When to Raise Prices

Raising prices for your services is inevitable. The cost of operation tends to increase every year. To compensate, price increases are the most common remedy. Unfortunately, few grooming business owners with a few or more employees study productivity and cost-efficiency looking for ways to maintain price levels and profitability. The only solution is then to raise prices.

As consultants that have reviewed hundreds of financial statements for grooming businesses, we ask that you trust our experience and understand that most grooming businesses operate somewhat inefficiently, and they keep raising prices to compensate for their own inefficiency. It becomes a major problem when you out price your services for your market, and then many of them come to us to learn cost-efficiency once trouble has onset.

In defense many groomers say some "weird things." For instance, if you promote cost-efficiency you risk the safety and comfort of the pets being groomed, or you cannot use the best products or equipment in a cost-efficient operation and you don't care about pets if you are focused on your income and expenses. Wow! We have heard even more extreme allegations.

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I ask them, "For your service fee do you provide pet owners with the assurance that you have a written safety and supervision plan for pets and people, and that you have written and hands-on training programs to instruct employees in your standards of operation?" The answer is almost certainly, "No." I reply, "But you have said we don't care about people and pets, and we risk pets, employees etc. Well, we do and our clients bond to our business for many reasons including this one, and yet our fees are less than yours, we use the same or better products, we offer more client services, we have state-of-the-art equipment, etc. and you charge more and give them overall less. Are you not at least curious how we do that? Why do you instead criticize and foment misunderstandings, in defense?"

Management training produces remarkable changes in groomers' attitude toward cost efficiency and productivity. It means that they can improve their profitability without always having to "ding" clients for more. The largest and most successful businesses in the U.S. do not have a history of frequent of price increases, consumers don't like it and it forces the "shopper" pet owner to go "shop around."

As a whole this industry has a serious problem. It's difficult for most grooming businesses to justify the fees groomers deserve. At the heart of the movement vocationally licensing the profession, or another form of required certification, one would hope that as a result groomers could justify and receive better service fees. Look around at other vocationally licensed professions and most are considered good to very good income generators for its members by the public. It's not likely that any state is going to vocationally license the grooming profession any time soon, so the hope of using that recognition to justify better fees is not going to be reality soon.

The irony of The Madson Management System for Pet Grooming Businesses, based on the system of management developed in one of the world's largest salons now nearly 50 years in operation, was that the business offered more pet care services and many client services, for median fees. Consumers enjoy getting more for less. Every pet is given humane pet care, safety and comfort, artistic styling and a broad menu of client services. They were no cutbacks! Employees are given the same wage levels too. It's just a matter of rethinking productivity, cost-efficiency and your service fees.

Let's take a brief look at some of the standards behind The Madson Management System and its attitude toward price increases and overall service fees, and how to raise prices.

  1. You have to know how to read your monthly financial statements, especially the Income Statement. How can you determine profitability if you don't know how to read the Income Statement which clearly states how much income you took in, and how much was spent in operating expenses? A good bookkeeper is essential to a busy groomer, and they can help you to learn how to read your financial statements. How many bankrupt or near bankrupt groomers that we talked to wished they would have learned this simple practice, and done it every month as a preventative measure? All of them.

  2. Give your clients more than just a great grooming! The Madson Management System provides every pet with a written Madson Pet Groomer's Report and Health Alert Form. It costs about a nickel, but makes the client feel like a million and it separates you from the majority of shops not using one. It takes less than a few cents of labor to fill it out too. What else to you provide for the owner, the one who is paying the bill. Clients, not customers, stay with a business for years and pet after pet. They do that with a business that not only recognizes the importance of great grooming services, but CLIENT SERVICES. Appreciated clients are far more willing to absorb price increases.

  3. Don't raise prices every year, or more than once in year! If you raise prices every year your clients will anticipate it and more often than not you will hear the bemoaning clients start complaining about prices. Your price increase should be no more frequent than every 2 years under most circumstances. If you raise prices no more frequent than every 2 years, let your clients know that when informing them of price increases.

  4. Don't make excuses for raising prices, be informative. Most clients can relate to increases in overhead just as their household budget is affected by increases in household shopping, power, water, food, cleaning supplies, etc. Convey that in writing at least 3 months ahead when announcing the need to raise prices. Affirm that the price increase assures your ability to continue to deliver the standards of pet care and client services they have come to expect. Besides mailing your regular clients the price increase letter, post it as a sign in your entry way. Remind clients that their next grooming appointment will cost more if they are scheduling after the price increase takes effect. Once it is, make sure pet owners dropping their pet off know what the grooming service will be when they return.

  5. Ensure the need and amount for your price increases. Do you have a budget for your business like a household budget? If not, you are operating a business with some level of whim as all businesses of any trade are expected to have a budget, even grooming businesses. Many owners without a business budget for at least the next three years do not adequately raise prices and then find themselves raising prices once or twice a year, and that doesn't grow a business or maintain stability. Many of our clients maintaining budgets and monthly reviews of their financial statements discovered that they could delay raising prices, or moderate the increases, because they discovered ways to promote more cost-efficiency.

  6. The most financially successful business maintain median prices. From just a financial point of view, the most expensive shops are rarely large businesses. Which ever way you go is your choice, but if you want to grow a major business you will likely do so by maintaining high-end MEDIAN prices. This theory is largely covered in The Madson Management System publications, and there are many businesses using this system that are "living proof." We have clients taking in at least $500,000 a year and some much more, and NONE have what would be considered expensive prices for their area.

Most groomers are not paid their worth for the hard work of grooming pets. However, unless groomers take more time to study the management of businesses they will find earning the profitability they deserve impossible, or at least, very difficult. Lack of business education is the most profound source of problems and not consumers who have not been educated in what it takes to groom pets. As a whole, our industry is not conveying in any form what it takes to groom pets to millions of pet owners, and that makes it all the more difficult to raise prices and justify better fees.

You will find that businesses that provide extensive and very informative promotional materials detailing your grooming and client service procedures, such as the Madson Pet Groomer's Report and Health form, Madson Pet Care Services Brochure and Madson Client Services Questionnaire gain more respect for the work of grooming pets from their clients. In this way the are actually justifying better fees, enduring far less client objections to price increases and losing less clients to another groomer who charges less.

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