Can Business Be Too Good?
Lisa is a mobile pet groomer with steady clientele and a large waiting list. She has people bribing her to get in. Dave thinks it's time to raise her prices because she's too cheap.
QUESTION: Lisa in Iowa is calling because her business is too good. She’s been a mobile pet groomer for 10 years with steady clientele and a large waiting list. She tries to work with no debt, and she has people bribing her to get in. She wants to remain loyal to her current customers. Dave thinks it’s time to raise her prices because she’s too cheap.
ANSWER: I’d raise my prices across the board. Raise the prices again. You’re too cheap.
I used to be a real estate investor for a living. If I have an apartment complex that has 100 units in it and they’re full with a waiting list, that means my rent is too cheap. There needs to be a little bit of vacancy. I need to keep raising the price until there’s a little bit of vacancy and not a waiting list anymore. You haven’t found the top of the market yet.
What has happened during the 10 years that you’ve been doing this is—and you’ve noticed this and may have noticed it consciously, but I’ve noticed it watching your industry—people have gone from liking their pets to being complete morons about their pets. You are in a sweet spot, kiddo. Where people used to say it was a dog, now it’s a kid with fur. The numbers are there to support it. It’s a multibillion dollar industry. Studying the industry, one of the most exciting industries to get into is pets. Veterinarians are doing better than medical doctors because people have gone bananas. You used to be a dog groomer, and now you cut hair for their kids. Charge them for it! I don’t think your prices came up as much as the industry shifted on you. I can tell that by the level of demand you have.
At some point, it gets crazy, but the other thing that’s happened is a lot of people have gotten into your business. A bunch of them aren’t any good. They don’t show up on time, they can’t keep their help, and every time someone comes to cut their dog, it’s a different person. You’re none of that. If you’re coming to my house, you’re worth more to me because you’re predictable if I’m your customer. I’m trying to encourage you seriously to raise your prices. It’s not greed. You are providing a service in a different environment and a quality service that is predictable and quantifiable for your customers who view this differently than they did when you started the game 10 years ago.
I’m going to kick those prices on up pretty stout across the board. If you don’t lose anybody, you didn’t raise them enough. You can have a scholarship program for the customers who aren’t elite. If you’ve got a single mom or a widow and you want to do hers for half off, you can. We do that for a lot of people who come in for financial counseling. We don’t just do financial counseling for the rich. We do financial counseling for the people who need it. We charge the others, which enables us to do the ones who need help cheaper. You can build that into your business model. Raise your prices.