Money Matters

Everybody loves a deal, and everyone loves to spend less if they can, no matter their socio-economic standing. Have you been hearing “Do you have a discount for (fill in the blank)?” a lot lately and wondering how to respond? Are you tempted to offer discounts when business is slow? Here are some discount do’s and don’ts to protect you from giving your store away.

Have a policy in place. Never put yourself in a situation where you have to decide on the spot. Know ahead of time what, if any, discounts you offer, have a firm policy, and stick to it.

Avoid across-the-board discounts. For all shelter dogs, for example. Such a discount is great in areas where shelter adoptions are rare and need to be promoted. But in some cities half to two-thirds of all dogs are shelter adoptees. A discount that applies to eighty per cent of your clientele is not a discount; it is your de-facto rate.

Apply discounts uniformly. It is the law. The IRS takes a stark view of whimsical discounts and should you be audited, you must prove you have set policies.

Avoid ongoing discounts. Especially important for daycares, walkers, sitters, and boarders. With a limited number of slots to fill, allowing an innocent amount off weekly services means giving up a considerable annual chunk—which you can’t replace. If you have ongoing discounts, take a few moments to do the math—the amount of money you’re losing will likely stun you.

Don’t discount:

For up-front payment. Payment in advance should be your standard policy, full stop.

For all non-profits. There are simply too many worthy causes. Either provide a small discount to one or two favorite groups or volunteer a set amount of time. As in: “I’ll work with one dog at a time, on these kinds of cases, and the family has to be in real need and not be able to pay for training services.” The rescue group should do the screening and you decide when each case is done and you can accept another. This way you help but don’t butcher your income stream and rates.

For sob stories. A particular hazard for trainers. You will hear, “Unless Rex stops barking I’ll have to give him up,” “My mother’s in the hospital,” or, “I lost my job.” And there you are, seeing how Rex’s quality of life could improve through your work.

These are tough situations and you need a strong set of rules to carry you through. Compassion is understandable (and praiseworthy), but don’t let other people’s financial problems become yours. To make a living as a dog pro you must separate your desire to do volunteer work from your professional life. You have only so many hours every day in which to train. If you go bankrupt, you won’t train at all. Dogs in need of help don’t know if their owners have money or not. Help ten dogs this week and you help ten dogs. Help ten dogs for free this week, and next week you will be working behind a desk to pay the rent. No dogs helped.

For friends. Better yet, don’t train for friends at all. People rarely take advice or homework seriously enough when a friend gives it. Then compliance fails, the dog doesn’t improve, and tensions in the friendship follow.

Do discount:

For volume. People who sign up for Puppy and Adolescent classes as a package, for example. But make it reasonable, don’t give away the store.

For vets and vet staff. So they can experience how good your service is and refer to you. This applies to other referral sources as well—the independent pet store owner and staff, shelter staff, etc.

For your favorite cause. Is Greyhound rescue close to your heart? Or senior dogs? That is a good reason to offer a discount. Just make sure the group you favor is smallish, or you may get a reputation for low rates that nets you an entire clientele of discounted people. No business can survive that way and being passionate about something should not preclude earning a viable income.

Remember…

Clients who haggle rarely respect your skills and qualifications and, when given in to, will likely prove difficult to work with. The same client would never barter in a lawyer’s office. Plus, when your fees are negotiable it undermines your professionalism—you are an expert at what you do; it’s okay to charge for it. If you need more support when it comes to pricing and services, this is an area we explore fully in THRIVE!

In our consulting work we’ve noticed dog pros share a nearly universal fear of raising rates. If you’ve put a rate increase off, worried your clients will leave you in a mass exodus, this article is for you.

Why Raise Your Rates?

To make a living. Our job at dogbiz is to help people make a living doing what they love. Too often we see new clients whose rates will never provide that living. Many factors go into setting rates. One critical factor that’s generally overlooked is what the dog pro actually needs to live on. If you don’t set your business up to make what you need, you’re not likely to stay in business.

To get the right clients. You may think keeping your rates low will make it easier to get clients, but the exact opposite is true. Low rates will only attract bargain hunters, and they rarely make long term, loyal clients. The clients you really want—the ones who are serious about their dogs and have money to spend on them—are looking for the best dog daycare, walker, or trainer, not the cheapest. If your rates are low, they’ll assume you’re not top notch and look elsewhere.

Because you’re worth it. You have to believe this. Confidence breeds confidence. Setting a strong rate and standing firm behind it can help convince prospective clients you’re the one for them. And besides that, you are worth it. You aren’t selling cheap plastic items or hawking knives door-to-door. The services you provide to dogs and their people improve the quality of life for both.

When To Raise Your Rates?

When the numbers don’t add up. If you’ve avoided doing the math, it’s time to take a deep breath and grab a calculator. What do you need to live on? What is your business making? What is your business’ potential? You can keep the math simple:

1. Start by figuring out how many dogs you can serve per week. (How many dogs will fit in your daycare? How many private training sessions or classes can you comfortably and sustainably fit into your schedule? How many pet sits can you manage?) Multiply that number by the rate you charge for that service. That’s your top potential gross earning. Now multiply that number by .75 to get to your gross income running at 75%– that’s a safer number to work with.
2. Add up all your business expenses. Subtract these from your 75% number from step 1.
3. Estimate your taxes and subtract these from the number you get in step 2. (A quick call to an accountant can give you a ballpark formula for your taxes. We recommend www.dog-pro-cpa.com.)
4. Compare the number from step 3 to what you need to live on. How does it add up? Can your business as currently set up provide what you need?

If the answer is no, look at raising your rates. What would you need to charge to cover your personal living needs? (If that number isn’t a feasible rate to charge, it may also be time to consider additional services or other service approaches to make the math work.)

When you’re behind. We recommend reviewing other rates in your area yearly to keep a thumb on the going rates. If you aren’t charging at or near the top rate in your area, but are offering top notch services, it’s time to step up.

When you’re busy. Business bustling? Have a waitlist? Turning people away or referring them to colleagues? It’s absolutely time to raise rates, no doubt about it. You’re popular. People love you. There are potential clients standing in line to get access to you. They’ll be willing to pay more.

When you haven’t for a while. It’s important to review your rates yearly, and raise them periodically. Avoid falling behind. A small rate increase every year or two is much easier to orchestrate than a large one every five years.

How To Raise Your Rates?

Write a letter. Craft a letter for your clients announcing and explaining your rate increase. A written letter is best if you can, as it’s a nice personal touch and gives people time to digest the information before they respond. Don’t over-apologize about the increase—that only encourages people to be upset. The tone of your letter should be even, warm, and confident. Put a marketing spin on your rate hike—how does the increase actually benefit your clients, what does it allow you to do for them? Does it help protect your ability to maintain small daycare or walking groups, the very reason your clients chose you? Keep class sizes small? Allow you to continue boarding dogs in your home environment a few at a time for maximum attention to each? Help your clients understand the reason for the increase and they are much more likely to be understanding.

Give clients time to digest. Provide a grace period between announcing the rate increase and putting it into effect. We recommend a two-month minimum before clients actually see a difference in their bill. If you’re facing down a large increase, implement it over time. For example, a $5 increase in an ongoing service like daycare or walking can be a large pill to swallow. Let clients know about the increase, but explain that it will take place in phases—perhaps a $1 increase in two months, another $2 six months after that, and the final $2 another six months beyond.

Avoid the bad times. Don’t announce rate increases at already financially stressful times of the year, such as the holidays, the New Year (a common time to receive rate increase notices), and tax time. These times may negatively impact clients’ perception of your increase.

Don’t Fret

Every client we have worked with on raising rates worried terribly about losing all her clients in the process—and every client has been thrilled with the results afterward. If you handle the increase well and are increasing rates on committed clients you’ve taken great care of, there will be no mass exodus. In fact, our clients very rarely lose more than two clients, tops. And with everyone else paying more, they generally come out ahead even before replacing the one or two who choose to move on.

Brand loyalty is a powerful thing, especially in an industry like ours. Once someone has forged a relationship with a pet sitter or dog walker or daycare operator, it’s very difficult to imagine trusting their dog to anyone else. You’ve practically become family. You relieve a great deal of stress, worry, and guilt for your clients. They are unlikely to create upheaval in their lives searching for a new dog pro over a $2 rate increase.

So take a look at the rates around you, assess your own, and if warranted, take a deep breath and make the commitment to charge what you’re worth. You deserve it.

We take a deep dive into rates and services in THRIVE! Take a look and see if our group coaching program is for you.

We’ve often written about the need for good policies—and what makes them good. Our advice has included tips on putting solid policies into place, delivering your policies in writing and verbally, and sticking to them—including thinking ahead about what constitutes a reasonable exception and, perhaps more importantly, what does not. We’ve talked about understanding the purpose of policies, too. For example, a cancellation policy that doesn’t keep you from losing money isn’t doing what it’s supposed to. What we haven’t written as much about is how to communicate your policies effectively. Because having a good policy is only the first step—how you present it matters just as much.

So you know you’re supposed to include written policies in your service contract. But how you write your policies can make a world of difference in how clients and potential clients perceive them, and in whether they respect and follow them. A policy statement should include much more than just the meat of the policy itself.

Tell Them Why
Small children pester their parents with a constant barrage of “why?” in an attempt to satiate a growing curiosity about the world. For teenagers, the question takes on a petulant edge, as in “why should I?” or “why do I have to?” At that age, interest turns from curiosity to a deeply held belief in fairness—and a surety that any rules they disagree with are inherently lacking it. I’m not sure we ever fully outgrow this stage. At least it can seem that way watching a grown adult complain about a perfectly reasonable policy and demand, beg, or haggle for an exception.

As small business owners, you know that making those exceptions can make or break you. The first step toward solving this problem is proactively answering the question, “why?” We’re all less likely to question a rule when we understand its purpose and believe it to be reasonable and fair. You have your policies for a reason—make sure your clients know what that reason is.

Spin It
We’re also less likely to question a policy when we perceive it to be in our interest. So put a bit of spin on yours—tell clients how your policy is in their interest. Does it allow small classes? Guarantee their spot in your daycare? Make holiday pet sitting reservations easier? Allow you to take better care of their dog or keep him safe? Your policies are a marketing opportunity to reinforce why clients want you—what makes you different, what aspect of your service drew them in.

Write It Down
Let’s look at some examples.

Here’s a cancellation policy for dog training classes:
No cancellations allowed within two weeks of the start of class.

Here’s the same class cancellation policy, written to include the “why” and the spin:
Because we are dedicated to maintaining small classes with plenty of one-on-one interaction, we are not able to accommodate cancellations. Cancellations with less than two weeks’ notice will not be refunded, so please plan carefully. We appreciate your cooperation to help keep our classes small and effective for you.

Here’s a cancellation policy for private training, this one for day training:
Missed transfer sessions must be rescheduled, and will be charged for.

Here’s the same private training cancellation policy, written to include the “why” and the spin:
Without the critical step of transfer sessions, you will not enjoy the results of the day training done for you. Because our goals are for your dog’s behavior to change for you, and because we want you to see the best possible outcome from training, your attendance at transfer sessions is mandatory; we do not allow cancellations. Missed sessions will be rescheduled and automatically charged to your card. The importance of these sessions to meeting your goals cannot be stressed highly enough. Please schedule them carefully.

Here’s a pick-up/ drop-off policy for dog daycare:
Dogs must be at daycare by –am, and picked up between the hours of –pm and –pm.

Here’s the same pick-up/ drop-off policy, written to include the “why” and the spin:
Our clients value the careful attention we pay the dogs in our care. In order for staff to give their best to your dog, and so that your dog may enjoy a day free from stressful interruptions, we appreciate your respect for our pick-up and drop-off hours. All dogs must be at daycare by –am and picked up between –pm and –pm.

Which of the above statements would you yourself be more likely to respect? Policy statements that incorporate an explanation and marketing spin are much more palatable; clients are less likely to balk at rules when they understand their purpose and benefit. We find it’s rare for clients to complain about or ask for exceptions to policies that are written and verbally explained this way up front. Who doesn’t want smaller classes? Who doesn’t want his dog’s caregiver to place her full attention on his dog’s happiness and safety? Who wants to pay for training and not see results?

There will of course still be occasional teenagers—er, clients—who feel entitled to an exception. But when you understand your policies and the reasoning behind them, it’s also much easier to say no and explain why when they do.

Looking for more help setting successful policies for your dog business?
We’ve got a dogbiz U course for that! Take a look:
Money Matters 101: Pricing, Policies, & Packages

We all know to avoid topics like sex, politics, and religion when talking to potential clients. Most dog trainers would like to include money in that list, too. Unfortunately it’s an unavoidable subject, but talking about the price of your services doesn’t have to be uncomfortable for you or your clients. Setting the right tone and context for the conversation can remove the dread from this dreaded subject. Here are some tips:

Don’t hide your prices
Think about how much more comfortable it would be to talk about your rates and arrange services knowing clients already know what you charge. Putting your rates on your website puts both you and potential clients at ease by removing the proverbial elephant from the room. Your clients don’t want to have to call or email to ask what you charge. It’s just as uncomfortable for them to ask as it is for you to answer. So give dog owners the basic information they need to make their initial decision to reach out by making your rates easy to find right on the pages that describe your services.

Make the decision easy
Package your services to meet your clients’ needs. Pre-designed packages for various issues—leash reactive dogs, for example, or puppy training—allow potential clients to quickly see that you can help solve their problems or address their goals. And answering the fundamental questions we all have when seeking a service provider—what will it cost and how long will it take?—helps potential clients self-screen. This means far less time and discomfort fielding emails and phone calls that don’t lead to work.

Make the decision safe
Choosing a service provider, whether an accountant, a plumber, or a dog trainer, can be nerve-wracking. How do you know you’re making a good choice? It’s no wonder sites like Yelp and Angie’s List have been so successful. You can reassure potential clients they’re making a good choice with you by providing plenty of authentic content on your website. Authentic content is material that backs up what your site says about you and what you can do for people and their dogs.

Testimonials are a great way to do this. Sprinkle short excerpts throughout your site, rather than relegating them to a testimonials page. Though if you have a lot, dedicate a page as well. You can also link to social media testimonials such as on Facebook, or third-party site reviews a la Yelp.

Blog or article posts are another effective way to provide authenticity and assure clients you are who you say you are. Video blogs are terrific for this as well. Both show off your expertise, professionalism, and training approach. Both also have the added advantage of boosting the performance of your website in searches.

Don’t avoid the subject
When it comes time to talk turkey, don’t hesitate. If you’re using the above tips, most likely the potential client already knows what your services will cost, but don’t assume. Your best strategy is to answer the dreaded question before it’s asked. Remember, most people would really rather not have to ask. And you’re going to have to give a number one way or another—it’ll be more comfortable to share the figure on your own terms, rather than in response to being asked.

The trick is to state the price up front and then keep talking. Tell them how your service works, what kind of benefit you’ll look to bring them. For example, after gathering some basic information, you might say:

“I’m so glad you called. I’m sorry you’ve been dealing with Fido’s lunging and barking at other dogs during your walks. I know how frustrating and embarrassing that can be. The good news is that it is something that can be effectively addressed through positive training, and I think we can make your walks much more enjoyable. The first step is an initial consult, which is $XXX. At the initial consult we’ll take a look at what’s behind Fido’s behavior—there are actually different root causes and we need to know which we’re dealing with, as we address them differently. Then we’ll put a training plan together and schedule the time we’ll need to carry it out to create some peace for you on the other end of the leash. If that sounds good, I have some space in my schedule next week and would be delighted to work with you and Fido. Are you feeling ready to schedule and get started?”

You can use this same approach at the end of your initial consult to sell your package. Or, if you sell packages up front without the initial consult, simply replace the initial consult language with the price and explanation of the package and how it will work.

This approach is effective because of the tone. It’s not about selling, it’s about explaining. The client hears the number up front, releasing that tension for both sides. Then, rather than dwelling on the cost, you move on to provide the context—what will happen as a result of that cost. Continuing to talk after you’ve dropped the number also gives the listener time to absorb the cost information without being put immediately on the spot for a response. By the time you’ve finished explaining how you’ll help, your potential clients will be more ready to become actual clients.

There’s unfortunately no way to get around talking with potential clients about money. But using these approaches and shifting your mindset from selling to explaining can make it a more comfortable subject for both you and your clients—and lead to better sales. That’s a great thing not just for your business, but for the dogs and dog lovers in your community, too.