Douglas Emerson Profitable Horseman
Profitable Horseman Newsletter
 
May 9, 2008 
In This Issue
Do You Wait Too Long to Raise Prices?...
Others Have Said
Back At The Barn
Do You Wait Too Long to Raise Prices?
old red truck 
  • 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.

As mentioned in last week's newsletter, your escalated expense 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.

DB in New Jersey wrote:  "I have found if clients are given a 2 month notice they know what to expect. Also, a brief note about the increases in costs to maintain horses for their lesson.

I've only had trouble when one client who did not get the notice. Nobody likes a surprise. In addition - we commented, "as much as we disliked raising our rates, we dislike the question that suggests an alternative even more - can we afford to continue to do this? "

 

MP in Ohio wrote:  Boy you hit the nail on the head with your comments about increased costs vs. not increasing your fees.    

 

Having crossed this bridge before, I have come to understand that most single horse owners are clueless as to how expensive it is for the barn owner and they assume they are being gouged.  So I made up a simple spread sheet of what everything cost last year vs. this year to show them just how much it cost me to maintain their horse for them. 

 

I then explained I was in business not charity and that to stay in business and to continue providing the stellar care they all loved so much they would need to absorb the additional costs.

 

Once people realize how little is made on (if at all) a boarding operation the increase seemed more bearable to them.

     

 

JB wrote: Just a note to say thank you for the newsletter and for discussing this horrible state of inflation. 

 

Thank goodness I have a boarder that insisted I raise my rates last fall and she told the other boarders this is "what she has to do, or she will be out of business".

 

In addition to the comments above, 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.  The flip side is that 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.

 

 

Others Have Said 
"There's always something to be thankful for. If you can't pay your bills, you can be thankful you're not one of your creditors."--Unknown

"Beware of the little expenses; a small leak will sink a great ship."--Benjamin Franklin

 "It's not hard to meet expenses, they're everywhere."--Unknown

Back At The Barn

bridles

We had a large group watching the Kentucky Derby last weekend at our house.  Big Brown was amazing in his win coming out of the 20th position, the mint juleps were almost as good as sipping at the Derby and twelve year old son Phillip won the money in our little pool.

Like most viewers, the devastating news of Eight Belles' injuries and euthanization brought a tear to my eye. 

Unfortunately, tragedies involving horses, especially high profile horses, bring out  ignorant criticism from non horsemen which puts fire in my eyes.   For some reason, a tragedy can seldom be left as just that-a tragedy.   There are those who must point to trainers, jockeys, owners and the racing industry as accountable villains.

Please, do gooders, accept the fact that some events in the lives of horses and humans are simply beyond control.

 
 
Need A Speaker About The Horse Business? 
 
audience
 
 
Call or e-mail me about possibilities for your event.
 
 
Call me (716) 434-5371.
Hay, fuel, bedding costs are up, profits are down? I work with professional horsemen struggling with the business half of the horse business.
 
Contact me to discuss your situation and the possibilities.
 
Until next week,
 
Doug

Doug Emerson
Profitable Horseman Deewochagall
 
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