Why Is The Market Wrong?
Why the Market is Wrong
Groomers tend to look to each other to determine how much they should charge for their services, but all too often, this strategy fails because no one is charging enough. Most groomers’ prices don’t account for factors like skill levels and inflation.
Hi, I’m River Lee of the Savvy Groomer. I’m going to show you why the market is wrong and how we can raise our prices to change that.
What is inflation?
For our purposes, I’m going to simplify some economic concepts a ton. Simply defined, inflation is a general increase in prices and a decrease in the purchase value of money.
When something is rare, it has more value and prices go up. When something is common, it is worth less and prices go down.
Every year, the U.S. government adds more money to the economy. This means there is more money in the supply, which causes the value of money to go down, which means you need more money to buy something year after year.
How does inflation affect grooming?
Let’s look at this real-life example. A great groomer working in a shop charged $20 for a Shih Tzu in 1980. That same groomer charges $60 for a Shih Tzu in 2021. At first, this seems like a lot more money!
But because of inflation, that $20 in 1980 is actually worth almost $65 in 2021.
Inflation happens every year, at an average of 3% per year. It affects the price of everything, including grooming prices and grooming products, as well things like gas, building materials, food… literally everything!
This means that the groomer who was charging $20 in 1980 would need to increase her prices to $65 to ONLY keep up with inflation. This groomer has since become a certified master groomer and gained 40 years of industry experience. That means she should be charging much higher prices to properly reflect her value. And why wouldn’t she?
Why is the market so bad?
A lot of groomers base their prices on what they charge at chain stores like PetSmart and Petco. But what most people don’t realize is that all these stores are actually selling grooming services at a loss!
These businesses are losing a lot of money on grooming and instead, they make their money on other services and products. People are more likely to buy pet food, toys, and other stuff from the store that they already take their pet to get groomed at, so it builds customer loyalty.
So why are we using businesses that take losses as our reference for the market?
I think it is because they train a tremendous number of groomers. Many groomers started there, so we think their prices are the market price.
Small salons have the chance to take a stand and charge the prices they want. But unfortunately most people are too afraid. We have to be brave and increase our prices.
How can groomers increase prices?
I have worked with many clients whose prices were not even keeping up with inflation. They come to me because they want to increase prices, but are scared.
I’ve encouraged many of my clients to increase their prices significantly, and their businesses have done amazing. Many have been able to work less than they used to, but make more money, work with only clients they like, take more time off — and still keep their clients happy.
You can do it too! You just need to know how to market yourself and do it right.
Use small yearly price increases
Inflation happens every year, so you need to increase your prices every year to keep up.
This might seem scary at first, but think about it! It is much nicer to your clients to have a small yearly price increase instead of a much larger one every several years.
If inflation is about 3% each year and you charge $100 for a groom, then you should plan to raise your prices at least $3 every year. I recommend increasing at least $5 per year to cover your bases and keep your prices at nice round numbers.
If this seems like a lot, consider that if you only raise prices every 3–5 years then you’ll not be keeping up with inflation for those few years. Your business expenses will increase because the price of supplies and everything goes up every year. And then when the time comes, you’ll need to raise your prices by $15–25 instead! Large price increases like this tend to be very difficult.
If you are worried about customers leaving, consider this: A customer who will leave you over $5 will definitely leave you over $20 or $30, so you’re likely to have a mass exodus anyways. And if they leave you over just $5, either you didn’t market the change well and you’re doing something wrong, or they are simply not your soulmate client. Your soulmate client won’t leave over $5.
You need your grooming customers to invest in you because you want to grow your business; so if they aren’t willing to invest, then they aren’t worth your time. Maybe you want to take classes to improve your skills, upgrade your products and equipment, or get training for your other groomers. You need to make enough money to not just live, but to thrive.
So the industry is wrong, but we create this terrible market for ourselves by being too afraid to stand up. When we encourage these bad prices, we give the bad clients control over our business.
In economics, everything is about supply and demand. Right now there is high demand, but actually a groomer shortage. Therefore, there is no reason not to raise prices.
It’s all about doing what’s best for you and your business.
You decide your pricing! Don’t worry about the market.
If you want to learn more about the market and why you should increase your prices, watch my YouTube video on this topic and please subscribe to my channel! You can also check out my live workshops every Monday at 7 pm ET or sign up for my business coaching classes.
I also encourage everyone to sign up for my 6-week Price Increase Masterclass. This Masterclass contains 12 weeks’ worth of business coaching packed into an awesome 6-week group class where you will learn all about the market and how to increase your prices the right way.