I have heard the same questions over and over and over again. In fact, I
calculated that I've
spent at least six years out of the last 30 years answering the same question or
others answer the same question and reinventing the same wheel.
A frightful discovery. Let me give you an example.
Should I raise my prices?
Of course not. How foolish would
Sorry for the sarcasm, but let’s
continue with the example. After all,
your costs have increased by over
five percent in the last year. You are
expecting a rent increase of three
percent and the minimum wage is
On the other hand, piece counts have fallen and your competition charges less
than you do
and they've started sending out discount coupons.
How often have you struggled with this question? Every year? Every six months?
You ask your industry friends for advice. You ask your wife, husband or partner
Your bookkeeper might even give you advice.
At the end of the day, it's still your decision. You struggle. You cross your
fingers and then
you finally raise prices just like you have every other time by 10 cents.
Let's look at what all of this time and energy got you.
First, you might have gotten some good ideas from your industry associates, your
and your employees but have discounted them as, perhaps, not being relevant to
situation. After a while, they may stop sharing their insights.
Second, and just as important, you made a decision based on history, with no
A 10-cent increase on $3, which was the price for a pair of pants more than 10
was, at that time, a three percent increase. Keeping the dollars constant while
the price of pants
increases results in a 1.5 percent increase on a $6 pair of pants — not nearly enough to cover
your cost increases.
Third, as this decision comes less frequently than once a year, the annual
increase is probably
less than one percent. You are clearly falling behind inflation and lower
Finally, and most sadly, you've spent all of this time and energy and the time
and energy of
your friends and colleagues to only continue to reinvent the same wheel you've
used over and
over again and with which you continue to fall behind as a competitive business.
Can you understand why I'm not happy with this scenario?
Getting out of your routine
Successful business owners have moved out of this historical routine in a
variety of ways.
Some owners evaluate the business, the competition, and the environment once a
year or twice
a year and increase prices by a fixed percentage for some of the key garments,
for all of the
garments, or for all of the garments and the add-on charges in their price list.
still requires time and attention and the personal fear that such an increase
will bring with it a
drop in piece count.
Another option is to deal with this question once and for all with a more
Every month, the entire price list is increased by .25 percent; that’s .0025. Over 12 months
each increase is cumulative over the previous one and actually results in an
slightly greater than 3 percent.
What have you achieved in this process? You have freed up oodles of time. You
don't have to
fret over the same decision time and time again.
What have you risked? The threat still exists that your pricing is incorrect for
your brand, your quality, and your individual service items, but that is really
part of a much
larger question to be answered when the entire company strategy is being
considered. It is not
a stand alone item.
Should I lower my prices?
A similar question to the one above, but not the exact opposite as you might
think. If you
lower prices by 10 percent, what will that accomplish? We know all of the bad
news. Profits will
immediately fall by 10 percent if nothing else changes, but the hope is that
piece counts might
In tough times, this question is frequently considered in the hopes that piece
counts will grow.
We have tracked several recessions with cleaners that make different decisions.
decides to lower his prices. The other one, who operates a similar business in a
environment, raises his prices.
In every case we've examined, the piece count drop is identical. Who do you
think is ahead at
the end of the day? This is not a wheel which needs to be reinvented.
In better times, the same result occurs. Your price-conscious customers who have
expensive choices in the marketplace have already moved on. The rest are happy
with you, your
service, and your quality. There is not a single case that I am aware of where
frequently, in small increments, has not been successful. This wheel has been
How best to use your time
Consider what is the best and highest value return for your time. Your strategic
management of your human resources, and technical training all have a higher
return to you
and your customers than reinventing the same wheel over and over again.
Are there other areas that we can stop reinventing and move forward with a
better use of our
time and effort? Stay tuned.