The Great Rate Debate---- Aka, my study on pricing in the DFW market

Ok-- being the ever omnipotent nerd that I am, sometimes I tend to approach things with more logic than emotion. Which, in a way, is good-- because I'm generally not encumbered by attaching a rate to my "worth". So, bear that in mind while reading this.

Mind you, I know that there are other variables in this. I am not a spinner and I am not under 23, which skews things a little, but not a great deal as there are many popular, curvy women in Dallas who are over the age of 35.

Ok-- the beginning:

In September, I raised my rates. No fanfare, no announcements-- I simply changed my ads. I had decided that I was going to test some of the theories regarding rates and raising them was the first step to a successful experiment. For two weeks, I did not offer any specials-- just the new rates.

Then, for 2 weeks, I offered a small special-- $25/off my "new rate".

Then, for another 2 weeks, I offered a larger special-- $60 off my "new rate", which essentially was the rate I had when I started in DFW.

Then, for the grand finale week, I offered a crazy special--- $75 off my "new rate".

The only variables other than price were availability. I was available during my normal hours when posting at the highest and the lowest rate. I had extended availability during the middle two rates.

The results:

$200/75 minute rate--
Avg. 6 clients per week Avg. $1200/week in earnings. 7 1/2 hours of "client time"

$175/hr rate--
Avg. 6 clients per week. Avg. $1050/week in earnings. 6 hours of "client time"

$140/hr rate--
Avg. 10 clients per week. Avg. $1400/week in earnings. 10 hours of "client time"

$125/hr rate--
Avg. 4 clients per week. Avg. $500/week in earnings. 4 hours of "client time".


More than anything-- this project has shown me that there is indeed a floor. Below a certain point-- nobody cares how good the reviews are, they assume something is "not right". With the exception of the lowball weeks, my earnings are fairly close to steady regardless of rate. The significance to me is in that in my general range, discounts aren't as meaningful as once thought. Perhaps in the 300-400/hr range they are-- but not at this range.

Thoughts, opinions? Perhaps not the MOST scientific study out there, but it does seem to lean towards the point that lowering rates does not improve business enough to generate a significant increase in income.

I am so glad you did this! Although I was somewhat spoiled by Veronica Moore's pie charts the other day

Lowering rates does not increase business enough to make any sizable difference in income, amen! I hope more providers will conduct similar experiments so they can see that for themselves.

Great job, woman!

One variable you didn't take into account is the time of the month. Cash flow ebbs and flows.

It would also be interesting to note how many were repeat vs new clients.

Regards,

I think the problem with the lowball rate is exactly what you said.

If it looks too good to be true...

Now if you saw someone at your normal rate and they were interested in seeing you regularly, you could discuss the lower rate in return of guaranteed business.

maybe that's a just a pipe dream of mine...haha.

Actually Bob-- my regulars enjoy lower rates than first timers. And I also offer even lower rates for those who want a "regular" schedule. And in the TGTBT vein-- I had several newcomers during the $140 week ask me if this included things that are in my reviews. I told them of course--- so yes, I can see why the TGTBT might change things for people.

As far as the ebb and flow goes-- thats why I had the highest rate during what tends to be the best time of the month financially. I also had my "old" rate during that same timeframe in the following month.

In terms of returning clients, during the $200 weeks, I had 3 returners-- but they were offered a lower rate in the ad. During the $175 weeks I had 0. During the $140 weeks I had 2, but BOTH of them had long been grandfathered in at that rate regardless. During the $125 week, 0.

There just is not right answer. I hate to make assumptions, but I have to believe many clients are in my situation. When I started this three years ago I could easily make 2 or 3 sessions per month (all in the $150-$200) range. One recession and 45% drop in income later I can see one lady who gives me a deep, deep discount maybe once per month.

In other words, the relationship is not linear, if my income three years ago had been 2 or 3X what it actually was then the subsequent drop might have resulted in halving rather than virtually eliminating my hobby visits. But, as it is, the drop left discretionary spending not only very difficult, but disguising it from the SO completely impossible.

It isn't so much that prices are too high, just that the number of clients who can afford to be clients is smaller, the number of visits per client is less, and the number of providers is greater if anything.

Good luck out there.

Regards,

That's not a bad part time job. I wish I could get in on that.

I worship the bargain!! I will admit that it sets up a red flag ... maybe a yellow flag. I'll spend more time checking reviews, maybe seek some "intel" from my brothers (possibly sisters). But it is still just one factor and doesn't offset the other factors. I won't see someone just because of the low rate if the other criteria are not (well) met. Just don't want to discourage ladies who might be inclined to dabble with a sale.

I did visit with you, not that long ago. Rate was part of it ... but the clincher was the theory of everything. You and the Dannie ... have scary intellects. I like that about you, both.

Ironically enough Dodger-- you saw me during the beginning 2 weeks-- so I would not have ever guessed you to be a bargain hunter

Yes, I'm a nerd. I embrace that about myself. I'm not a supermodel-- but damn it I will kick ass at Trivial Pursuit!!


Iaint-- I know where you are coming from. In my last home, I charged 300/hr plus without batting an eye. Took some time off, recession hit, moved down here---thats why I lowballed when I first started here. The DFW market is an odd one-- and harder than some to price accordingly. My study was primarily to illustrate the fact that you can lower rates, but unless you are a 24/7 kind of girl that doesn't mind a revolving door--- it may not help you much.

Depending on many other factors there is also a "snob" factor in pricing of subjective services like this one. I was once told a story about a rather mediocre photographer who launched a minor add campaign and raised his prices which resulted in increased volume!

But in a business with new competitors entering almost hourly, I don't see this sort of approach as being sustainable. To my mind, like IronMike said, this should be a part time job for extra cash if at all possible, one avenue would be to build a loyal following of regulars even if it takes a steeply sliding scale to keep them coming back.

But I'm no business major. Nerd maybe, but not in that sense.

Its not sustainable IMHO. I have a nice following of loyal regulars. Some I see weekly, some monthly--- some only come around every few months. But they all get discounts compared to others. In my opinion, its good business sense to reward my regulars for their loyal patronage. Don't get me wrong, there are several beautiful laides who have made a successful career out of this-- kudos to them.

I challenge u to a game of trivial pursuit...and will have to work out the specifics.

I'll see DL at any rate...

For me it what timing more than anything, but mixed in was service, availabilty, and rate.


However, my guess is that if you get great reviews and are well established, and you did some specials, new business would not be affected with the "snob factor".

december, you sound like me - in that i've kept records of my visits, going back 10 yrs!!

i do it for a couple of reasons - 1) to plan for and monitor my expenditures and 2) to remember who to add to my gvha list and who to add to my never-mind list after i visit them.


i did, however, think that your rate study might be on the upper and lower bounds of rates in the dfw market and how many charge various rates. guess someone else will need to conduct that research.

Yes, that particular study is outside of my realm. To be perfectly blunt-- I don't necessarily trust others to be honest about how many clients they see at their rate. I also don't see the point in comparing the 800/hr girls to the 125/hr girls. Totally different market segment.

But-- I will say that if I had to eyeball the "average", it would be right around the 175-225 range. To get a fair average, you'd need to eliminate anyone who has not been advertising here longer than 4 months--- that weeds out the "quick buck" group fairly effectively. I'd personally also eliminate the HDH ladies, as their piece of the pie chart tends to differ from the norm.

Nice study.

Im glad you posted your findings. Low rates does not mean anything. Low rates raise so many questions and red flags its not worth it. However it means more clients, thus the never closed door.

Thank you for posting........well I was kinda spoiled to Veronica's pie chart...giggling..