Actually no I wouldn't run my business like that.
Simple math. If you have 100 people paying you $200 an hr and getting great reviews why not keep them happy? Why risk losing what you had to be greedy?
Originally Posted by paintedbynumbers
Simple, because you have a lot of options in a business like this:
1) If you want to keep your 'loyal customers' and not 'risk losing' them, you can grandfather those in who want to - but see how many new people will pay the new rate.
2) If I'm consistently getting booked, then a service business is literally driven by utilization rates. If she's fully utilized (and doesn't want to see 12 dudes a day), then seeing same #/day at higher rates is pure profit.
3) Simple math: As you said, 2 dudes a day at 200-> 1,000/week. If she raised to 300; she only needs 3-4 people/
WEEK to make the same money, versus 10/week. Can she find 3/4 dudes a week who would pay more?? In this market?
Hey - I'm not arguing that I wish she wouldn't raise rates. Hell, I wish she was 80/120/180 for QV/HHR/HR. However, I can't sit here with a straight face and claim that it's a stupid decision, unless I know for a fact that she isn't busy in this market.
And given teh state of the market, and since she is apparently hot/sexy, etc., .... I think she seems to have more of the supply of what's in demand.
Time will tell. But I would say this - you maybe wouldn't run your business that way - but I sure as hell would. Especially because - if the price raise doesn't work, I lower it and immediately my 'loyal customers' will flood right back to me. This isn't the kind of business where if you raise prices, customers will hold a grudge and never come back.
That happens when you get fat/strung out/old/underperform/etc., In this case - there's literally no downside to her seeing what is the 'real' market rate for someone with her package.
Yes, I've owned business(es) before.