Raising Rates

Here's a look at some of the practical and legal issues for raising rates.

With her boarders gathered for coffee, donuts, and a brief barn meeting, Katie Wentz announced, “I’m going to have to talk to you about stuff that I know you don’t want to hear about, and I’m sorry about that.”

This is how the Katie Acres Riding School and Stable owner broke the news that boarding, lesson, and hauling rates were going up. The last increase came in 2003, and the price of nearly everything had gone up since, including hay, bedding, and feed, mostly as the result of soaring fuel prices.

“I tend to be as candid and honest with my clients as I can. We have a good community spirit in our barn and good communication,” says Wentz, of Hudson, Fla. “They tend to understand that their cost of living has gone up, so the cost of horses will go up, too.”

Raising rates is not a task that anyone looks forward to, be it the professional raising the rates or the client paying the difference. Equine professionals can lessen their burden by having a plan that includes good communication and reasonable expectations.

Know When It’s Time

Have a reason for raising your rates, whether it’s a regularly scheduled annual increase or much-needed compensation for higher overhead. Justifying an increase in lesson rates is more difficult than an increase in board or hauling, as there isn’t a tangible cost associated with giving lessons aside from upkeep of school horses. Cheryl Manahan of Wichita Riding Academy in Derby, Kan., justifies her lesson increases with an increase in her own qualifications.

“I need to justify it with getting my certification, earning a judge’s card, attending clinics and seminars that further my education. I do not mean I attend one seminar then raise my rates, but rather as my knowledge and experience expands, the market will bear a raise,” says Manahan.

Also consider whether your clientele can bear the increase. You can’t please everyone all the time, but if clients are already unhappy with your work, they probably won’t stay with you through a rate increase.

If you lose a few clients how will your business be affected? Wentz notes that when she increased her rates, she had a waiting list for boarders. She did not lose any clients with her increase, but if she had, she could have replaced them without much effort. Besides, if you do lose a client or two, you have more than made up for the loss with the increase in rates to tide you over until you fill the empty spots, at the higher rates.

If many of your clients are both boarders and students, will an increase in the prices of both lessons and board be unfair? Manahan tends to raise board or training one year and lessons or hauling the next. Staggering increases still allows you to plan for future costs while not overburdening your clients.

Be Up-Front

Be sure your clients understand your procedure for raising rates when they sign on with you. Whether you institute an annual increase or raise rates more sporadically based on outside influences, open communication is the best method for getting your business through the situation intact. “If you are up-front with your clients and say, ‘I cannot keep doing business like I’m doing. I need to raise prices 10 percent,’ if they’re happy with your service, they won’t leave,” says John Keeton, coordinator for Purdue University Cooperative Extension’s Ways to Grow and Beyond program for agricultural entrepreneurs.

At Canter Brooke Equestrian Center in Ames, Iowa, boarders sign a contract that assures them 60 days’ written notice for rate changes. In exchange, the contract commits them to giving the managers 30 days’ written notice before they leave the barn. This plan gives both parties time to make arrangements if they no longer wish to continue their relationship.

Since opening in 2004, the stable has raised its rates twice due to rising overhead and has not lost any boarders because of it. The business partners looked at the rates from surrounding facilities and also from the larger Des Moines market a half-hour away. They are on the high side of facilities in their area, but still well within the range of those closer to the city.

“People feel like they’re getting what they’ve paid for. We had to raise the rates in order to keep offering the same level of service we promised,” says co-owner Dana McCullough.

How you break the news makes a difference, too. Wentz’s meeting went over well as an opportunity for everyone to socialize and learn about upcoming events and other barn happenings. Written notices can’t go wrong as long as they’re clearly written and distributed to everyone affected by the increase.

When Brad Bixler of Bixler Farrier Service in Frankfort, Ind., raised his rates at the beginning of this year, he mixed bad news with good. Bixler hosts an annual cookout for his clients in the fall. When he sent flyers announcing the cookout, he included a letter announcing the rate change and a new rate card. Clients were happy to learn about the party and less concerned about their rate increase.

Offer Options

Offering a choice of plans will assist clients who might have a difficult time adjusting to higher prices. Wentz developed a new half-hour lesson option when she increased her lesson rates. Her new half-hour lesson is the same cost as her old group lesson rate, while the group lesson rate went up $5.

Some operations grandfather in the changes and give long-term clients the lower rate for an extended period of time. This can become confusing when it comes time to collect the checks and can lead to resentment among other clients. Most professionals find an all-or-nothing approach works best.

Sometimes the pricing options you develop have less to do with appeasing your clients than they do with benefiting yourself—but your clients don’t have to know that. For example, the shorter lesson period Wentz offers is a more efficient use of her time and allows her to tack up one horse to use for two or three half-hour lessons rather than needing a new horse for every lesson.

Manahan experienced this a few years ago when she found she was getting burned out and discontinued her group-lesson discount. Some of the less committed riders left her program, but by teaching more private and semi-private lessons, she has been able to provide a better quality lesson and spend more time with her students.

Just Do It

As an equine professional, you might be reluctant to raise your rates because of the effect the increase will have on your clients’ budgets. Always remember that you are a professional, and you deserve to be paid.

“At the end of the day, we have to make sure the money is there to make ends meet. People forget that this is a business because they ride horses for the love of the sport. Sometimes you have to remind your clients that you love the sport, too, but this is your business,” says Wentz.






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