When you run a children’s activity business, there are a lot of elements that need to be taken into account in order to continue growing. Successful businesses need to find new customers, make connections with local schools and partners, and maintain relationships with families to get repeat business.
Along the way, businesses need to plan their budget, think about their spending and costs, and then determine how best to increase their revenue. Sometimes, this means adjusting their offerings and even raising prices. As a business owner, you might dread raising prices because you feel like it can hurt your relationships with your current customers. However, if you know the right way, raising prices does not need to be a bad thing.
At Sawyer, our goal is to help children’s activity business owners with everything they need to be successful so they can spend more time working with children and doing what they love. In this article, we will outline when you should consider when it comes to raising prices, how to find data so you can be confident in your pricing strategy, and best practices for price change announcements.
- When should you raise prices?
- ~Where can you find price data?
- How should you announce a price increase?
When should you raise prices?
Raising prices can be stressful, but it is often the right decision for your business’ growth. Here are some reasons why you should consider raising prices for your classes, activities, and camps.
When your costs increase
In order to continue making the same amount of income, you will need to raise prices when you see an increase in the cost of supplies, materials, studio rent, labor, and other expenses. Of course, you can shop around and find new sources for buying supplies if your usual source raises prices, but for the most part, increasing your own prices is a good way to combat that loss of income.
When your competitors raise prices
If your peers increase their prices, it might mean that they are paying their staff more competitively or they are using higher quality products and materials in their classes. Keeping in line with your competitors is a good way to keep the playing field level and let your classes speak for themselves. Plus, it shows parents that your activities are comparable: If your classes are much cheaper than a competitor, parents will wonder why.
Where can you find price data?
If you are not sure what your competitors charge, feel free to ask the families who attend your classes about the other activities that their children attend and then look up the prices. Likewise, you can do research yourself by looking up businesses in your vertical on Sawyer to see their prices. You can also join networking groups and attend events to speak with similar organizations to learn about their cost structure and if they are considering increasing prices.
When you have a waitlist
A waitlist means that you have a greater demand (people who want to register) than the supply (open spots) for your classes. This is a good thing! When you have more demand than supply you can increase prices and get more revenue. Even if you lose some business from the price change, you have the wiggle room because of the waitlist.
When you add value
You can increase the prices of your classes when the value you provide to customers increases. For example, if you add an instructor who has an advanced degree, offer new classes that are more time consuming to prepare or teach, or add new locations and services, then increasing the price makes sense. Parents will understand since you are offering more value.
To add flexibility
If you want to offer free trials (which you should because they will ultimately increase revenue!) or if you’d like to provide scholarships to families who need them, you can increase your full price enough to afford this flexibility. Ironically, the more you charge, the more affordable you can make your classes because you can offer options.
How should you announce a price increase?
Now that you have a sense of when to raise prices and how to keep your classes competitive with your peers, you should start thinking about what raising prices means for your current families. If you are deliberate when raising prices, you should be able to do it with minimal backlash. Here are some options you can consider when raising prices.
Don’t make an announcement
That’s right - you don’t have to announce a price increase! Parents will see it on their own and can choose to ask you about it or not. The ideal increase is enough to make a difference in your bottom line, but not so much that current customers can’t continue taking your classes. If it falls in this range, families might not even notice that you have increased your prices.
Announce that a price increase is coming
You can boost your sales by announcing a price increase will be happening in the next few weeks. This encourages parents on the fence or waiting for some reason to book as soon as they can to avoid the higher price.
Segment your audience
If you do choose to announce your price increase, make sure you only announce it to current customers. New families don’t know what you used to charge, so there is no need to tell them about the increase. Not sure how to send segmented emails? Sawyer has integrations with both Mailchimp and Constant Contact so that you can pull customer reports filtered by first class date to create audience segments!
Be honest and don’t apologize
If you wish to announce your price increase, then take the time to honestly explain to families why you are making this decision. Let them know that supplies have increased in price due to supply chain problems, you are paying your staff more in order to stay competitive and support them, the rent in your studio has gone up, or you have added new labor-intensive elements to your programming. People want to be spoken to truthfully and they will support you when you give them the chance.
Optional: Be flexible
Depending on your location and type of services, you might hesitate to raise prices because you are worried families won’t be able to afford your classes, then. If this is the case, you might want to offer flexibility. Can you offer a sliding scale for families who are less well off? Perhaps you can set up some scholarships or ask for donations to cover students who need it.
We hope that this guide has given you the inspiration and tools that you need to consider raising prices for your classes. If you are looking for guidance on managing and running your children’s education and activity business, the team at Sawyer is here to help.
With our suite of tools, like custom forms to record allergies and t-shirt sizes, flexible payment options like gift cards and installment plans, and seamless scheduling and registration on any device, Sawyer saves business owners 28 hours per month. If you are ready to spend less time on admin and more time doing more of what you love, see how Sawyer can help with a free trial or demo.