Below is my response to a post that was somewhat burried but i think it would generate some interesting feedback. Basically a lady was talking about how and why she raises her rates as well as her view toward past clients and her practice of raising her rates. Her post in a nutshell was that she would raise her rates when she feels or found out she was getting popular. She would raise them in $25 increments as to not "sticker shock" clients. She also indicated that past clients got to keep their original rate. Here was my response.
----------------------------------------------------------------
For a provider to not raise her rates across the board in my opinion is very bad business. I know this may sound crazy being that I'm a client but I'll tell you why I think its bad. First off you have to determine what makes a past/steady client? Two meetings, three, four? And does when he saw you also factor in to grandfathering him? For example, he maybe saw you only once every 9 months. What qualifies a client to be grandfathered to a rate?

Loyalty is cool but be damned. This is business. When they raise the price of milk, everyone pays the new price. I can't go back to the market and say, "you know I've been drinking milk since I was a kid. I've been a regular client and you should show me loyalty by only charging me my orginal rate. Only charge those new babies your new rate". When rate increases happen in the real world, everyone pays. If you want to show some loyalty or favor to established clients then offer them other incentives, extra time, higher level of service etc.

If you keep raising your rates in $25 increaments, how do you know who locked in at what rate? It would be confusing to the guys and almost imposible for you to manage. You would basiscally have to count on the honesty of your clients. Good luck, especially when word gets around.

What about the new client who sees you weekly compared to the client who only saw you three times over the last year. That first guy is more of a reliable established client yet the other guy is getting the better rate???????

I never said this industry was typical of typical business ecomomic practices, yet I think some people don't understand the real business drivers behind running a business. I know I'm about to get slammed but that is my take on it because I've heard this before from lady's who have raised their rates. Hell, I've been offered and turned down the favor for the reason stated above. I'm not looking to take advantage of anyone and if a person feels the need to justify raising rates, how in the world can they confirm that justification if they selectively aply who pays what?

You indicate your popularity is what drove you to raise your rates. I wonder how popular you remainded when your rates rose faster than the inflation rate for the country? You may charge more but do you make more? If the volume of clients stayed the same then your decision was sound. I just have a problem when a person "feels" they are popular and because so, they deserve to charge more. Sort of like a porn star charging a obscene amount for the same amount of work just because she is "popular" and did some guy in a video and let him give her a facial.

Excellent point.
Guys who want to be grandfathered are downselling and probably hate it when someone upsells them. Some may even be cheapskates.
If you're saving money for a good cause or your kid's tuition, maybe it's time to keep it at home and stop hobbying altogether.

Hobbyists who decline to accept or even ask for grandfathering get better service. Been there a few rimes because I have fun discovering new hotties, who quickly run up the scale to $400 after starting at $225.

I bought Coca Cola for 5 cents as a 4 year old, and
Mountain Dew when it first came on the market for 25 cents.
I don't think the wholesale price is down there anymore, much less the typical $1 retail now. If I asked the Korean grocery for a 5 cent Coke, they'd laugh their little asses off.
BTW what is the wholesale price of a bbjteku?

I am not a provider but from a pure business stand point, loyalty is very important. What is the common saying, 80% of your business come from 20% of your customers. Well that is business in general and may not apply in all cases but corporations will spend hundreds of thousands of dollars to millions, just to keep their customers and reward them for loyalty.

Do you know how hard it is to get a person to switch from Coke to Pepsi or from 7 UP to Sprite?

I have friends that are in the biz and they really do reward their loyal regulars. I am not talking about the guy that callsc once every 6 months. These are guys that are weekly or bi monthly that they can count on.  

For me in my business, I reward loyalty and also attitude.
Many people are jerks and push and demand things where the other nice customer won't ask. Well, I reward a good attitude more than a shitty one. For those that push and push, I stand my ground but the really nice polite and ones that you really enjoy doing business with, I will offer more discounts or throw in certain things. You don't reward bad behavior.  

In a nutshell, we can reduce this to a behavior modification scenario or a Skinner box environment.
if anyone needs explanations on this, please ask.

Not all business works acording to the model that you mention.  In many cases landlords do not raise the rents on tenants already living in their apartments but raise the rates on new tenants.  This is more true of smaller landlords not the big chains like Oakwood.  Why do they do it.  They do not lose rent while the property is vacant.  They do not have to clean the apartment, put down new carpet and fix any little problems they find. With a regular, providers do not usually have to worry that they are LE or an abusive nut case.  The same thing happens to a lesser extent in the legal and accounting practices.  Rates may be raised but often the older client is not paying the same rate for a tax return that a new client would pay for the same work.  With attorney's I have seen small clients get much better service than normal from a large law firm simply because they were clients when the firm was small.  There is more than one economic model or business plan out there.

-- Modified on 4/15/2002 11:45:18 PM

x

I'll just say this with the lawyer analogy, NO lawyer I work with, collaborate with or argue against etc. offers discounts to clients. A lawyer with a heart is an oxymoron LOL. Seriously though, part of the reason is because the demand for legal services is so high, lawyers don't need to. If you are good in a particular field or better yet have a good reputation, clients will spend two, three, four times as much for the same legal services. F. Lee Bailey will charge 100 times more than Associate Lawyer John Doe. Depending on the case, it is not neccessarily a lock that the experienced and probably jaded F. Lee will out argue the hungry and eager John Doe.

In most cases if rent is raised in a property it is general across the board for all tenants once their lease expires especially if its an area with low availability of housing and an over abundence of prospective tenants. Now in some places like Dallas where there is more availability than tenants, then you will see some obscene marketing tactic to get people to move in.

In the Escort business, the demand of clients in most cities far exceeds the supply of providers. Many lady's will tell you that even when times are slow, they are still good enough to pay the bills. I figure a lady will continue to raise her rates as long as she feels she is making enough income to support her lifestyle. She may see less (in volume), cutomers but the overall income may be more. For them that is the goal; work less make more. When they start to work less and make less due to a drop in clients is when they may have over priced their service.

The bottom line is that I don't think many of these lady's care if a client can't or wont see them at a new or higher rate provided that someone else will to ensure their income flow. In most cases, there will be someone to pay. Its not called the world's oldest profession for nothing. For those lady's that do the grandfather thing, may in the long run defeat the purpose of raising their rate in the first place.