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When to put up your prices?


GEORGE
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Just in the process of updating our website & wondered whether its time to increase our prices

We have been running our B&B for 2 years with no increases but  when is the right time to ask for a little more?

We have had a good summer & been told  that we offer excellent  value for money

How do you decide when its time to  increase your prices?

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[quote user="GEORGE"]

Just in the process of updating our website & wondered whether its time to increase our prices

We have been running our B&B for 2 years with no increases but  when is the right time to ask for a little more?

We have had a good summer & been told  that we offer excellent  value for money

How do you decide when its time to  increase your prices?

[/quote]

I assume guests on departure have decided they have had value for money.That is excellent and that is the "name of the game".Those same guests did not know that when they booked.!

Part of the reason they booked was they were happy with the price quoted

Should you increase your prices for next year, you may not get the same level of occupancy 

Your existing pricing structure has worked well this year, and I would not want to increase at this stage.

Perhaps you could revisit your pricing structure if you feel ,early next year , that 2008 bookings are looking healthy. 

 

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Leo,thats all very well but after 2 years I suspect that all sorts of costs related to running the business will have gone up and the owner can't be expected to absorb these for ever.

Perhaps the New year is the best time to start new rates, if not then how about Spring next year?

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[quote user="Russethouse"]

Leo,thats all very well but after 2 years I suspect that all sorts of costs related to running the business will have gone up and the owner can't be expected to absorb these for ever.

Perhaps the New year is the best time to start new rates, if not then how about Spring next year?

[/quote]

My suggestion is for price increase ,or not , to be market led.

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When to put prices up? Little and often in line with your rising costs (but also taking into account your competition, capacity and demand).  The rules of running a small business are the same for B&Bs as for any other business.  Keep up the good work,  Ian

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At only 45€ for your best room, per night, you are quite cheap for your area. The going rate seems to be 50€ to 60€ in the summer.  Why not consider two rates and keep the off season prices the same as they are now but introduce a new high season price (July and August) of 50€ for your twin room and 60€ for your annex room which sounds really nice and worth every centime.  You may well find that charging more attracts more people as they will think they are going somewhere of a high standard. It will also make the people booking off season think they're getting a bargain !  Might I also suggest that you include the proce in Euros on your default English language page which will make it simpler for people (especially non-Uk English speakers) to make comparisons more easily.

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[quote user="LEO"][quote user="Russethouse"]

Leo,thats all very well but after 2 years I suspect that all sorts of costs related to running the business will have gone up and the owner can't be expected to absorb these for ever.

Perhaps the New year is the best time to start new rates, if not then how about Spring next year?

[/quote]

My suggestion is for price increase ,or not , to be market led.

[/quote]

 

Having had a good look at your website , I would like to revise what I said above .

Your existing prices are not high enough for you to make a real profit ! Gross turnover can be high and net  profit could be low

You must raise your prices by at least 20 per cent as from now!

You are not only in the business to hear guests repeatedly saying " good value for money"

You are in business to get paid for your efforts , and remember there are two of you .

Tell your bank manager that your business  offers "good value for money" and he will say ....." so "

In my opinion the "marketplace" will stand your new prices.

 

kid regards,

Leo

 

 

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[quote user="Ian"]When to put prices up? Little and often in line with your rising costs (but also taking into account your competition, capacity and demand).  The rules of running a small business are the same for B&Bs as for any other business.  Keep up the good work,  Ian
[/quote]

Cost prices/increases are irrelevant when setting selling prices - unless the 2 are too close together. Charge as much as the market will bear and increase little and often rather than a big hike after 5 years (e.g. tv licence fee in UK but that's a monopoly so different rules apply). 

Once upon a time I was an accountant but couldn't stand the excitement 

not

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Charging "what the market will bear" is of course the accountants/economists answer - others include:. "make as much as you can" or "maximise your profit".

The trouble comes in trying to find out what the market will bear.  If through your hard work, your B&B now features regularly in a column in the Sunday Times - always with glowing reviews, or Posh & Becks have stayed there recently - the market will bear a whole bunch more no doubt....

If your capacity and demand are pretty much in equilibrium (sounding like an economist myself there) - and there are no additional planned marketing campaigns or new competitors (etc) - a price rise in line with what the whole economy can bear is going to be about right. (this is indicated by how much prices, pay, costs etc are steadily trickling up month on month)

 Your own personality will also play a part - it is your business and lifestyle choice, not your accountants - do you like to be booked up nice and early each year or do you have nerves of steel that can wait until all the local places are booked and any tourist wanting a bed for the night has to come to you (and pay a desperate-man's premium)?  Do you glow with pride when people smile and say "that is such good value" or do you shudder with frustration that you could have charged 'em some more?  Do you relish many repeat bookings - or would you prefer to see who would be prepared and able to pay more?  Do you like the punters you get now - or would you prefer a more upmarket or less snobby clientele?

It's quite a personal choice (as well as a business choice) and the fact that you took the trouble to post here on the subject indicates to me that you care about your customers and your business appropriately - all the best,  Ian

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If you're overbooked and turning guests away then I would say you're underpriced.  The danger is if you overstep the price threshold for what you have to offer/the area, but I guess you should have a fair idea after 2 years of what other places charge and how well they're doing.

January is the normal time for price changes, but it's up to you.

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[quote user="Ian"] ....... - others include:. "make as much as you can" or "maximise your profit".
[/quote]

And the only good reasons for being in business. Making people happy is not why you do what you do, it may be a by-product but that is all. You want their money not their love.

What does the local competition charge ? Do your rooms merit a premium or a discount by comparison with them ? Does it matter to you if you doubled your prices but lost 49% of your bookings ? I wouldn't be bothered by this but others might.

No-one else can make the decisions for you - good luck.

John

not

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[quote user="Iceni"]

And the only good reasons for being in business. Making people happy is not why you do what you do, it may be a by-product but that is all. You want their money not their love.

[/quote]

There are many reasons for being in business - just thinking of my own business interests - connection with others, learning, adventure, fun, discovery, making a difference, control of your own  destiny, flexibility, pride in a job well done and yes: customers being thrilled and delighted. 

I profoundly disagree with the idea that making customers happy is a by product.  For me delivering great results for my customers comes first - and if I do that or any of my team do that - then sales and profit come along as a natural result. 

But then I am only in my thirties and so have been heavily influenced by business and management teaching over the last 20 years - I am aware that this is seen as "terribly modern" by some (though "modern management" guru Peter Drucker died in 2005 aged at least 90 - so I don't think my views should be seen as too way out or wackily trendy)

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