Each November and December, Red Renchin’s footcare clients always asked how much he was going to increase trimming and shoeing prices at the start of the new year. They knew the farrier from Mequon, Wis., would be bumping up his prices anywhere from 3%-6%.
It was a business practice that Renchin knew was essential to stay ahead of rising costs and inflation. And as far as I know, the now-deceased farrier never lost any clients due to these yearly increases.
This leads me to the question as to what you’re thinking in regard to increasing your pricing for 2019. With both fixed and variable costs having gone up over the past year and more pricing increases likely in the coming months, what are you going to do?
Price Increases Expected
Your clients are accustomed to paying more each year for the goods and services they purchase for their families and businesses. So they’re not going to be surprised by price increases, such as your need to keep your farrier business profitable in 2019.
Data from the recently-completed 2018 Farrier Business Practices survey shows an average charge of $142.09 for trimming and applying four keg shoes. (If you’re a paid magazine subscriber, you’re receiving a special 16-page report highlighting these American Farriers Journal survey results along with this issue).
Using Renchin’s typical price increase ranges as an example, this means the typical farrier seeking a 3% price increase needs to charge $146.35 in 2019. For a 6% boost, the price for trims and four keg shoes rises to $150.62.
As Renchin recognized, it’s much easier to boost your hoof-care prices year-by-year rather than being forced into a huge increase after a few years of not raising your prices.
To illustrate, take a look at a farrier who hasn’t raised his prices in a half-dozen years. Faced with 6 years of rising costs, the following outcome is now going to be a tough sell to his clients.
In 2012, the average price from the AFJ Farrier Business Practices survey for trims and four keg shoes was $108.80. Since this farrier has now decided it’s time to catch up to current pricing and even add a 3% increase for 2019, he’s forced to raise his prices by 31%. That’s an extra $33.29 for trims and four keg shoes to reach $142.09, which will be an unpleasant surprise for many clients.
So I think you can see the value of increasing prices on at least a yearly basis rather than being forced into a huge increase after doing nothing for several years.
Consider Inflation, Too
The average U.S. inflation rate over the past 12 months increased by 2.5%. This means a full-time farrier earning this year’s average income of $102,994 will pay $2,575 more for goods and services compared with last year. To stay competitive, he or she must increase pricing to overcome the impact that inflation will have on his business.
This is why you need to set your prices based on meeting the economic needs of your family. As a bonus, try to work for clients who expect you to raise your prices on a regular basis.
It’s time for action! Keep pace with inflation by raising your footcare prices right now for the coming year.