Monday, March 12, 2007

A Bear Market?

Think about your local market, and your bottom line, and examine who sets the rates. When someone suggests that "Our customers will never pay that much," how did they reach that conclusion? Is it just because some customers complain about the fees? Perhaps those are the same people who never leave a good tip, or always complain about the price of fuel for their boat toys? Should we always assume that customer's grumbling about prices is an indication that the prices are too high?

Remember the old adage that capitalist forces will adjust market prices to "whatever the market will bear." Not happily pay, but bear, as in carry a burden; endure. The entire nation is engaged in a debate about health care prices, but I don't hear a single hospital or doctor suggest that they will just charge less to make their customers happy. Nor would that solve the crisis. Nobody wants to get towed, and they really don't want to pay for it. That is exactly why the membership networks are able to sell memberships.

When you are faced with a customer who isn't a member, it's probably because the guy doesn't even want to pay that small fee. When he breaks down, he's faced with paying many times the yearly membership price, and now he's angry. You hear the anger and figure, incorrectly, that the anger would be less if the price was less. That would only be true if the price was ZERO.

Setting your prices to avoid the ire of your customers is a terrible business plan. There are so many other ways to please your customers, like showing up on time in a clean, professional looking vessel, with polite, presentable captains who understand that part of the job is being a salesman.

It's still the off season in most of the country. Take some time to examine what influences your rate structure. Focus on ways to increase your profits, not just quite disgruntled sailors.