You need to raise your prices [part 3]
What happened when we started charging for something we used to do for free
This is the third post in my series about raising your prices. If you haven’t already, check out my first and second posts, which explain why I think raising prices is the smartest (and maybe only) path to increased revenue for storefront retail businesses, and the simple math that demonstrates the beneficial impact price increases have.
This post is about what happened when Fernseed went from doing something for free to charging sometimes up to $25 for the same service.
When I launched Fernseed, I thought it would be cool if we offered an on-site potting service. I thought by giving away this little perk, we could justify selling plants at a higher price than the big box hardware stores. How it worked: you buy a plant and a pot together in the shop, and we potted them for you on site.
People loved this! We potted thousands of plants. But people also took advantage of the service. We had to set limits on pot sizes, because we were giving away a lot of potting mix. The shop was small, and on a busy Saturday it could take up a good 20-30 sweaty, dirty minutes to pot a monstera into a new 12-inch ceramic pot for someone.
So we started charging $10 for the potting service on a large pot but kept every other size free. People didn’t like that too much, so they didn’t pay for potting on large pots. That was fine, because it kept us from having to do the work, but it gave us the impression people weren’t willing to pay for potting.
In hindsight, I realize they just weren’t willing to pay for potting when sometimes potting was free.
When I visited other plant shops in Seattle, Portland, and Denver, I saw that they were charging for their potting services, so I started feeling like I had permission to charge for ours as well. In 2021, we implemented a small fee for potting services that started at $1 for a “small” pot.
How did that do? Let’s look at the numbers.
In 2019, the year we opened, we didn’t charge for the potting service. We potted 1,401 plants and grossed a total of $40 for potting (probably because we charged someone something at one point?). That’s $0.03 per plant!
In 2020, once we started charging the $10 for larger pots, we potted 2,206 plants for a grand total of $120. Up to $0.05 per plant!
When we started charging at least $1 for the service in 2021, we potted 3,744 plants for a total of $2,455 in gross potting service revenue. That’s $0.66 per plant! Clearly people were willing to pay for a potting service.
In 2022 we potted fewer plants, probably because we raised prices again (and dropped the $1 option). That year we did 2,253 plants for $4,589 in potting service revenue, and that bumped the per-plant revenue up to $2.04.
In 2023 we raised potting services once again. Now they start at $2 and go up to $25 depending on plant size. We ended up potting just 1,648 plants, which is about what we did in our first year of business. But unlike our first year in business, we didn’t make just 3 cents per plant. We grossed $6,557 in potting service revenue for an average of $3.98 per plant.
So in 2023, we potted less than half the plants we potted in 2021, but we increased the revenue from the service by 168 percent. That’s the highest it’s ever been.
This has a measurable impact on our team!
When you pot a plant for a customer, you have to drop everything for a few minutes (this is particularly annoying for our floral team) and get your hands in the dirt. It is delightful when you don’t have other things to do, but when you’re busy, when it’s hot outside, when a customer wants 5 plants potted that they brought in from home, it can be a real chore. Life in the shop feels different when we are potting just 4 plants per day on average versus the record of 10 per day in 2021. We are working less and making more money, and that’s huge.
Does anyone ever ask why we charge money for a service we used to give away for free?
In the 3 years since we started charging for it, I’ve probably been asked about it 4 times.
I’ve got some other great examples of price increases from Fernseed over the years to share with you in the next post, so stay tuned.
In my bicycle retail store, service is a huge part of our business. We used to offer free "air & oil". It was a pain in the butt, because, like you said, someone has to drop everything to perform a free service for some tenuous amount of goodwill. A few years ago, we started charging $10, while keeping a pump outside the shop people could use for free. Zero complaints. We recently discovered that another shop in the area is basically selling the same service (with a little value added) as a mini-tune-up for $40. Genius.