Hate Your Grandpa
I was lucky. I had both my grandpa’s in my life into my teens. They were very different characters. Loaded with lifetimes of interesting experiences, stories and wisdom to share.
This post in not about them or their valued contributions to my life. This post is about price grandfathering. It is about what is, why I hate it and why you should hate it, too.
Grandfathering is the business practice of holding some clients back at the old price when the price goes up. You are agreeing to serve them at the old price while everyone else goes up. DO NOT DO THIS. Ever.
The price is going up for a reason. The price needs to go up for many good reasons. The price must go up for all.
We think we re doing a client a favor. We think we are being good to them and therefore being good to ourselves. We are wrong.
Grandfathering creates challenges for two main reasons.
1. Your memory is not that good. You will not remember who was held to the old price and who moved up. A client will come in and you will rack your brain to try to remember what price they are at now. You will not want to ruffle any feathers so you will just chargre them the old price. They will question why it had gone up last time. OOPS. You will charge them the new price and they will remind you that you have promised to hold them back. Now you look like you regret the choice (‘cuz you do) and you have created an issue of your own doing. The whole situation has become uncomfortable.
2. You will resent the decision – The 1st time a grandfathered client comes in after you have implemented a price hike you will feel kinda’ good. You will remind the client how good, nice and kind you are. They will appreciate it, kinda”. They will not tip any harder. They will not send additional referrals. They will just take the cut and happily take it for less. Remember this was YOUR doing. The 2nd time they come in after a price bump you will be a bit less thrilled. The new price is now over two months old. Everyone is paying t pricehe new with no barking or objection. All is good. But you are still cutting THIS guy for the old price. You feel the beginning of a pang of resentment. Not much has changed but you feel a whole lot less good about the decision. The 3rd time this guy comes back you are just plain angry. Everyone else is up but this guy is now ripping you off. You resent doing work for less than it is worth and less that you do the dame work for everyone else. Your customer service is compromised. Your quality of work slips as bit as you hustle him through to get past the cheap work and bad feelings. You mumble under your breath about how unfair this is and you ponder how ever in the world are you now going to get his pricing up. If you implement another price increase he is even farther away form what the rest of the clients pay.
You created this problem. It started out with the best of intentions. You really wanted to do a good thing but now it has all gone bad. Soon you will lose the client. This is exactly what you were seeking to avoid in the first place by not raising their price. This is the exact thing that has chased them off. It is better to raise them and keep them (or maybe lose them) than to keep them lower AND lose them.
Do not grandfather anyone in the first place.
Share your stories of grandfathering gone wrong and price increases gone right. We can all learn from one another.