Raising the Rates

San Francisco, 1982: The staff at Network Answering Service were clamoring for raises. But we had no more funds. We had as many clients as we could handle, and our signups just replaced clients who left through natural causes. What to do?

My wife Lori booked a CPA consultant. After examining our books, he suggested the obvious. “You need to raise your rates,” he said. “They’re just too low.”

Well, of course they were, but I was terrified.

I could see it so clearly …

In 1976, when we started, I’d figured that, because we’d built our answering service on Call-Forwarding, we had no switchboard expense. Because of our operator-team method, each pair of operators could handle almost 300 clients. Very efficient. Other companies charged $30-$40 monthly. Our price was $14.76 to $17.76.

With these rates and good service, we grew quickly, but now we’d come to an impasse.

Now, looky back, it’s hard to imagine my fear. But then I saw it clear as clockwork. We would raise the rates, and immediately all the clients would leave. As simple as that. We’d be ruined. The clients were never going to pay more! It would never work!

Under unrelenting pressure from Lori, and implaccable assurance from the CPA, I yielded, with poor grace. Announced 30 days in advance, we raised the rates to $21.77. There was no exodus. A tiny twinkling of grumbles, and mostly a gaping yawn of indifference. $17, $21, what’s the difference?

I learned three things: First, you can raise the rates, and life goes on. Secondly, that clients will make any adjustments within three months. That is, if you offer some alternative, then within three months, everyone who is going to change will have done so. Third, just because I thought $21.77 sounded expensive didn’t mean the world felt the same. Just because I was a cheapskate didn’t make everybody else one! In short, we raised the rates, and no problem.

Some years later, my friend Oz called me up. He was agonizing over changing his rates. They’d been the same for years and years. If he changed these rates, he knew for certain, all his customers would leave. But all his costs had gone up; he was at an impasse. He was in agony. I laughed. I told him this story. Worrying at 90 miles per hour, he went off to try it, and called back later, wondering what all the fuss was.

What fools we are! How amazing it is that the deepest ignorance is so totally full of theories and beliefs!

There is just nothing quite so amusing as the pain of another. Even if the other is yourself, years ago.