3 Tips For Raising Your Prices At Your Indoor Playground Business (PLUS An Alternative Strategy!)

In the past I’ve talked about how to find potential opportunities to decrease some of your costs, especially if your business model has shifted at all since opening. Or if your volume is a little different than expected. 

However, what happens if you can't decrease a specific price? Even  worse, what if you are facing price increases? That's the situation, unfortunately, many small business owners in every industry, not just ours, are faced with as we go through 2022. 

While I was doing a little research for this topic, I found dozens of articles from business publications this week alone citing the inflation rate and rising costs associated with all sorts of factors. All of which are affecting large corporations and small businesses alike. Over the last few weeks, we've been hearing from companies that plan to raise prices this year, including Coca-Cola, Starbucks, Proctor, and Gamble and Levi's. Many small businesses are planning price hikes as well. 

Nearly every company is fighting supply chain bottlenecks, worker shortages and rising commodity costs– All of which drive up operating budgets and eat into profits. Many of the members inside of Play Maker Society have cited rising costs over the last few months especially. 

Many are considering price changes in the first quarter of the year, if they haven't increased them already. Krystyne, one of my favorite owners to highlight– she's the owner of Sweet Peas Play Cafe in Kokomo, Indian– came to the group with some examples like her drastically rising electric bill, as a reason for her considering some price changes.

Also, Tal, the owner of Art Factory and Play Cafe in Virginia, has been dealing with price increases– this time in the form of rising balloon costs and party product item costs. She's changed up her pricing and offerings a bit. It's really been an issue across the board, whether the business focus is memberships, open play, parties, or balloon.

Whether you're already open or if you're just drafting your business plan, let me ask you this. Is it time to update or change your prices? 

Something I talk a lot about is operating costs versus cost of goods sold. As a quick review, operating costs are the normal cost of doing business things that aren't tied to one specific good or service. Things like rent, utilities, insurance, building, maintenance, play equipment maintenance, things like that. 

Cost of goods sold refers to the direct costs of producing the goods or rendering the services sold by a company. This includes the cost of the materials and labor directly used. For example, in our industry for a birthday party, let's say cost of goods sold would be hourly wages, plates, table covers, decor, balloons, food cupcakes, things like that. 

I will talk about how to calculate your prices based on your cost of goods sold and your target profit margin at another time. For now you just need to know that in order for your business to remain sustainable, you'll need to consider any rising costs in either your cost of goods sold or your operating costs.

Some things that have been increasing in price over the last few months especially, are slated to continue increasing throughout this year. Things that directly affect the play and party industry include rent utilities like heating, cooling, and electric gas fuel and new cars. So if you're purchasing a van for a soft play rental,  you're going to face increased prices. Groceries, so all food items, milk, milk alternatives, and coffee, which drastically affect people that operate a cafe. Canned goods and other cooler items due to supply chain issues and all sorts of issues.

Play equipment, shipping, and anything from a foreign country is going to be a lot more throughout the year.

If you are considering a price increase, which I hope you are, I have a few tips.

TIP #1: First, only announce it to those you absolutely need to for price increases, especially when you announce them on a super public forum like social media– where people love to complain will always be met with a negative and often visceral reaction.

Here's the thing: you are allowed to quietly raise prices behind the scenes. You don't need to announce it.

As long as you are operating your business from a place of integrity, I would not put much emotion at all into your price increase. Don't make a big show of it, or offer a huge explanation or an apology post. Just raise them. It's a business and you're the boss.

Sure, if people come in and notice it's $1 more to play, you can arm your employees with a few talking points about why the increase took place, but I promise you, it's not as big of a deal as you are making it in your mind. We, as business owners, put so much pressure on ourselves, Especially in this industry, to please our customers and to avoid negative feedback at all costs.

However, I promise you, you are going to be better off, and most people will hardly notice or not notice at all. Just remember, if someone booked a service at a given price, you should still honor it. For example, if someone booked a birthday party in April to take place in June and you raise your prices in May, you should honor the price at which they booked it in April. Now this may be a bit bumpy and hard to keep track of for a few months, but as long as you have a good tech and software stack in place in your business, you'll be fine. Not raising prices will do your business much more harm, then juggling these kinds of influx prices will be.

TIP #2: My second tip is to consider a grandfathered rate or a last chance sale.

If your membership or party prices are increasing and you really feel like you would like to announce it, consider announcing it before the increase and let people purchase for a very limited time at the lower previous rate, this will get the message out there iIf again, you really feel like you need to– while STILL deterring the negative feedback, because people will still have the opportunity to get the lower price. That way, they're less likely to complain. You can even offer to lock them in at a certain membership price. If they jump in and enroll before the price increases. 

TIP #3: My third and final tip is that there are alternatives to price increases. 

If for whatever reason you are looking for an alternative to a price increase, you can also consider scaling back whatever offer has been faced with increased costs.

For example, I remember a few years ago, the bakery that we had been working with for cupcakes for our premium party package closed down. All the alternatives in our area that provided cupcakes were much more expensive.  Instead of making another deal with the local bakery and raising our party prices, we actually thought it would be best to remove cupcakes as an included item in the package. 

We instead added it as an optional add on that people could purchase. 

After all, we noticed that most people were bringing in their own cakes or desserts or treats anyway. We of course included cupcakes and ate the increased price for those who had already booked prior to the change.

However, no one even seemed to notice this change in the package moving forward, and in this case, it really worked out for us. Like I said, instead of increasing the price to reflect the increased cost in the cupcakes, we just scaled back the offer and removed cupcakes as an offered item. As long as you can find a way to keep your desired profit margin so that you can compensate yourself, pay your bills, cover all your overhead costs, and your cost of goods sold.

You are allowed to get creative. This is your business and you are the boss. 

Customers have no idea what is going on behind the scenes of your business. While I love asking customers for all sorts of advice and feedback in many areas, price is not one of them in this industry. Price needs to be a business decision and a calculation.

If you let emotion or your customers, or even your competition dictate your prices, you are much more likely to fail. 

If you need more guidance or feel a little lost or overwhelmed while navigating all of this, you're not alone. Many of us are dealing with this in Play Maker Society– and we would love to welcome you inside of our group if you are a current Play Cafe Academy student. 

Join us today inside of Play Cafe Academy and Play Maker Society here!

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