Name Your Price

Who Are You?

Doellgast asked herself that question during the two months she and her husband searched for loans and considered buying the Plumbush Inn. "You have to dedicate some serious time to looking at everything, going out and collecting all the information," says Doellgast, who diligently examined the pricing on their competitors' menus. "Then you put it on paper, and you need to seriously study it. It needs to be a serious time without distractions, where you ask and answer the questions, Who am I? [What] do I want our business to be?"

Doellgast and her husband decided they wanted it to be upscale, the kind of B&B where romantic couples go, not the kind of place where a family of eight might stop in for cheap lodging for the evening. "We are a slow-dining experience," says Doellgast, who says she raised the prices because offering the public a richer experience costs more money. Says Doellgast, "We don't buy anything frozen. Everything is fresh, which makes a difference in the price."

The Plumbush Inn also uses organic products, which cost more. But when people know what they're getting, they don't mind paying for it. In fact, Doellgast points out that the customers who had initially been angry at them for raising rates later returned with new expectations-realizing they were coming to a high-end inn-and seemed very happy with the changes (see "Dollar Signs".)

"People bring a whole set of equations with them when they make a purchase, and one of the values for most people is that high price equals quality," says Rob G. Docters, co-author of Winning the Profit Game: Smarter Pricing, Smarter Branding. "If you're successful, you ought to have a price that reflects the success."

In the same breath, Docters warns not to go overboard: "Customers resent it when they think you're charging them much more than you should be. It's an old Puritan ethic--nobody wants to be ripped off. So you have to know your customers and what they will tolerate."

Geoff Williams has written for numerous publications, including Entrepreneur, Consumer Reports, LIFE and Entertainment Weekly. He also is the author of Living Well with Bad Credit.

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This article was originally published in the September 2005 print edition of Entrepreneur with the headline: Name Your Price.

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