Why & How to Pay Employees Fifteen to Twenty Dollars per Hour (And Remain Profitable!)

By Laura Laaman

With a pent-up need to get out of the house, people are finally traveling in droves. This means a parade of furry guests who need your services—but do you have the staff to handle it? 

For many pet care businesses, COVID meant downsizing, and just as many are finding it harder than ever to find quality staff. We have the solution, but brace yourself…you need to get ready to pay some employees $15-20 an hour or more. 

According to ZipRecruiter’s July 2021 salary data, pet care employees make an average of $11-$14 per hour nationwide, qualifying it as an entry-level, near minimum wage job. The current hiring frenzy—thanks to the COVID-induced unemployment surge—means quality applicants are scooped up as soon as they enter the arena. To make matters worse, many minimum wage employees have chosen to stay unemployed for the time being—between the $600 bonus checks and forgiving unemployment terms, some people have actually made more money by NOT working!

Recently, there’s been a major movement to increase starting wages in the food service industry to $15 an hour or more in various parts of the country. And as restaurant chains are opening to full capacity, they’re desperate to attract workers. This demand has exploded the average food service wage to $16.82 hourly, according to May 2021 data from the Department of Labor. 

Pet care employees often feel they’re worth AT LEAST that much—and they’re right. Before you jump out of your skin, hear me out: This can be good news!

Pet care is an honorable and important business. Success depends on keen financial management and investments. One of your top investments are well-paid, quality staff, and ample supervisors and managers. And on top of that, you need advanced technology to run as efficiently as possible, building investments and, let’s not forget, well-deserved profit for the owner(s).

How to Profit When Paying Higher Wages

Like it or not, wages are going up. According to Trading Economics, average nationwide wages increased nearly 14% in May 2021 over the same month in the previous year—with a forecasted increase of an additional 3-4% for the next several years. 

Can your business handle a 14-18% hit to the bottom line right now? Almost none can—especially after COVID. Can your business adjust to these massive changes? Absolutely! And in the end, your business will be better off for it. If you need to pay out more in wages, the difference has to come from somewhere. Two key areas are efficiencies and pricing.

Raising prices even marginally can make a world of difference to your revenue intake, but it’s a dangerous process. When not handled properly, raising prices can devastate your business. But, when done correctly, you’ll have a healthier and stronger company.

Is Your Price Structure Working Against You?

Of the various price structures utilized in professional pet boarding, all-inclusive pricing (activities included in boarding rate) is fairly common—especially on the west coast. Regardless of the location, this pricing structure is incredibly detrimental.

By wrapping play costs into the overnight rate, you’re left with a high flat rate and, ironically, this “higher” price is often less than what you should charge. Sadly, pet parents are not ready for a $75 flat, nightly price tag. They’re not even ready for $45 as a one-price option. But they will pay that—and often much more—when given the option of customizable add-ons for their dog’s stay. A flat-rate fee at almost any price is highly alienating. People who want to pay less will flee; people who are happy to pay more for a more customized stay will look elsewhere.

Breaking out the nightly rate lets you offer a variety of activities for the pet parent to choose from. When given properly-priced options, very few pet parents will choose the lowest-priced service. And even fewer pet parents will choose no activities at all. This lets you upsell services as well as provide the most rewarding, customized experience for every pet.

Will you lose customers by raising prices? Yes. But when done properly, you’ll lose very few. And what’s important to remember is that you naturally lose customers every day. Before the pandemic, pet care facilities naturally shed about one third of their client base every year. This is because pet parents move, their pets age out or pass away, or can’t use your services for any number of unforeseen circumstances. During COVID, most pet care facilities lost nearly all of their clients for over a year. 

So, how did proactive pet care companies recover, and continue to grow? For one, they never let up on marketing—the right way.

Communicate Your Value

When it comes to adjusting prices or changing price structure, communication is everything. Your customers will want an explanation. Providing clear, consistent and honest messaging goes a long way in establishing an understanding and buy-in from not only your clients, but also your employees. At the end of the day, price communicates value. 

This means more than giving prices and availability to everyone who asks. It’s important to qualify higher prices by ensuring customers (and customer prospects) understand the incredible care they’re getting with your company. Give them information on what makes the experience at your facility special and describe your activity offerings. Help them visualize all the fun their pet will have with you. Otherwise, you risk turning your business into just another commodity not worth looking into, and no one wants to pay more than they must for a commodity.

Reduce Unnecessary Labor Expenses

If we’re going to pay our employees more, it’s more important than ever to cut excessive labor spending. Currently, many pet care companies spend a staggering 30-50% or more of their revenue on labor. This includes employee wages, benefits, payroll taxes and other expenses. And if you’re going to increase wages significantly, you’re unlikely to succeed without addressing labor expenses. You can calculate your labor ratio by dividing your total revenue by your total labor costs. But what is your ideal labor ratio?

A range of factors come into play, including the types of services you offer, your location and even the design of your building. It can be challenging to pin down your ideal labor ratio without professional guidance, but chances are good you’re currently overspending.

If you spend too much on labor, the long- and short-term health of your business is at risk—especially in this incredibly competitive environment. Overspending results in needless burning of revenue, stunted marketing spending, reduced business value and financial stress for you. While less likely, underspending can also be dangerous, leading to employee burnout and increased likelihood of mistakes and oversights.

So, how do you reduce labor without compromising the quality of care you provide? Thankfully, quality care and ideal labor spending are NOT mutually exclusive. While the answer is different for every market and facility, many pet business owners are successfully reducing labor spend while maintaining (or even improving) the quality of care.

Technology is becoming more and more important to manage labor spending in the pet care industry. Tools and software are only starting to finally meet our needs, not only as pet care providers, but also as thriving businesses. A software change can save you thousands in labor hours—every month—by streamlining communications, reservations, client profiles, data reporting and much more. These advances allow us to utilize our time much more meaningfully, even eliminating unnecessary positions easily handled by a smart software.

You Depend on Happy, Quality Employees

Pet care is a service-oriented industry, and employee morale is directly tied to the health of your business. Unhappy employees have been shown to affect the customer experience, quality of pet care provided and your work environment. 

To attract the kind of employees that will contribute to, grow with and better your business, you need to be willing and able to invest in them. And if you don’t, your competitors will. 

Laura Laaman is president of Outstanding Pet Care. If you’re interested in our pricing assistance, labor ratio guidance and hiring help, or any of our other proven services, scheduled a consultation by calling 1-888-735-5667 or vising www.OutstandingPetCare.com/contact.