‘I Did Not Want to Raise My Prices’

A couple of years ago, I was reading an article about a guy in his 30s, David Geslak, who had started a company in Chicago, Exercise Connection, that works with children who have autism. Reading the article, it became obvious to me that he must have his hands full, trying to teach, to develop programs and to give speeches while also building his business. In part because his mission is dear to me — I have a nephew who is on the autism spectrum — I decided to call him to see if I could offer any entrepreneurial advice.

When you called,” Dave told me recently, “I was making great progress in developing autism exercise programs, seeing results, and getting publicity. But I was having a hard time paying my bills. I was at a crossroads. I had been led to believe that if I followed my passion and worked hard, everything else would take care of itself. What I didn’t realize was that — as you say — if you follow your passion, you may do a great job. But if you don’t get the math to work, you will have a very expensive hobby.”

One of the first things that struck me was that Dave was making keynote presentations all around the world, on a topic that he is uniquely qualified to discuss, and he was charging $250. My jaw dropped when he told me — and then his jaw dropped when I told him that many people making keynote presentations charge between $3,000 and $10,000, or even more.

I was embarrassed to tell you that I was in the middle of personal bankruptcy,” Dave continued. “It was the result of a combination of me not making enough money and the real estate meltdown. I had bought a small condo that was now way under water. However, I made sure to protect the business from going under, even though I wasn’t making much. I have to make this work — not just for me but for the children and their families. When you said, ‘You need to charge more,’ it was hard to digest, because I wanted to spread my message and not lose a potential customer. I didn’t want them to think I was greedy.”

Greed is not good, and neither is going broke. This is a typical response from entrepreneurs who are not making money because they are not charging enough. They also say things like, “I want to be fair,” “I don’t want to gouge anyone,” or “It is a very competitive market” — or my favorite, “The customers like my low prices.” None of these thoughts have anything to do with establishing prices to run a successful business. It is about charging what you need to charge, instead of what you want to charge, which can actually take courage. To charge what I call the “appropriate price,” you have to take into account supply and demand, your value proposition, competition, and the need to make a profit. Most likely, some customers will not be happy with your price — but that doesn’t mean they won’t pay it. An extreme example is a bottle of water that can be bought for 17 cents at Costco but sells for $3.50 at the movie theater. (It’s chilled!) Let’s not even talk about the popcorn.

In Dave’s case, he was charging $75 per home session, and traveling more than 400 miles a week. But there are only so many hours in the week and what he does is both physically and emotionally exhausting. His rate was less than what most personal trainers charge for in-home training — even though he has far more training, certifications, experience, and expertise than the typical trainer. In an effort to be “fair” to his clients, he was being unfair to himself. After we spoke, he decided to raise his rate to $85 per hour for existing clients and $95 for new clients. This resulted in increased income of about $5,000 a year — in addition the extra income he is getting from raising his speaking fees. The end result is a financial model that works, which has allowed him to hire people and reach more children.

“I realized that you were right,” Dave told me. “If I wanted to keep doing what I believed in, I had to charge enough to stay in business. I could not borrow any more from my parents, which in the end was a good thing since it made me face reality. I have a bachelor’s degree in health promotion. Aside from taking two entrepreneurship classes, that was all of my business experience. The only thing the entrepreneurship classes did was focus on writing a business plan. I spent college summers working at Nordstrom, which taught me a lot about customer service, but I never had any accounting training. If you asked me two years ago what I was, I would have said a coach. Now I realize that I am an entrepreneur who does coaching. Both roles have serious responsibilities.”

One of the discoveries that Dave has made is that exercise for children with autism can be a gateway to new possibilities. The children not only get improvement with fine motor skills, they develop confidence and optimism. He has hired several of them — with pay — to put together his Visual Exercise System, which requires cutting, assembly, and organization of different parts to be shipped out and is also sold at trade shows and conferences.

He believes this will improve the prospects and opportunities for the children, and it is a dream come true for their parents. Don’t get me wrong, this is no miracle cure, but Dave and other professionals have seen some very promising improvements when exercise becomes part of a child’s life. At the top of this post, there is a three-minute, unscripted video that features one of Dave’s champions, Rachel. I think it speaks for itself.