You raised your boarding rate to $65 per night.
But are you actually earning $65?
Maybe not.
Packages, memberships, discounts, promotions, legacy pricing, complimentary services, and other adjustments can create a surprisingly large gap between the price on your rate sheet and the revenue that actually reaches your financial statements.
That’s why one of my favorite pricing metrics for pet care businesses is Effective Rate Earned.
It’s a simple number that answers an important question:
“What are we actually earning each time we provide this service?”
For established pet care businesses with multiple services and years of pricing history, that answer can be revealing.
Published Price and Actual Price Aren’t Always the Same
Let’s say your published boarding rate is $65 per night.
During the month, you provide 2,000 boarding nights. If every night were sold at the published rate, you would expect to generate:
2,000 nights × $65 = $130,000
But your financial reports show boarding revenue of $118,000.
Your Effective Rate Earned is:
$118,000 ÷ 2,000 nights = $59 per night
Your published rate is $65.
Your business is actually earning $59.
That’s a $6 difference on every boarding night.
Across 2,000 nights, that’s $12,000 of potential revenue difference in just one month.
That doesn’t automatically mean something is wrong. There may be very good reasons for the difference.
But as the business owner, you should know the gap exists—and understand what’s causing it.
Calculate Effective Rate Earned by Service
The calculation itself is straightforward:
Service Revenue ÷ Units Sold = Effective Rate Earned
The important part is defining the appropriate unit for each service.
For example:
- Boarding: revenue ÷ occupied pet nights
- Daycare: revenue ÷ pet visits
- Grooming: revenue ÷ completed appointments or pets serviced
- Training: revenue ÷ sessions, classes, or another consistently defined unit
Consistency matters more than perfection.
Choose a unit that accurately reflects how you deliver the service and use the same definition each month.
Over time, Effective Rate Earned becomes much more valuable because you can identify trends rather than simply looking at one month’s result.
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Where Is the Money Going?
If there’s a meaningful difference between your published price and your Effective Rate Earned, the next step isn’t immediately raising prices.
It’s understanding why the gap exists.
Start by looking at a few common areas.
Discounts and Promotions
A 10% discount doesn’t sound significant when viewed as an individual transaction.
But what happens when 20%, 30%, or 40% of your clients qualify for some type of discount?
Small discounts can become a significant revenue reduction when multiplied across thousands of transactions.
Packages and Memberships
Packages and memberships can be excellent tools for encouraging frequency, improving retention, and creating predictable revenue.
But they still need to make financial sense.
If clients receive a lower per-visit rate in exchange for purchasing a package or membership, know exactly how much that reduces your Effective Rate Earned.
Legacy Pricing
Long-term clients sometimes remain on older pricing structures long after published rates have changed.
Individually, those exceptions may feel insignificant.
Collectively, they can create a meaningful gap between what you believe you’re charging and what you’re actually earning.
Complimentary and Included Services
Free add-ons can be valuable parts of the client experience.
But “free” doesn’t mean they have no cost.
If you’re routinely providing services that require staff time or supplies without generating additional revenue, consider whether those costs are appropriately reflected in the price of the primary service.
The Bigger Question: Is the Discount Earning Its Keep?
I don’t believe the lesson from Effective Rate Earned should be “stop discounting.”
Discounts, packages, memberships, and promotions can all have a strategic purpose.
The better question is:
What are we receiving in return for giving up part of our price?
Perhaps a membership improves client retention.
A package may encourage more frequent daycare visits.
A promotion might fill unused capacity during a traditionally slow period.
A multi-pet discount may help retain a valuable household.
Those can all be reasonable business decisions.
But every pricing concession should have a purpose.
If you’re giving up revenue without gaining something valuable in return, it’s worth reconsidering.
A Small Rate Gap Can Become a Big Profit Opportunity
One reason I like Effective Rate Earned is that it shifts pricing conversations away from simply asking:
“Should we raise our rates?”
Instead, it encourages you to ask:
“Are we capturing the revenue our current pricing should already be producing?”
Sometimes the opportunity isn’t another price increase.
It may be reducing unnecessary discounts.
Updating legacy pricing.
Restructuring packages.
Changing what’s included in a service.
Or simply ensuring that your team is consistently charging according to your current pricing policies.
For a high-volume service, even a small improvement in Effective Rate Earned can produce meaningful additional revenue—often without serving a single additional pet.
Add One More Number: Your Target Effective Rate
Once you begin tracking Effective Rate Earned, take the analysis one step further.
Set a target.
If your published boarding rate is $65, perhaps you determine that your business should be earning an average of at least $62 after your intentional discounts and packages.
Now you have something you can monitor:
Published Rate: $65
Target Effective Rate: $62
Actual Effective Rate: $59
That $3 gap becomes a financial leadership question you can investigate and manage.
Instead of vaguely wondering whether you’re giving away too much through discounts, you have data to guide the conversation.
Your Pricing Challenge This Week
Choose the same core service you’ve been following throughout this series and calculate:
Total Service Revenue ÷ Total Units Sold = Effective Rate Earned
Then compare the result with your published rate.
If the numbers are close, great.
If there’s a significant gap, don’t immediately assume it’s a problem.
Ask:
“What’s causing the difference—and is each reduction intentional?”
Your goal isn’t necessarily to collect your full published rate on every transaction.
Your goal is to make sure the difference between your published price and what you actually earn is the result of deliberate business decisions rather than pricing leakage.
Because when you’re evaluating pricing and profitability, knowing what you charge is only half the story.
You also need to know what you actually earn.
Are you tracking the metrics needed to make confident decisions? Get a free copy of Crystal Clear KPI’s and learn the eight metrics every pet business should track.
Are You Tracking the KPIs That Actually Drive Profit?
Download the free Crystal Clear KPIs guide to find out.
Next in the Pricing for Profit series: Why pricing isn’t just a rate decision—it’s a financial leadership decision.