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Setting an Anchor Price
In our latest 21 Hats Podcast episode: Do you anchor low to avoid scaring anyone away? Or do you anchor high to disqualify unlikely buyers?
Here are today’s highlights:
Small businesses are planning to raise prices. A lot.
Still struggling to fill openings? Have you tried hiring working moms?
New research suggests two-days-a-week is the hybrid sweet spot.
An urban mystery: if America’s biggest metros are shrinking, why are their housing markets on fire?
THE 21 HATS PODCAST
Setting an Anchor Price: This week, Shawn Busse, Paul Downs, and Liz Picarazzi talk pricing, specifically how they use an anchor price—the first number they offer prospective customers. Do they anchor low to avoid scaring anyone away? Or do they anchor high to disqualify unlikely buyers and to make the actual sale price feel more comfortable? Plus: Liz explains the remarkable, dream-come-true, my-product-in-Times Square PR gift she just received. Of course, this is entrepreneurship, so even when dreams come true, there tend to be complications. Liz’s business is getting a wave of publicity at a time when her fabricator in Shanghai has been locked down for almost four weeks. She’s talking to domestic fabricators as well, but they, too, will be dependent on raw materials that have to come from China. It’s a problem, she tells us.
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A survey finds small businesses preparing big price hikes: “About 40 percent of U.S. small businesses intend to raise selling prices by 10 percent or more amid decades-high inflation, according to a survey from the National Federation of Independent Business. Overall, more than two-thirds of the respondents plan to increase prices in the next three months, according to the survey, conducted between April 14 and April 17 among 540 business owners. Almost half of the small firms are planning increases of 4 percent to 9 percent.” READ MORE
New research suggests that two days a week in the office is the sweet spot for hybrid work: “For months, managers have called three days in the office a week a hybrid-work ideal that both gives employees flexibility and packs in enough face time to cement company culture. For some, the three-day plan may be looking more like two, according to a leading researcher on remote work.”
“More new survey data this week shows that full-time workers have more work-related stress and anxiety than their hybrid and remote counterparts.”
“The discontent reflected in the data among those working in the office every day highlights risks that companies take by giving priority to face time and in-office culture over worker preferences for flexibility coming out of the pandemic, says Brian Elliott, executive leader of Future Forum.”
“‘We were kind of shocked that it was as bad as it was,’ he says. ‘It’s going to impact people’s tendency to resign.’” READ MORE
Have you tried hiring working moms? “That's the argument made by Reshma Saujani, founder of Girls Who Code and author of Pay Up, a book about the future of women at work, and Joeli Brearley, founder of UK charity Pregnant Then Screwed, which supports working mothers. ‘We've got a skill shortage,’ Brearley told Insider. ‘Companies are desperate to recruit talented, brilliant people and there are at least 870,000 stay-at-home moms who want to work.’ That was in 2019, according to an analysis of UK government data by charity Save the Children. Post-pandemic, Brearley estimates that this figure is even higher.”
“In the U.S., there were 10 million stay-at-home mothers in January 2021, 1.4 million more than the year before, according to U.S. Census Bureau data from March 2021.”
“Working mothers are one of the most common types of employee to leave the workforce early — but childcare support and flexible work could bring them back.”
“‘Childcare can no longer be your personal problem. It is an economic issue that companies have to figure out how they can solve,’ Saujani said.”
“The cost of these perks is easily comparable to the cost of attrition, she added.” READ MORE
More than 50 small business organizations sent a letter to Congressional leaders looking to protect funding for the State Small Business Credit Initiative program: “Capital helps small businesses start, grow, and expand. It also breathes life into the business ecosystem and helps small business owners act as the economic engines for their communities. But when financing is not available or scarce, it can undermine entrepreneurship and create barriers for under-resourced communities. That’s why we are disheartened to learn that more than $2 billion would be rescinded from the State Small Business Credit Initiative to help pay for the Covid Supplemental Appropriations Act.”
“Last year, the American Rescue Plan allocated new funding to reauthorize the SSBCI, which was originally developed in 2011 and supported nearly $8 billion in new lending and investment in its first five years.”
“ARP’s $10 billion allocation builds upon this successful model and also includes new funding for technical assistance, an essential component to any small business lending program.” READ MORE
Don’t try this at home:
LOCATION, LOCATION, LOCATION
Times Square is plotting a pandemic pivot: “Investors and developers are doubling down on tourism and entertainment venues while Times Square’s office towers remain largely empty during the day. A new hotel with an outdoor pool overlooking the theater district has been opening in stages since last year, while another hotel with a concert stage is set to open in 2023. A developer has proposed building Manhattan’s first casino in the entertainment district. Times Square’s economy suffered more than that of any other New York City neighborhood in 2020.”
“Now, entertainment is re-emerging as a source of strength. Weekly Broadway attendance was at nearly 90 percent of its prepandemic levels in mid-April, according to the Broadway League, a trade association.”
“Times Square’s hotel occupancy in March was about 80 percent of the March 2019 level, according to the Times Square Alliance, a business-improvement district.”
“Meanwhile, office occupancy across Manhattan was at just 37 percent of pre-pandemic levels as of mid-April ...”
“New York state has a ban on new casinos until 2023, but Gov. Kathy Hochul wants to end it this year.” READ MORE
Americans are fleeing downtowns, and yet rents are rising: “The major drivers of population—migration and births—declined, while deaths soared in the pandemic. But America’s largest cities are getting the worst of this national trend. In the past three years, the net number of moves out of Manhattan has increased tenfold. In every urban county within the metros of New York City, Los Angeles, and San Francisco, immigration declined by at least 50 percent from 2018 to 2021. In downtown Detroit and Long Island, deaths actually exceeded births last year.”
“So what we have here is a bit of an urban mystery. If America’s biggest metros are shrinking, why are their housing markets on fire? And if rents are rising in almost all of these cities, how can they possibly be shrinking?”
“The third, simpler answer is: It’s inflation, stupid. That is, cities really are struggling with population loss, but urban rents and housing values are rising along with national inflation, which is surging toward 10 percent.“ READ MORE
Direct-to-consumer darling Harry’s now gets more than half of its sales from brick-and-mortar stores: “The closely held company, which made a splash taking on what founders Andy Katz-Mayfield and Jeff Raider saw as big corporations’ overpriced offerings, is seeing the sales payoff from its expansion to traditional retailers such as Target. It’s also growing in overseas markets, including France and Germany, and entering new categories such as women’s shaving, haircare, deodorant and even cat products.”
“The moves by Harry’s could shed light on what’s next for direct-to-consumer businesses as enthusiasm for the model wanes, given many businesses have struggled to turn a profit or maintain growth.”
“The company first entered the mass retail market in 2016, and its products are available at large stores including Target in the U.S., Walmart in Canada, and Tesco in the U.K.” READ MORE
Meta (aka Facebook) is opening its first retail store: “The Meta Store, at the company’s campus in Burlingame, Calif., will open on May 9, Meta said. The store will showcase Meta’s hardware, including the Quest 2 virtual-reality headset, the Portal video-calling device, and the Ray-Ban Stories smart sunglasses. Customers can try out the devices to experiment with virtual and augmented reality and buy the items in the store or later online at Meta’s or Ray-Ban’s website.”
“The company is at work on other hardware products, like a smartwatch and more high-tech augmented-reality glasses.”
“Mr. Zuckerberg has said he expects mass adoption of the technology to take years.” READ MORE
If you see a story that business owners should know about, hit reply and send me the link. If you got something out of this email, you can click the heart symbol, you can click the comment icon below, and you can share it with a friend. Thanks for reading, everyone. — Loren