Read time: 2 minutes

After CEO Raised Minimum Salary To $70,000, Revenue Doubled

The move sparked not just a firestorm of media attention, but also a lawsuit from Price’s brother and co-founder Lucas.
After CEO Raised Minimum Salary To $70,000, Revenue Doubled
Image from: nytimes.com

Remember this guy? I'm glad it all worked out, because it was a good thing to try:

In April, Dan Price, CEO of the credit card payment processor Gravity Payments, announced that he will eventually raise minimum pay for all employees to at least $70,000 a year.

The move sparked not just a firestorm of media attention, but also a lawsuit from Price’s brother and co-founder Lucas, claiming that the pay raise violated his rights as a minority shareholder.

But six months later, the financial results are starting to come in: Price told Inc. Magazine that revenue is now growing at double the rate before the raises began and profits have also doubled since then.

On top of that, while it lost a few customers in the kerfuffle, the company’s customer retention rate rose from 91 to 95 percent, and only two employees quit. Two weeks after he made the initial announcement, the company was flooded with 4,500 resumes and new customer inquiries jumped from 30 a month to 2,000 a month.

The changes may not come as a surprise to Price. After an entry-level employee got angry with him in 2011 over low pay, he decided to give out 20 percent annual raises to his 120-person staff. While the raises came with a cost, profit still rose as much as the year before thanks in part to a 30-40 percent productivity increase. He decided to hand out the same raises the next year, to the same result. Before April’s announcement, the company reached $150 million in revenue, $2.2 million in profit, and had a 15 percent annual growth rate.Now the company is in the process of instituting the larger pay increases, which immediately raised the lowest salaries to $50,000 a year and implemented $10,000 raises at the bottom each year for the next two years. Those who already earn between $50,000 and $70,000 will also get $5,000 raises.

Can you help us out?

For 17 years we have been exposing Washington lies and untangling media deceit, but now Facebook is drowning us in an ocean of right wing lies. Please give a one-time or recurring donation, or buy a year's subscription for an ad-free experience. Thank you.

More C&L Coverage

Discussion

New Commenting System

Our comments are now powered by Insticator. In order to comment you will need to create an Insticator account. The process is quick and simple. Please note that the ability to comment with a C&L site account is no longer available.

We welcome relevant, respectful comments. Any comments that are sexist or in any other way deemed hateful by our staff will be deleted and constitute grounds for a ban from posting on the site. Please refer to our Terms of Service (revised 3/17/2016) for information on our posting policy.

Please Do Not Use the Login Link at the Top of the Site.

In order to comment you must use an Insticator account. To register an account, enter your comment and click the post button. A dialog will then appear allowing you create your account.

We will be retiring our Crooks and Liars user account system in January, 2021.

Thank you.
C&L Team