Was there ever a time that you wanted to increase prices at your salon, spa or clinic, but you just couldn’t because you didn’t have the right tools or were afraid that you would lose your clients?
We sat down with Estelle Carroll, a salon business coach from The ZING Project, for expert advice on how to develop your pricing strategy, when to do a price increase, and how to communicate it to your clients.
Why do you find it difficult to put your prices up?
Whether you’re opening a new salon or clinic or making changes to your existing business model, planning and implementing a price increase is an important step.
Here are the common reasons why it’s difficult for salon owners to think and act when it comes to increasing prices:
Quick fixes instead of a smart pricing strategy
Money can be an uncomfortable topic for some people so the annual price increase is often avoided, then a rushed bump up here and there is put in place with no strategy at all. Your salon prices should reflect your team’s skills and expertise, environment, and level of service.
Fear of losing a client and getting a one-star review
We don’t put the prices up, or we introduce discounts because we want the client to be happy, right? Wrong. Even the cheapest of salons will have a client that says ‘That’s too expensive!’ and there is nothing you can do about it. So always remember not to price your skills and experience based on this fear.
We undervalue our skill
This is the biggest reason. We are happy to explain to a client that a moisturiser costs $148 or a haircare product costs $52, but when it comes to the services – we get uncomfortable. Stop being your own worst enemy! Stand up for yourself: value the time, money and passion you put into your work. Set the price and own it!
When is the right time to do a salon price increase?
The short answer is there is no wrong time to do a price increase. If you haven’t done a price increase for over a year, chances are your expenses have increased and it might be hurting your business.
October is a great time to do a price increase. In most salons, the Christmas rush starts in October and teams will start having conversations with their clients about booking their Christmas appointments as early as in August.
So rather than waiting until things calm down in January, launch your new pricing in October when the salons are bustling.
How much should I increase my prices?
Know your breakeven point
Start with working out your breakeven – the amount of money it costs to open your doors each day/week/month/year. It’s so important to factor this in.
Firstly consider what you are going to charge per hour. For example, if you were to charge $90 per hour for services that are low product or service cost, that would mean for every 15 minutes you would be charging $22.50.
When you calculate the time required for the service you can work out the price:
- 15 mins – $22.50
- 30 mins – $45
- 45 mins – $67.50
- 60 mins – $90
Now let’s talk about your services with high product-use, in a hair salon that would be a colour, foil, chemical services and extensions. You may opt for a higher price per hour and stipulate that the base rate includes a certain amount of product, and any additional product required is extra.
Then decide on where the base rate starts. For example, colour service costs $80 and includes 30 grams of colour and takes 30 minutes. Next, decide how you will charge for any extra product or time required. For example, it’s $22.50 for extra 15 mins or $1 per gram.
It’s also a good practice to map out all of your services and required time, then the hourly rate goal you have decided based on:
- Your breakeven
- Your service
- Skills
- Environment
If you figure out the math now, it will be a simple tweak the next time you want to do a price increase.
Get clear on your value proposition
It might be tempting to compare your pricing to a salon’s down the road but if you provide a different level of service that has a lot of behind-the-scenes costs, you have to charge more.
I recommend considering the following aspects of your hair and beauty business when evaluating your pricing:
Client experience
- The rapport between your team and the clients
- Do you remember your clients’ kids’ names or their preferred refreshments?
- Refreshment menu: tea, coffee, beer, and wine
Your team’s expertise
- Award-winning
- Ongoing training and upskilling
- Speed (quicker doesn’t equal cheaper, it takes skills to do things quicker)
Environment and ambience
- Furniture
- Technology and tools
- Decor and interior design
- Heating and cooling
3 tips for implementing a salon price increase without losing your clients
Tip 1: Value matters
I don’t recommend setting up a sign or shouting from the rooftops that you raised your prices. Why? Because it makes it sound that the price is the most important thing and it’s not! The most important thing is the value that you deliver to your clients.
Tip 2: Prevent uncomfortable situations
Before you launch the new prices, have a meeting with your team and discuss the top red flag clients (the clients who might make a fuss about a price change). Likely, there will only be a handful of those.
Have a team member call these clients or do it yourself to inform them that you have had a price increase and on their next appointment it will be a new amount.
I recommend making a note on the client’s history that you spoke with them and quoted the price. This helps diffuse any unwanted and uncomfortable situations in the salon.
If a client does complain, politely and calmly offer them the regular price on this visit and explain that it will be the new price next time. Make a note of this conversation on the client’s history so that you can avoid this situation on their next visit.
Tip 3: Check in with your team
Your team members will likely hear feedback from the clients and it’s important to distinguish between clients who complained or those who just made an observation about new salon prices.
The salon price increase is one of my favourite topics. It takes time to get it right but when you do, it’s a game-changer.
You can get in touch with Estelle Carroll at estelle@zingcoach.com.au.
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