Salon pricing – Increased costs make it a very real issue for most small business owners. The inflated costs of supplies and other overheads make price increases a necessary part of doing business.
So we all know price increases should be done. But what’s the best way to go about it? How do you know how you should be calculating your costs, or how much to raise your salon’s services by?
We’ve spoken with numerous industry professionals including salon coaches and owners, and what we’ve learned is this: there are a many different ways you could increase your salon pricing.
Ultimately the decision is in your hands. No one knows your clients or your business like you do! You may decide to be as open as possible with your clients and communicate every price update, or you may choose to employ one of the strategies detailed below.
Read on to find out more about different pricing strategies, and what could work best for your salon, spa or clinic.
Schedule regular price increases
One of the most popular, and simple ways to implement price strategies is to set a yearly price increase. The main benefit of this annual overhaul is that you can review and reflect on the year just gone to see exactly what has changed pricing wise, and by how much, which gives you a great indication of how much your price increase should be to counteract these costs.
Malcolm Gibbons, coach and owner of Salon Business Coach, recommends looking at your profit margins (not mark-up), and how these may be affected by changing prices. He goes on to suggest a minimum of 10% increase on your services per year.
Some businesses choose to do this to coincide with the start of the financial year, or it may be that you decide a set month for the annual price change. October or November would be a good time to do this to maximise profits for the busy season!
Read more about Malcolm’s take on salon pricing: Are you being paid what you’re worth? Knowing when to increase your salon pricing.
The odds are in your favour
How you set your pricing can have a big impact on how you implement price increases! Marie Drever of ZING Coaching weighs in with an interesting strategy: “All services should end in a 1, 3, 7 or 9” she recommends. “The human brain can remember even numbers but can struggle to recall odds. E.g. If your service is $50… instead of your price rise going up by:
- Whole numbers (from $50 to $60, $80, $100, $110)
- Middle numbers ($55, $65, $85, $105) or…
- Even numbers ($52, $54, $56, $58)…
Price them with odd numbers $51, $53, $57, $59. They won’t notice as much if a service goes from $51 to $57, as they would if it went from $50 to $60.”
Marie goes on to suggest that there’s no need to announce these changes: “If a customer does notice and says ‘Oh, your prices have gone up’, make sure you reply with confidence and a big smile: ‘Yes, they have’, ‘Yep they do every year’ – just smile, nod and agree!”
Marie’s colleague and fellow ZING Coach, Jay Chapman, agrees: “Don’t apologise for putting your prices up, every service, every product increases their prices at some point. It suggests you’ve done something wrong and you haven’t, you’ve made a smart business decision.”
Learn more about hiring a business coach here: 6 signs you need to hire a salon business coach, or visit ZING Coaching to chat with Marie or Jay directly.
Price your services accordingly
Salon owner and manager Nadia Howard from Bedlam Hair Design and Bliss Day Spa recommends setting a solid foundation for your pricing right from the get go. That means pricing each salon service to cover all costs, with additional charges where necessary. This makes price increases simple as you can recalculate and edit your pricing as necessary.
How to set it up
You need to work out your hourly charge and go from there. Don’t be afraid to charge enough to make money, that is after all why you’re in business! It’s also important to factor in things like the level of service from each stylist, and don’t forget to include all your overheads in this.
From there you can work out the cost of each service based on the length of time and experience level of each therapist or stylist. For service pricing such as colour treatments, where product is used, Nadia takes the same approach and works this into the initial pricing, based on how much product each treatment should be using.
Charge for extras
Nadia also recommends implementing an extra surcharge for certain services. For example, a client with very thick hair will need more colour, so Nadia has worked out her base rate for a colour service is based on 30gms, and then charges for every 10gms used on top of that. After all, why should you be bearing the extra cost?
Read more about Nadia’s salon pricing strategy: The fundamentals of salon pricing
Increase pricing one service at a time
A unique and intriguing strategy from salon business coach and therapist Paul Carbis is what he calls ‘price cycling’.
What is price cycling?
The strategy is based on the premise of increasing prices one service at a time, with the idea that you won’t know how much your clients are willing to pay for a service until you test it out – this is an easy and effective way to test the limits.
It essentially involves picking one section of your offering (colour services, nail treatments etc), and increasing the prices by a set amount. Be sure to take note of the number of these services you were doing or selling both before and after the price increase. The idea is that once this has been done, the next month you choose a different section of your offering and do the same thing.
Small increases of $2-$5 will generally go unnoticed, and as you’re not upping all your services at the same time, anyone booking for multiple services will not have to bear the cost of all the increases at the same time.
How to implement price cycling
The only way this strategy can work effectively is by utitising your salon management software reports, and keeping accurate and up to date records of any changes made.
Paul recommends to keep on cycling your price increases until the numbers in any particular service section start to slow. For example, if your latest increase cycle is eyebrow shapes, and you notice a drop off in services from the month prior to the increase, then simply put that on the back burner and continue with price cycling your other service sections.
Read more: Price cycling – could this be right for your salon business?
Is it time to revisit your salon’s pricing?
No matter what strategy you choose, what path you decide to take, one thing is clear – salons should be increasing their service prices regularly to maintain a successful and competitive business.
For more tips on managing your salon, spa or clinic, visit our business management guide. To see how Kitomba Salon and Spa Software could work for your business book a free demo here.
This blog was originally published on 22nd March 2019 and had been updated for relevance.
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