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The fundamentals of salon pricing

26 Oct 2022 by Kitomba

Salon pricing can be a complex and imposing issue for many owners and managers. Not only having to navigate the difficulty of increasing prices to combat increased costs, but also how to know when you should be reviewing your pricing, and how to ensure your base rate is right to start with! 

So we sat down with an expert to talk more on the topic of salon pricing – Nadia Howard, Owner of Bedlam Hair Design and Bliss Day Spa, and also the General Manager of Akobe Hair Design Salons.

Nadia puts a lot of importance on setting the right prices from the get-go – for both your salon, and your salon team. She stresses the importance of pricing each service and product accordingly, not being afraid to charge what you’re worth, and ensuring your pricing foundation is solid and applies for all services offered!

Watch the full chat below, or read on to find out more about why she finds the calculation behind costing your services accordingly so fundamental to the basis of her overall salon pricing.

Get it right from the start

“Salon pricing is definitely a bit of a taboo subject, I think. Speaking to a lot of seniors stylists, as well as other salon owners, people just are too scared to charge what they’re really worth.

As salon manager or owner, you have to set your pricing according to your salon and your costs, and it’s definitely worth sitting down and figuring it out properly. I don’t think it matters what the salon up the road is charging – overheads are different in every single business. So it’s important to price according to your own business; your overheads, your product costs, staffing costs, how long certain services take. 

A lot of salons just don’t feel like they can charge what we’re worth, and why not? You’ve got to do it to stay open and be successful, salons shouldn’t be scared to set their pricing this way. 

Don’t forget it’s up to you what you charge, and it’s actually about getting what you deserve to be paid for the services that you’re providing. If you’re spending that time and using all those products, and the clients are happy with the service, I don’t see why we can’t be charging for it!”

Blog Pull Quotes Nadia Howard, owner of Bedlam Hair Design & Bliss Day Spa_8

So, where to start?

Look at your hourly rate 

“I find the best way to work out your pricing structure is by starting with what your hourly rate is. Rather than sitting on what you think the price of a service or treatment should be, or what your clients are willing to pay, start with what your hourly rate is and go from there.

There’s a lot to take into account, you might have apprentices, run a lot of training, offer a higher level of refreshment or other client experience benefits that should all be factored in, and make sure you’re working it out based on the level of service each staff offers – you’ll have some seniors and then some juniors so the cost may differ slightly.

It’s not always easy to work it out – it took me a while to learn! It’s absolutely worth putting the time into it though, once you’ve worked it out and the costs have all been broken down, the way to grow your business is by setting all your pricing accordingly. I know I keep saying that, but it’s because I genuinely believe it!”

Set up a simple pricing structure 

“Keeping in mind some extras such as inflation, and prices of product going up as well as extra shipping charges, in our salon we worked out the hourly rate for each stylist should be $100 to $120 an hour. Therefore, if we’re taking an hour to do a service, that’s what we should be charging! And bearing in mind this is just for our business, every salon will be different, have differing overheads and other costs so again it’s important to work this out for yourself rather than seeing what other salons are charging. 

So we broke it down from there for the base rate. If we’re doing a 30min appointment and charging $60, that’s on point. If you’re taking 45 minutes, which we worked out to be around average, you’re paying $30 every 15 minutes for a service. If someone’s coming in for a quick clip or something that’s taking 15 minutes you’re looking at that $30 mark and so on from there. So it works out from that hourly charge, we’re looking at $30 per 15 minutes. That’s if you really want to break it down. 

Unfortunately though, a lot of salon owners or managers just don’t feel comfortable charging that by the hour. Yet you’d pay for a plumber to come in and check out your washing machine for half an hour, and pay them a call out fee of around the same amount, if not more. So why shouldn’t we charge accordingly for haircuts and other services as well!?”

Need help working out your hourly rates? It might be time to employ a salon coach, find out more: 6 signs you need to hire a salon business coach.

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Factor in product 

“The other aspect we really look at in terms of setting prices is colour costing. It’s a service that takes a bit of extra staff time, but again, it’s charged out accordingly. We charge from a set cost per gram of colour used, so it differs for a touch up or a full colour, depending on how much product we’ve used. 

We then factor in if clients have thicker hair, longer hair, their regrowth’s been left longer – it’s all extra product again! So we introduced an extra colour service fee, which is for example, an extra 10 grams on top of the start base of 30 grams. 

We do make these charges clear in the initial consultation. So we say to a client right at the start, your hair is quite thick, our colour service starts from about so and so amount but because you’ve got a thicker hair we need more product so will be an extra so and so amount. And it works if you say to the client, we’ve used extra colour and it’s going to price accordingly when you check out. Because who else would cover that extra cost? Explaining to the client the process from the start shows them they’re getting more product and it’s taking longer, and that’s what they’re paying for. 

So we have a price for a retouch colour or for halfhead highlights or full highlights or balayage, whatever service we’re doing. And we’ve worked out how much product each service should use, and if the stylist needs more that’s when we add on the extra colour service. We’ve added it as a service in Kitomba which keeps it nice and simple when booking appointments and also when it comes to checking out, the client knows what is being charged and all of the staff are aware as well.”

Staff levels and training time 

“Another thing to factor into your salon pricing is training and upskilling. Our seniors are constantly upskilling, our juniors are getting training done, our colour technicians have been really trained up. They’re spending that time, a lot of them in their time, as they’re going to train on balayage and or foiling and or colour techniques. So they’re putting the time into it, and again, we need to charge for that experience.

There are also a lot of the services now that do require that extra training. For example a free hand balayage, it does take longer because there’s an art to it and the stylist has trained especially for that service. Why shouldn’t you charge for that experience? Why shouldn’t you charge for that service that you’re providing, that you’ve trained on and perfected? A lot of clients will book directly after seeing services like this on social media so are happy to pay for a good quality outcome. 

We make it quite obvious when we do training in the salon so our clients know they’re getting that extra service, we put it on social media and make sure our credentials are updated on the website; ‘how our team spent the day upskilling on the latest hair trends.’ 

Salons pay for on-going training and it’s not cheap. Your clients are paying so that they get a good experience. So make sure you’re charging accordingly.”

Blog Pull Quotes Nadia Howard, owner of Bedlam Hair Design & Bliss Day Spa_9

Increasing prices 

“So now you’re set with the prices you’re charging, it’s time to look at price increases. Again, concentrate on what is right for your business, not just what your competitors are doing.

Every salon is likely to have clients that are going to quibble over a small increase, but are those clients you really want in your salon anyway? If they are shopping around to get their hair or other treatments done by price rather than by experience, they will always find someone cheaper! And again, it would be because it’s a cheaper model, lower overheads, because they’re not training or upskilling, or perhaps there are a few client experience extras they don’t offer. The clients that value training, quality and value the experience will always come back.”

Have regular pricing reviews 

“We absorb a lot of increased costs as salons over the year. These increases seriously affect overheads and product costs, so regular price reviews are important. 

We generally increase prices once a year if we haven’t done so in between for any other reason. Yes everything is priced accordingly but things do change so annually is a good start. Usually just a small increase, it might only be a couple of dollars, but a couple of dollars on a haircut annually is not really something that’s noticed. We do put a little sign on the desk saying, something like ‘as from the 1 June, there will be a slight price increase’, however it generally goes unnoticed. Knowing what your base rate is, and therefore what your breakeven points are it means you’re not having these big leaps in pricing which helps.”

Space out your service increases

“We also choose to alternate our increases by service type – I’d start by increasing the colours by a few dollars, and then six months later increase the price of a haircut and so on.

It just means your clients aren’t getting that increase of $5 to $10 on the same appointment. It’s just a couple of dollars at a time, and then it doesn’t hurt as much. Clients know what we are experiencing, and generally we don’t have any problems with it because they’re happy with what they’ve got and with our service, and so they’ll pay for it.“

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Overall 

“Whether you rent space, whether you’re paid by the hour, or you’re on commission or you own your own salon, there’s no reason why you shouldn’t be charging your services out according to what you’re worth! Your clients pay for your time, your product, your experience, and your knowledge so make sure you’re charging for it. 

It’s not always worthwhile seeing what everybody else is charging. The way to get a proper price on your service is figuring out what your staff are training on, how much time and product it’s using, and also what your overheads are. It shouldn’t matter what people around you are charging because your clients are booking with you for a reason. So just make sure you charge accordingly to your services, and trust your team to provide the best service they can.”

For more salon management tips, visit our all-inclusive business management guide for salons, spas and clinics

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