Salon Business
Learn tips, tricks and business recommendations from our top salon professionals.
11.15.2022
All Businesses Raise Prices, Are You Doing the Same?
It’s no secret that inflation rates have been on the rise, and this has affected many industries worldwide. As a result, the cost of professional salon products, tools, and services will likely rise. To manage inflation, stylists might consider assessing yearly expenses and adjusting service pricing. What happens if you don’t raise your prices to reflect the changes with inflation? You might be giving your clients an unintentional discount, affecting your yearly revenue.
Understandably, you may have some fear around a price increase, and it is possible that your clients may not be happy about a price increase. But they will likely understand your need if you communicate with them properly. Keep reading below for our tips
Follow the Data
In times like this you must make decisions based on data. Service cost by time and cost of goods should be at the forefront of your pricing structure to understand which services are most profitable for you, leading to higher profit margins.
Refresh your Services
Another strategy is to refresh the services offered and introduce new products to perform these new services. This will help you inform your clients why there is a price adjustment. For instance, consider selectively removing services with low-profit margins. You can determine this by the time the service takes and the end profit of the service.
An example would be to offer an alternative to your 20-minute toning services, such as a 5 or 10-minute glazing service. Consider charging your client less because they will take less time.
Keep your Best Clients Happy
Client turnover due to price increases can be challenging. This may result in you having to recruit and win over new clients. Consider trying to keep your best clients happy before pivoting to new clients. Your loyal clients already trust your ability to provide consistent, high-quality work. You will need your best service increase strategy and top-performing products to deliver on that promise.
How to Analyze Your Pricing Model
Increasing prices is inescapable. To get started, answer the questions below to help determine your new pricing rates.
Are your Services Unique?
You can often increase the prices of specialized services more regularly when adopting new and innovative technology. An example would be introducing the new SHINEFINITY zero-lift, zero-damage glaze as one of your focus products for your price increases.
Are your Customers Loyal?
Another factor to consider is customer loyalty. You can create loyalty with your clients by introducing them to new trends, care recommendations, and experiences.
Are Your Competitors Providing More Competitive Services?
Before curating your new pricing strategy:
- Do some research on your competitor’s service pricing.
- Review the range of services your competitors offer and analyze the price-value relationship of their offerings.
- Compare this to your services and determine which are unique to you to decide how to remain competitive.
In Summary
Preparing your business for rising inflation can be a positive process. Using the abovementioned techniques, you can help create a solid plan for long-term success. Raising prices should be exciting for you as a business owner, as it will ultimately help you hit your earnings goals.