Finance

10 Tips To Raise Your Salon Prices Without Losing Clients

5 min

Over the last few decades, the price of living has gone up, and customers’ habits have changed. In the hair and beauty industry, there’s still quite a bit of fear associated with raising prices. While price increases should be seen as a given for heightened reputation, many still view this as something that will drive loyal clients away. It won’t. Not when you raise prices for legitimate reasons and have numbers to back yourself up. That being said, some proven-to-work strategies can help make your announcement go smoothly.

Listen to the audio version of this blog, and subscribe to the Phorest Blog Podcast here:

A step-by-step guide to raising your prices

1. Know your worth

How much does it cost to keep your salon open? What’s your break-even number? And most importantly, how confident are you with your level of services versus what do the numbers say? When Killian and I were discussing this topic with David Barnett on Phorest FM, our first question was: “How do you know what you’re worth?”

He explained: “Let’s say it’s $1000 a month to keep the lights on. If your average ticket is $50, or whatever it may be, then how many clients have you got to see to do that?

Then we break it down to a daily basis. […] If it’s $1000 a month, you’ve got to see 20 clients in that time. Of course, that wouldn’t be hard to do. You’d be seeing one a day to keep the lights on. If it ends up being $4000 or $5000, then obviously, the number [of clients to see] is a lot higher.

You need to have that number. […] You’ve got have that intimate relationship with your business that you know exactly how much it is to keep the lights on. Then you can start to say, ‘Okay, this is where my prices need to be. This is where I can afford to have them.’ Once you’ve found out that price point, then it’s, ‘Now, how much more am I worth?’ […] Your experience, obviously, comes into that, where you’ve worked previously. How many years you’ve been in business. What the guest’s experience is like.”

In addition to that, you can look at what extra services you’re providing, what others aren’t offering that you are and which makes you unique.

Listen to David Barnett’s full interview and subscribe to the Phorest FM Podcast here:

Neil Ducoff’s advice on Phorest FM Episode 162 echoes the above and goes into specifics a bit more:

  1. Decide the margin you want (the difference between the selling price and cost)
  2. Figure out how many inventoried hours you have for sale (how many staff will be working the first 1-3 weeks when you reopen and for how many hours)
  3. Estimate the productivity (perhaps 80% with all the post COVID-19 sanitisation)
  4. Multiply the hours you have for sale by 80%
  5. Take all of your company’s expenses for an average month (except retail) and divide it by the number of hours you have for sale (that’s your cost per hour)
  6. Put a profit margin on that cost per hour (recommended 15%)

2. Review your staff’s performance

Before raising a specific stylist or therapist’s prices, David Barnett suggests comparing their performance against the benchmarks he’s worked with throughout his years in the industry. If they surpass said benchmarks, raising prices won’t be an issue.

These benchmarks include:

  • The stylist or therapist should be at least 75% booked
  • The number of services (not clients) provided by the stylist or therapist in a month should be at least 130
  • Their retention rate for the past three months should be at least 60%
  • With staff without much of a clientele, track new clients and make sure they get at least 8 new clients per month.
  • Get the retail ticket per client to at least $10

3. Aim for added value rather than plain profitability

One of the best ways to smooth the price increase is to add value to the services you provide to clients. Perhaps you could add small complimentary services for the first week or two after the announcement, or possibly re-evaluate the TreatCard points attributed to your products and services.

4. For retail products, consider packages

Creating different-sized or additional packages can help make your old packs seems like a bargain, even at the new price. Let’s say you were selling five products for $100, but need to raise that price to $120. By creating additional 3-products retail packs for $80, you make the 5-pack seem like a deal, even at its newly increased rate.

5. Communicate and be transparent

Send your clients an email, write an announcement for your website and announce the increase using your social media accounts. Whatever you do, communicate and be transparent both with staff (ahead of time) and clients.

6. Just do it

Don’t lose sleep over your decision. Your best customers value your work and will be surprised that you didn’t raise prices sooner.

7. Thank your clients & celebrate your stylists or therapists

Why not celebrate your stylists and therapists achievements and experience? Make it a time to say congrats to both your staff (for their hard work and achievements) and clients (for their loyalty and support over the years).

Sarah Schupp, from UniversityParent, explains: “The first thing I do when I increase prices is say thank you to customers. I sincerely express my appreciation for the risk they took on me, and then I’m transparent with them about why I need to raise prices. I make sure they understand why we’re asking for more money and why our product is worth more now than when they started. It doesn’t always work, but most customers tend to be understanding.”

8. Make yourself available to chat

When you’ve announced your new salon prices, be prepared to answer any questions coming from your clients. Taking the time to chat with them will smoothen the entire process.

9. Stand your ground, don’t apologise

If you don’t send client communications out to announce the change in pricing, then sure, you might have to deal with a bit more of a shockwave in your client base. However, if you’ve been fair with the numbers, as well as clear and transparent in your communications, then stand your ground. Agreeing to honour the old pricing for some of the perhaps more difficult customers undervalues your work and harms your brand.

10. Review your pricing yearly

You should review your costs and pricing at least once every year. When you do, the increases feel much smaller in the eyes of clients. Imagine keeping your prices the same for five years and then increasing everything by $25. How do you even start to communicate such an increase? Instead, if you were to spread that same amount over five years, you’d be looking at a $5 increase year-on-year, which in comparison, is only the cost of a lovely latte at your local coffee shop.

Download a free email template for announcing a pricing increase

Fill out the form below to get an email announcement template by email (this can take a few minutes):

Got feedback? Let us know either in the comments below or tweet us @ThePhorestWord! (Pssst! We’re on Instagram too!)

Thanks for reading! #LetsGrow


This post was originally published in July 2016 and has been updated for accuracy and comprehensiveness. Featured imaged shot on location of GMALE Barbers, in Dublin. © 2017 Phorest Salon Software.

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