Tim Howard, hairdresser, ex-salon owner and now chief innovation officer at Vish, provides his take on when stylists should increase their prices.
1. You’re running at capacity
Being anything more than 80 percent booked each day limits the ability to take on new clients as well as makes it hard to do business with existing clients, who may reluctantly look elsewhere if they can’t get an appointment when they want. They’d be willing to pay a higher price to get one with you. So if you are at 80 percent capacity or booked up to four weeks or more, now is the time to increase prices by at least 10 percent.
2. Costs exceed 10 percent of revenue
If color costs swallow most of your profit, then you need to look at how to even that out. One of the easiest ways to reduce costs is to cut back on waste using technology, such as Vish, to better track your product use. Bringing your color department up to date with tech may also enable you to track costs, separating them from service charges and transfer them to the client. It might just be a few dollars to the client, but it means much higher margins for your business.
3. You charge less than your competitors
It’s not difficult to keep tabs on what other salons in your area charge, and it’s something you should monitor regularly. Being the cheapest won’t be good for business, and not just because your margins will be squeezed. You risk alienating high-spend clients who align with high-end establishments as much for your talent as they do for the perception. These are the clients that expect to pay for additional high-margin services, such as toners or conditioners.
4. You can’t afford education (or other benefits)
Reinvestment in education is important to keep on-trend and your skills fresh. Without getting regular education, people stagnate. If there isn’t enough in the pot to pay out for professional development, you need to review what comes in and ways it can be increased. Perhaps it means additional investment in recent innovations. Quite a few salons that have introduced Vish have redirected money previously wasted on unnecessary color into education or employment benefits, like setting up 401Ks.
5. When it smacks of disrespect
The bane of every beauty business owner is the pressure to give discounts or freebies. Those who give in do so at their peril because it quickly devalues the brand in the eye of the guest. There comes a point when you will notice that the majority of clients are happy to pay what you ask—some might even mention what good value you offer. If that’s happening, take the hint and hike up those prices.