guess its time to raise prices," says the frustrated salon
owner. "Supplies, advertising, insurance, and utilities are steadily
increasing. My checkbook balance looks pretty scary most of the time.
And I really need to increase my own personal income. But how? Decisions,
decisions. Should I post a sign informing clients of price increases
or send a letter? Maybe we could inform clients when they call for appointments
or just surprise them after their services? How much should the increase
be? Will my staff support a price change? They always fear losing clients
and go ballistic whenever a client questions any service charge. Oh
..This is too much, I think Ill just skip it."
As the owner of a small business, I struggled with this topic many times
myself. Today, as a consultant and coach to small business owners, I
spend many hours developing pricing strategies. It is the essence of
our business, hence the cash register and without proper pricing the
salon is doomed.
The formula for
proper pricing is: Cost of Services + Profit = Price of Service. It
is paramount to know the salon's cost to perform each and every service.
All salon expenses should be analyzed: rent, advertising, utilities,
insurance, stylist's wages, assistants/receptionist/salon coordinator
salaries, payroll taxes, accounting, legal & consulting fees, credit
card processing & banking fees, hospitality, etc., etc. Pricing
is not a number randomly selected; it is based on actual cost of services
plus desired profit.
A service should
never be priced below the salon cost of performing that service. It
is important to realize a profit on every service in order to stay in
Pricing is not based
on what your clients would prefer to pay or what feels right
to employees. Although important considerations, they are not the determining
factors. Pricing involves business savvy, market knowledge, service
excellence, high self-esteem and strong personal confidence.
Salon owners, many
times, work through the decision-making process (the how & when
to inform clients) and analyzing the numbers (analyzing costs) only
to end up stuck or frozen at the implementation stage.
Quick story to
illustrate this point: Three birds are sitting on a fence. If two birds
decide to fly away, how many birds are left sitting on the fence? Answer:
Three. The birds only made a decision to fly - neither actually flew
increases requires excellent communication skills, both listening and
speaking. Ideas and decisions without action are only noisy distractions
that prevent true success of owning a business. There are many aspects
to the pricing challenge, and its different for every business
owner. If you find yourself "sitting on a fence" when you
really want to fly, enlist the help of a trained coach. Happy Flying!
by The Salon Association in Spring 2000