Basing your prices on what others charge is fundamentally wrong because there are too many variables. You don’t know their expenses, if they are VAT registered or not or even the length of time they take to do a service.
As salon owners, we need complete control of our numbers to know that when we set our price lists, every service is profitable.
There are two things you need to know when setting your prices:
1. Your break even costs: the costs for you to be able to trade
2. Your goals
Once you set your goals, you can reverse engineer them to know what you need to take in your salon per week, per stylist to hit them. Knowing your break even means you can set your pricing based upon what each service should be per hour, even down to per minute to not only hit your revenue goals but your PROFITS.
When selling a product, it’s standard practice to know the cost of buying that product and deliver to clients at a profitable price. Even so, many people pluck their figures from thin air without fully understanding upselling their services.
We know that as the cost of product goes up, the price you sell it for will increase, if you don’t, your profits go down. The same applies to your services, yet many people find it difficult to charge what they need to in this area of their pricing.
Within my town of Inverness, it used to be common for people to travel to Glasgow, Edinburgh and even London to get their hair done at top named salons, with clients only popping into Ego Hair Design for a quick blow dry. It was even common for young talent to head to other cities for training, which really installed a belief that the standard of hairdressing in our community wasn’t good enough. This belief created a huge drive for me to create change, making sure we enter awards at the highest level and offer the best training locally to ensure young talent don’t feel they need to leave the community for it. In doing so, the value of our local salon services elevated, allowing people to receive high-class treatments on their high street rather than having to travel afar.
Salon owners often think their clients shop on price and therefore try to keep their prices as low as possible to cater to that. What they ignore are the premium paying clients who want to pay more for a high standard service. Some clients enjoy spending on themselves and feel it’s important to splash their hard-earned money on making themselves feel pampered. In some cases, the higher the price tag, the more appealing to the client as they feel they are buying their best.
Pricing is relative to each individual, and what you think may be expensive, won’t be to someone else. We should never make judgements or assume what someone is willing to pay. There are many salon owners who want high paying clients, yet don’t market to attract that demographic of clientele. If you rely on lower prices or discounts, you attract discount hunters who are searching for lower rates. If clients can see the value in what they are getting, they will pay more. When you demonstrate confidence in the services you provide, and the talent you and your team have, your clients pick up on it. Clients will pick up on when you are fearful and will question your price increase.
Expenses go up every year; therefore your prices must follow. Unless you want to work for free or on less than the minimum wage you MUST price for profit and secure the pay-check you work so hard for.
Focus on creating an experience that is so memorable to your clients, that when they hand over their hard earned cash, they feel they would have paid even more. People remember how you make them FEEL, not what the price was. Most would rather part with a bit more cash in exchange for a higher value service. When your prices rise, support this by making the experience even better, ensuring your clients feel incredible every step of the way. So in conclusion, know your goals, look at your costs, and then set your price with the aim of making a profit. Write your marketing messages to attract ideal, premium clients, providing them with experiences that will blow them away. Caroline Sanderson, Owner of Ego Hair Design, and The Salon Jedi.
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