“What are your thoughts on charging more so I can afford to pay competitive wages?” | Phil Smith

January 04, 2022

As one of the most respected names in the hairdressing world, Phil Smith has built salon empires, launched multi-million selling haircare ranges and won countless awards for his business acumen. Here, he tackles your tricky post-Pandemic business issues…

“I’m nervous about putting up the prices in my salon, but with costs rising and the pressures of paying my team enough to keep them, I feel like I have no other option. What are your thoughts on charging more so I can afford to pay competitive wages?”


“Let me start by saying you’re not the only one facing this dilemma right now. Directly after the Pandemic there was a lot of uncertainty about how our businesses would recover. To a degree we’re still finding out what the long-term effects will be. Many things went on hold – pay rises being one – but as we look ahead and work out what 2022 will bring, it’s time to focus on making money rather than just surviving. 

Everyone knows how important it is to be on top of costs and outgoings in any business. Unless you have a clear picture of what’s coming in and what’s going out, how can you even begin to price your services? I’ve done some forecasting in my own business recently. I began with all the costs I knew I could control. For instance, I know what our rent will be for the next five years. If you don’t, then you need to negotiate it now. Landlords want secure tenants and you want certainty for your business. 

Since the most recent government budget, business rates have fallen massively in our favour. This is great news for salon owners who have seen rates slashed by up to half. Your stock should also be factored as a controllable cost. Of course, there’s no guarantees prices won’t rise, but it’s unlikely to be significant. You should be able to make a fair assessment of what your salon uses and sells and therefore what your outgoings are on a monthly basis. Investigate and negotiate on your current deals with suppliers – are there discounts or incentives you could be benefiting from? I’ve talked about it before but be rigorous about wastage and make sure your team are on board with that too. 

There’s a long list of other costs – your energy bills, laundry, hospitality in your salon, maintenance etc but after all of that, the next and usually biggest outgoing is your wage bill. There is no magic formula to work out what you should be paying someone. As we all know, a ‘going rate’ can be based on all kinds of factors such as talent, length of service and – certainly in my case – you sometimes pay above the odds to reward loyalty and commitment to your salon. Loyalty works both ways and I strongly recommend looking after your team. Which brings me back to the original question. Should you put up your prices?

The answer is that you must price for profit, ie; 10 to 15 per cent profit margin after your other costs have been absorbed – and that includes leaving enough in the budget to make sure your team are getting a fair reward. In my case, the conclusion after going through the forecast was that it was time to charge more for our services to enable me to be in a position pay my team more. There are some smart ways to go about it though.

My suggestion is to give everyone – your team and your clients – time to adjust rather than make the change overnight. I will be putting up the prices at Smith England from March 1st and so far everyone has understood and respected that decision. The reason I feel I can justify the rise and charge confidently is that I know my team goes the extra mile to make the experience worth every penny.

I strongly believe that when you charge more, you should give more. Think of it this way – if you ever go to a nice hotel or bar for a drink, what are the touches that make it worth the extra that you’d pay at the local pub? Could it be that you throw in a conditioning treatment for every client, a complimentary head massage, better coffee in the machine, a nicely designed drinks menu at every chair, freshly laundered gowns that smell amazing, flowers from the market on the reception desk. All relatively low cost but their perceived value is priceless. 

My final point is that there is an undeniable culture of poaching staff that leaves a bad taste in my mouth. It’s not something I approve of or ever do. My entire team joined me as school leavers and I’d like to think that if you value your staff, they will value you. If your staff are leaving, you need to ask why. Very rarely is it due to money, so you need to dig a little deeper to find out the real reasons and fix them.  

As we start the New Year, I’d like to say well done to everyone who has made it through, last year was tough! Let’s continue to respect each other – our teams and our fellow salon owners. When we make our own businesses stronger, we allow the industry as a whole to thrive and flourish.”