THE PRICE IS RIGHT
Upping your price list is daunting, especially after a global pandemic but with summer on its way – one of the busiest periods in the beauty calendar – now’s the perfect time to work out your worth. Becci Vallis, Vitality Editor, looks at the key things to consider.
When was the last time you thought about amending your price list? And when was the last time you actually did it? Money can often be an uncomfortable subject to tackle but if you want to keep your profit margins healthy, it’s something you can’t avoid. It’s even more prevalent now, when summer is just around the corner and holidays are back on the cards prompting people to invest in hair and beauty tweaks. It’s an opportunity to make up for all of those lost months of lockdowns. “Setting the right price is one of the most difficult decisions to make when running a business but get it right and your clients will be happy and your profits will be high,” says Liz McKeon, salon business expert. “Many salon owners make the mistake of setting up a flawed pricing structure and as a result, find themselves working very hard for so very little.” But it doesn’t have to be like that. Use this as your handy cut out and keep guide and you’ll be making the money you deserve in no time.
DO YOUR RESEARCH
Investigating what your competitors are offering for similar or the same treatments is a good place to start but there are other aspects to factor in. “Manufacturing costs, market place, market condition, brand and the quality of your products and services need to be considered before you land on a final price,” continues Liz. “And once you have you then need to ask yourself the following…”
- Does it achieve the financial goals of the business?
- Does it fit the realities of the market?
- Does it support the salon’s market positioning?
You could also contemplate getting professional financial advice from someone who understands the figures and can guide you on how to boost your profit margins.
FINDING A FIGURE
There isn’t one golden rule or percentage increase to use when it comes to inflating your prices and Katie White, owner of Relax LDN, recently added £5 across all of their treatments. “I always ask myself – is this treatment profitable and if not, what do I need to do in terms of price to make it profitable and will this price point appeal to my customer base? Then I move forward with a price where I know I will have margin to offer price promotions in quieter times,” says Katie.
External circumstances may also affect your costings. “Your suppliers might dictate when to put up your prices to a certain extent – the cost of your raw materials, professional products and running costs increase annually and if you choose not to pass these increases on to your clients you run the risk of putting your business under financial pressure,” continues Liz. As a rule of thumb she suggests going through the below before you make a decision on your final price.
- What are the pricing objectives?
- What are your running costs and overheads?
- What image do you want the price to convey?
- How flexible can you be on pricing?
- What are the chances of getting into a price war?
- How much do clients value your services?
Then you must:
- Check your prices against inflation
- Include the value of your time in your prices
- Remember clients are not always looking for the lowest price
INTRODUCING THE NEW PRICE
This is entirely up to you - you could do a big unveil with your new price list or you could involve your customers in the process. “Communicate with your clients,” recommends Amy Lewis, Founder of Mooeys Group. “You’ll likely have a database full of ways to get in touch with them all, be it your phone, Instagram, a Facebook group or a CRM like the one Phorest Salon Booking System Provides. Reach out to them and ask them their thoughts.”
By involving your clients you can also use the price increase as a marketing tool says Katie. “We tend to increase our prices in two ways. One is to use it to entice our clients – for example, book before a certain date to take advantage of the lower price point before we increase it. We also give them four weeks notice so they can benefit from the existing lower price and/or buy a package at the lower price to enjoy for the whole year before the new price kicks in.”
“The second way we announce a price increase is with the addition of a new treatment with added value. For example, we have just added facial cupping to our bespoke facial – the price point of the training was low, but it’s added value to an existing treatment – it’s tangible and clients can see how it will impact them directly. The true reason we needed to increase costs is because VAT, rates, rent, laundry and utilities are incredibly expensive, but it is much easier and a fun message to offer something new and exciting to our clients instead.”
JUSTIFYING THE COST
It’s natural to think you have to justify the cost increase to your clients but what’s crucial here is that you remember your worth. “Your first battle is your own mind and money mindset telling you that you can’t charge that much or people won’t pay it, but once you realise that your client will see the value as well as feel the benefits, you really can charge what you like,” says Rosanna Sulovari, owner of Twinoaks Beauty.
Amy likens the process to buying a bottle of wine! “Picture this – it’s Friday night and you’re in the wine aisle – do you go with the budget brand because it doesn’t matter about the quality or do you spend a bit more because you want it to be something you really enjoy? To your clients your treatments are the good wine – if they want the service and your quality shines through, they’ll pay for it!”
At the end of the day, you’re running a business and your clients will accept and appreciate that. Nothing stays the same price forever and a couple of pennies or pounds won’t deter them from a service or treatment they’ve come to know and love. Plus, there is always the opportunity if your prices are right that you can offer packages or membership options that you can use to fit clients who are cautious with their budget. “Pricing needs to be reviewed annually, staff must be trained to communicate the price increase in a positive manner and if you position your business as the first and best option to the client, increasing your prices won’t be an issue,” says Liz.