Raising prices in a Tough Economy
Written by Jon on August 22, 2010 – 6:00 am - ” Success is not a destination,it’s a journey”
Salon owners, like business owners across industries of every kind, are struggling to make a profit and combat rising business costs in this tough economy. Unfortunately far too many salon owners are trying to find solutions to these challenges by trial and error. In an effort to keep top hairdressers, many salon owners have resorted to any number of the following: recruiting top stylists from their competitors; paying commissions that are too high; or renting out stations just to survive.
While the cost of business will continue to rise,salon owners will have to find ways to stay ahead of rising business costs or see their profits decline.
Raising prices of services, individual stylists, or the entire team and/or products, are options you may want to consider even in a tough economy. Here are a few tips to keep in mind:
Positive Word of Mouth Referrals and Salon Demand – Referrals will be your score card in helping you decide when and how to raise prices. Monitor your customer return rate for each member of your team. If your referral rate is high, then you should consider raising your prices.
It is important to note before you raise prices, you must first create a demand, and then consider raising prices with individual salon team members, or raising prices for the entire salon. Good is not enough anymore, if your the best in your community and exceed client expectations,raising prices will not be that big an issue,especially if you target and market your salon to an upscale clientele.
Raise Salon Prices not Commissions – Raising prices is a win-win situation for salon owners and rewards your hairdressers for their hard work and dedication. It creates incentives for higher levels of performance.
Deciding When to Raise Prices – Once you’ve created a demand for services and have a high rate of customer returns and referrals, adjust your pricing as needed. However, if your salon is not busy as you want, you may have to keep your existing prices stable until you are able to create a demand for your services. The best time to raise prices is 2-4 weeks before your busy season. January and February are notoriously slow months, as is “tax time” in the US!
Rule of Thumb for Price Raises – Generally, small increments is best. Chemical services can be raised by $5.00, or hair cut prices by $2-3.00 depending on your salon’s reputation. If you have a very busy high end salon you may consider higher increments. Depending on your area,you determine the amount you wish to raise your prices.
Educate Your Team – invest in your salon’s greatest profit potential — educate your team. The higher the education and training, the higher the demand for their services.
Getting the Message Out – Before you announce price increases to your clients, have a staff meeting to discuss the changes. Be sure your staff knows how to present the increase in the best light. Once you’ve met with the staff, create a simple sign that can be displayed near your sign-in or reception desk,perhaps 1 month before you raise your prices. Simply say there will be a slight increase in our services effective, you decide on the date. List the services and/or team members that are affected. A simple “Thank you for your understanding and continued patronage” statement goes a long way.
Your advertising Strategy — plan in advance sending out a marketing program via email, post card, newsletter,or social media for new customers to compensate for any potential loss of customers due to fee increase.
As the cost of business continues to escalate,we must consider raising our prices just to keep up with the cost of living. Let us re dedicate ourselves to keep reaching higher levels of excellence by creating a demand for our services,only then will we be able to raise prices. Good is not enough anymore.
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