Salon owners are struggling 
to make a profit and combat rising business costs in this tough and competitive economy. Unfortunately, far too many salon owners are trying to find solutions to these challenges by trial and error. 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 stations just to survive.
While the cost of living and 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 is an option you may want to consider even when times are tough. That being said, here are a few tips to keep in mind:
Positive Word of Mouth Advertising and Referrals– will always 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 good enough anymore. If you’re 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.
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 as 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. Raising your prices at the wrong time could result in a dramatic decline in sales. Be smart about it when you decide to increase your prices.
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. Pool some resources to pour into your team, and then raise your prices as your team increases demand at your salon.
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 to their customers.
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 June 1 as an example. 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 by 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 increases.
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.
This will be one of my topics at my upcoming 2-day Business Seminar in Las Vegas on July 9-10. Let me help you to develop a championship team and improve staff performance and productivity. You won’t want to miss it! Too much down time with your staff members is not a good sign. I can help you in this area .