For hair stylists and salon owners, implementing a price increase can be a daunting task. On one hand, you want to ensure that your business remains profitable and that your stylists are fairly compensated for their time and expertise. On the other hand, you don’t want to alienate your loyal clients or discourage new customers from trying your services.
It’s totally understandable to feel apprehensive about announcing a price increase, especially in today’s climate when everything seems to be going up and up. In reality, though, the cost of doing business in a hair salon has skyrocketed lately, and if you don’t consider this in your pricing, then your business could suffer.
Luckily, there are plenty of ways that you can approach a price increase that will help to ease in the changes, and minimise the impact on your business and clients. In this article, we’ll explore some strategies for implementing a hair stylist salon price increase that will help you maintain a successful and sustainable business (and that won’t leave you pulling out your hair). So, need to increase the prices in your salon but don’t know where to start? Let’s take care of that.
3 (really good) reasons to increase the prices in your salon
1. Inflation & the cost of living
The cost of living crisis – it’s all anyone’s talking about these days, and for very good reason. It’s not just about charging more for the sake of it; inflation is a real issue that can impact the cost of running a hair salon. Rising prices for rent, utility bills, and supplies can put a strain on any business, and salons are no exception. In order to maintain their quality of service and cover these growing expenses, salon owners and stylists may need to raise their prices. It’s not ideal, but sometimes a small price increase is necessary to keep the salon doors open and ensure that clients receive the best possible experience.
2. A growing business
Business growth is an exciting prospect for any salon owner, but it’s essential to recognise that growth often comes with added costs. As your salon becomes more popular, you may find yourself facing additional expenses. You might, for example, need to invest in new equipment or products, especially if you’ve decided to incorporate new services into your treatment menu. As a hair stylist, you may need to invest in new tools, hair products, or extra training. Sometimes, it’s also necessary to hire additional or more specialised team members to keep up with client demand.
All of these factors can put a strain on your bottom line, which means it might be necessary to increase your prices. Whilst it can be a difficult decision to make, it’s essential to remember that all of these things enrich the overall experience at your salon, and that your clients value quality – which means that they will be willing to pay a little extra to receive it. If your goal in 2023 is to grow your business, then a price increase may be a necessary step.
3. Financial losses (without apparent cause)
An in-depth knowledge of your salon’s finances is crucial to the success of your business. A detailed reporting system can let you know when sudden or gradual changes occur, and can detect a ‘stop’ in the cash flow of your business. If this happens without explanation, then it could be a sign that your prices aren’t properly aligned with your business running costs – and it’s crucial to take action before the situation gets out of hand. Treatwell Pro salon management software provides intuitive, in-depth analytics and insights into the inner-workings of your business and finances. With this information at your fingertips, you know that you can make the best decisions for the growth and success of your salon when it comes to price increases (and so much more).
5 ideas to implement your salon price increase
- Analyse your competition.
- Carry out a cost/benefit analysis.
- Review the productivity of your team.
- Add value to your services.
- Be fully transparent.
a) Analyse your competitors’ prices.
One essential step to consider when raising your prices is to look at what other hair stylists and salons in your area are doing. Take a look at how they’ve changed their prices over the years – if most of the competitor salons in your area have increased their prices without losing business, then it’s likely that your clients will accept the change too.
However, make sure to carry out other research too. If you’ve analysed your own business, and decided that it’s time for a salon price increase, then don’t be afraid to be the first of your competition to take the plunge.
b) Carry out a cost-benefit analysis before a price increase.
Again, whilst it might be tempting to follow the crowd and set prices based solely on your competition – it’s essential to carry out your own research and have your own reasoning. Carrying out a cost-benefit analysis will help you understand the financial impact of a price increase on your salon’s revenue and profitability.
First, you need to identify the costs associated with providing your services, including rent, utility bills, wages, and products. Then, estimate how much revenue you’ll generate from your services at your current prices and the potential revenue after the price increase. Next, subtract your costs from your revenue to determine your net profit. Finally, compare your net profit before and after the price increase to determine if the benefits outweigh the costs. It may sound complicated, but Treatwell Pro’s reporting and analytics tools can help you at each step – making for a simple (and effective) cost-benefit analysis.
If your evaluation shows that a price increase will increase your net profit, then it may be a viable option. However, if the increase is minimal, it may not be worth the potential loss of customers.
c) Review the productivity of your team before raising their prices (so they don’t lose customers)
Before you raise the prices for each team member or hair stylist, make sure to check their productivity – otherwise they may end up losing clients in the long-run. Here are criteria to consider that may help you in your decisions:
- Is the team member’s calendar at least XX% full?
- How many services does the team member perform per month?
- Does the team member attract new customers?
- Of all those clients, how many come back? Check your retention rate.
- What’s the average price of a treatment booked with that team member?
With Treatwell Pro, you can easily check all of the above. Review which team members are bringing in the most profits to your salon, who has sold the most products, and who has carried out the most treatments. Keep your team motivated with regular reports and statistics, and use them to decide when a hair stylist should increase their prices.
d) Add value to your services
This bit’s important. If your prices are higher than other salons, this should be reflected in the experience your clients receive in order to justify this. Go above and beyond to create indulgent experiences – offer extras such as hot towels, a glass of prosecco on arrival, or aromatherapy during their treatments. Show them the quality of your treatments, your technique, and your products, and they’ll know that you’re worth the extra money.
e) Be transparent. Tell your clients how and why you’re increasing your prices.
Carrying out a price increase in your salon can be a daunting decision, especially when it comes to communicating the change to your clients. However, transparency is key to maintaining trust and loyalty with your customers. Make sure you’re able to communicate it effectively, and can answer any questions they may have.
Start by explaining the reasons behind the price increase, whether it’s due to rising costs, inflation, or the need to provide better quality services. Be clear and concise about how the price increase will impact your customers and their services. Provide your clients with a notice period, so they have time to adjust to the change, and consider offering discounts or loyalty rewards to show your appreciation for their continued support. Remember to emphasise the value of your services and how the price increase will enable you to maintain and improve the quality of your offerings.
Lastly, think about how you’ll communicate the price increase. With Treatwell Pro, you can send wide-reaching or ultra-targeted emails and SMS messages. Our smart communications tools allow you to quickly and easily ensure that all of your customers are aware of the changes. By being transparent and honest with your clients, you’ll strengthen your relationship with them and increase the likelihood of retaining their business.