Salon Business – Raising Prices. Should You Tell Your Clients?

by Marion G Shaw on June 18, 2012

In an industry where profitability and pricing is always an issue there are many different opinions as to when and how to raise prices and how to handle it with your clients.
I speak to many salon owners who have not raised prices in years and are literally swallowing price increases year after year but are terrified to ask their clients to pay more so that they can actually rest easy at night and pay the bills.
Time to stop!

Why are we worth so much less than our clients and other businesses.  We work harder than many other professions and yet are paid less than most.  We also give more commission away to our stylists than any other commission based industry and give even more commission when our staff want a raise, rather than have the client fund it by paying more.
When do you raise prices?
  1. When there is just too much month left at the end of the money and you find yourself contributing from personal funds to meet payroll.
  2. When your suppliers hit you with their manufacturers’ increases, usually at the beginning of each year.
  3. When your cost per hour to run your salon is more than you are charging for an hourly service.
  4. When either you or a team member is more than 80% booked.
  5. When you find that your appointment book is filled with clients who only want basic services, do not want chemicals or retail product. (You need to find a better quality of client.)

Comments that I hear when objecting to price raises are many.  “My clients can’t afford it” is popular.  Can you?  Let’s face it, it’s you or them and how will those loyal clients feel when you have to close down.  Then they will be faced with finding another salon, who, if they want to stay in business, will charge them more. Often I hear comments about individual clients.  “She’s been coming to me for years, I can’t ask her to pay more.”  Why not? I’m sure she’s been dealing with increases from other service providers and retailers for years.  If you go to your usual gas station or supermarket, where you have been shopping for years, do they give you a break just because you have been a long term client?  I think not!

So now comes the question of do you give your clients notice or not.  For years we have planned price increases, if we actually dared to do them, and given clients notice of how much and when.  However, at a recent seminar on pricing, one very successful salon owner commented that he did not believe in giving advance notice.  There were a few shocked faces, however, think on this.  Does anyone else tell you when prices go up?  Does your supermarket, gas station, favorite restaurant or dentist give you notice.  Absolutely not.  So why do we feel that we have to?

If you need to increase your prices in order to stay in business and make a profit, be like Nike – just do it, and don’t feel guilty about it.  You may lose a few clients, however, they will be the ones who had basic services only.  Statistics show that you will still be ahead. You may also give them the opportunity to spill off to one of your junior stylists. Your stylists will also thank you because they get a pay raise.

By the way,  if your compensation package is too high, you may want to increase prices and drop the commission rate. This will not produce a pay raise, but it will get your payroll expense under control.

Go take a look at your P & L.  Are you making a profit?  What do you need to do in order to answer “yes” to that one?

Have a great week,  see you next week – same time, same place.

{ 3 comments… read them below or add one }

James Jordan June 18, 2012 at 6:43 am

We do let our clients know ahead of time so they can make the choice to return or switch to a different stylist. We put up notices 90 days ahead of their change. (the typical salon cycle of most clients).

We have found that the loss of clients is minimal and they understand why we are doing it.

We usually position it as we are raising prices as our schedules are getting busier due to other jobs(photoshoots, tv shows etc.).

This works for us. But only if the stylist is actually very busy and providing good quality services.

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Kimberly November 22, 2017 at 2:30 am

Well I love my hairdresser and I been with this salon 9 years but because they won’t admit they charged me 20 more dollars this time, I’m going to look somewhere else. I really don’t like being lied too. Thank

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Marion G Shaw November 22, 2017 at 4:31 pm

Hi Kimberley, Thanks for your comments. Pricing is a very delicate subject and unfortunately the salon industry is bad in keeping up with correct pricing and many salons make no profit at all due to this. However, $20 is a big hike and one which you should be informed about. I would certainly be questioning it if it happened at the salon I go to. Pricing should always be based on expenses and productivity and should be reviewed every 6 months. Small increases to keep up with expenses need not be posted ahead of time, most stores that we shop at raise their prices constantly without any notice to their customers. Do we question the grocery store when the price of milk or butter goes up? However, it is a problem if your salon won’t admit that they raised the price. Hoe this helps.

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