Whether you just opened a new salon or you are revamping certain aspects of the business like the pricing structure and services, setting and adjusting your prices will ensure the success and longevity of your business. However, if you set prices that aren’t practical, realistic, or attainable, you may be setting yourself, your people, and your business up for failure.
And while there are many things to keep in mind when you are pricing your services — from the cost of your salon supplies to the geographic area where you live — this article will help set you on the right pricing path. From learning what factors play into your pricing and ways to properly communicate pricing to your clients, we will cover it all.
The Different Pricing Strategies for Salons
Several different pricing strategies can help salons at all levels set or raise their prices. But which one is perfect for your business?
- Price Skimming – If you’re opening your salon in an area where there are very few or no competitors, you may benefit from the price skimming strategy. Skimming allows you to charge higher prices as you open your business because your clients don’t have access to other salons nearby. And, eventually, when you do have competition, you can lower your prices to stay competitive without hurting your bottom line.
- Market Penetration Pricing – On the other hand, if you are opening your salon where there is a lot of competition, it could be beneficial to take the market penetration approach. This strategy allows you to offer services at a lower cost than your competitors in order to secure clients. Eventually, once you establish a loyal client base, you can then begin to raise your prices. This strategy may require your salon to take a loss on profits in the beginning, so it’s not a practical strategy for everyone.
- Premium Pricing – If your salon is high-end or offers services that are popular and hard to book, you can charge more for your services by using the premium pricing strategy. Your branding and salon’s overall aesthetic will need to communicate luxury for the prices to be substantiated.
- Value-Based or Economy Pricing – If you want to appeal to your client’s budget, you can offer pricing that reflects value options. To figure out what your clients view as a decent pricing model, you can always solicit feedback. Similar to market penetration pricing, this strategy may not work for every business model.
Things to Keep in Mind When Pricing Your Services
Now that you’re aware of the different pricing strategies for salons, here are some considerations to keep in mind when it comes to setting your prices and communicating them to your clients.
Prices Need to Be Practical for Your Bottom Line and Client
First and foremost, when you are establishing your pricing, your rates need to be practical enough to keep your business afloat and growing while also being ideal for your clients. Before you set your prices, create a budget and look over all of your potential finances. This should include everything from purchasing professional salon supplies to hiring talent. Depending on the pricing strategy you choose, pad your practical rates and prices a little to accommodate for any financial woes or hardships that you may incur.
Know Your Worth
Aside from knowing what your business can and can’t sustain in terms of pricing, it’s also important to establish you and your stylists’ worth and factor that into your salon’s pricing. Each business owner and stylist brings something special to the table and that should be reflected in your pricing.
As you develop a budget and adopt a pricing strategy, it’s important to also conduct a market analysis on the competition in your area. In order to secure business, you want to ensure your pricing is competitive and attractive to potential clients.
Communicate Pricing Expectations
For a client, there is nothing worse than spending more than an hour in a stylist’s chair wondering how much their new hairstyle is going to cost. And that’s why we think effectively communicating pricing on things like your social media platforms or website can provide clients with peace of mind, while also bringing more new customers through your door. Whether you show your social media followers a video of a brunette to blonde transformation and disclose the price or you share a cute infographic with salon pricing, these can be very helpful.
Communicate Price Raises Immediately
If you have had set prices, but you are thinking about raising them, it’s critical to make sure you communicate this to your clients. Whether you send out a mass email or you call to confirm an appointment and let them know of the price change over the phone, it must be done. Surprising a client with a price raise after she has had the service could leave a sour taste in their mouth and affect the way you price things in the future.
Add-on Services Are a Great Way to Boost Income
While you may think of add-on services as tedious and not worth your time, compared to offering professional hair color, these services regularly could have a dramatic effect on your income. Add-on services like glossing or conditioning could also supplement any discounts you are offering.
Incorporate Promotions and Discounts Into Your Regular Pricing
Promotions and discounts are a great way to get new and existing clients into your salon. Your pricing structure should be set up in a way that allows you to offer discounts and promotions regularly without taking a huge loss to your revenue and bottom line.
You’re officially ready to start creating and setting your prices. As you establish yourself and set your prices, never forget to always charge what you’re worth and never feel bad for charging what you do! You are offering a service that makes people feel beautiful. Your work is important, and it should be paid for.