January 2010

Raising Prices in a Tough Economy

By Jon Gonzales

Salon owners, like business owners across industries of every kind, are struggling in this tough economy to make a profit.

Many salon owners are trying to find solutions to these challenges by trial and error. In an effort to keep top hairdressers, salon owners may 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.

Raising prices of services, individual stylists and/or products, are options you may want to consider. 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.

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.

Deciding When to Raise Prices – Once you’ve created a demand for services and have a high rate of customer returns and referral, adjust your pricing as needed. However, if your salon is not busy, 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.

Rule of Thumb for Price Raises – Generally, small increments are best. Chemical services can be raised by $5.00, or hair cut prices by $2-3.00 depending on your salon’s reputation.

Getting the Message Out – Before you announce price increases to your clients, have an all-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. 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.

Jon Gonzales is president and founder of Hairdresser Career Development Systems, which is dedicated to educating and guiding hairdressers and salon owners on their journey to success. To learn how Hairdresser Career Development Systems can help you move to the next level in your journey visit: www.HCDS4you.com.