When an increase in service pricing is based upon pre-designated standards, techs can make the move with confidence instead of concern — regardless of the economy.
Imagine you work in an environment where, in order to get a raise, you need to approach your boss and sell yourself, listing all the reasons you deserve to make more money. In this scenario, you would probably compile a list of all the contributions you’ve made, what skills you bring to the table, and how the company benefits from having you on staff. You would pitch the idea of a raise based upon certain criteria that you value, and that you know your boss values. The same holds true when you are in the position to give yourself a raise. The decision isn’t made on a whim; it’s made because, based upon measurable evaluation, you can command a higher pay.
A raise — which in our industry means raising prices — should not be decided impulsively. Neither should it be avoided out of fear (of the economy, of losing clients, etc). Both ends of the spectrum — indiscriminately raising prices and being frozen in fear — are emotional responses to what ought to be a standard business decision.
“Raising prices has consequences,” says salon coach Lisa Arnold. “If there is no method to your madness, if you randomly raise prices, you will have negative consequences,” she cautions. Arbitrary reasons, such as “It’s been two years” or “It’s October,” are not strong enough factors to implement an increase in price. However, if goals are in place that determine a price increase, and those goals are met, the consequences of raising prices are likely to be positive, says Arnold.
The first reason to raise prices, indeed, an essential reason, is to stay in business. If your fear of raising prices has caused you to absorb the rising cost of rent, supplies, and utility bills, you’re losing your profit margin. You must raise prices. However, there are times when a tech can raise prices, not because the cost of business has increased, but because the demand for her service has increased.
Arnold says techs who are in demand and who have a strong retention rate are in a good position to give themselves a raise. “If you’re booked out three to four weeks, you’re in demand,” says Arnold. However, keep in mind, being busy doesn’t necessarily mean it’s time to raise prices. “You can be busy from new clients, but you aren’t doing the salon any good if you aren’t retaining them,” says Arnold. Therefore, a busy schedule isn’t the deciding factor; a book filled with repeat clients is the requirement.
Millie Haynam, owner of MD Beauty and Wellness Inc., says techs ought to be at least 80% booked before raising prices is even considered. “Techs increase their price because they have increased the value,” says Haynam. It’s the idea of a “value-added” service. If a tech is in the position of being unable to accept new clients, the “value added” is the technician’s reputation and her service quality. Getting an appointment with the in-demand tech is the value.
Arnold says when techs are so booked they have difficulty serving new clients, it’s time to raise prices because techs with a filled book often feel the stress of always being busy and in demand. This stress may cause them to feel tired or burnt out, which in turn can compromise the quality of the service. Raising prices helps to thin out the book, allowing for breaks and trips to the bathroom, without compromising income. “You may lose clients, but the clients you keep are ones willing to pay the new price,” says Arnold. This removes some pressure and increases job satisfaction.
Some salons make it easy to know when it’s time to increase prices because they have an advancement structure in place already, where a tech begins at one level, and upon achieving retention or retail goals, she is “promoted” to the next level. This gives her an automatic increase in the price of her services. It’s a system that not only motivates techs to achieve goals, it also gives techs the confidence to implement the price increase. But even without a policy to fall back on, techs shouldn’t be scared to let clients know prices need to increase. “We build trust with our clients,” says Haynam. “So most of the time, clients will understand, and they’ll be OK with a price increase. We are often more concerned about our client’s budget than she is!” Haynam says that once you determine it’s the right business move to raise prices, do it and let the clients decide how they want to spend their money. In other words, if clients want to come to the salon to feel good, don’t apologize for the price. Trust yourself that you are worth the increase. When you believe it yourself, your clients believe it too.
Arnold says that though techs may want to raise prices, that alone doesn’t mean they should. There are certain conditions to be met, says Arnold. If any of these factors are not met, work on successfully meeting those goals before you tackle a price increase. Three conditions Arnold mentions are bookings, education, and value. Techs are not ready to increase their prices unless their book is filled at least 90% of the time. Also, they must be educated on the latest and greatest in the industry, both in terms of technique and product knowledge. Finally, they must offer services where the value exceeds the price, which is the “value-added” idea we mentioned earlier. Value can be added to a service not only through a hard-to-schedule tech, but also a number of other ways: upgrading product lines, adding staff, becoming certified through continuing education, moving to a new salon, or expanding your current salon, to name a few.
Once you determine you are ready for a price increase, keep in mind the way you announce the news can have an effect on how it’s received. “Frame the announcement in the positive, letting clients know you’re getting a promotion,” says Arnold. Arnold says there doesn’t need to be a big announcement that the increase is coming. Simply let the clients know that since the last appointment, “so-and-so” got a promotion. She suggests techs say something such as, “We will honor the old price today, but just to let you know, there will be a new price for your next appointment.” If it’s done right, says Arnold, clients will be OK with it. If you’re a tech who is self-employed or who works in a small salon where it may not make sense to say you were given a promotion, then an easier approach may be to hang a sign in a highly visible area, announcing the price increase and date.
Haynam says it’s not necessary to raise all prices on the menu at once: “I raised the price of my base manicure and pedicure when I moved to a different salon, but the price of my fill stayed the same.” In the same way, techs may raise the price of their fill, but maintain the price of their full set. Another option that may make the price increase announcement a little more comfortable for the doubtful is to get creative. Haynam offers clients the ability to purchase a VIP card for about $25 a year. The VIP card entitles clients to last year’s pricing, plus they get extra (value-added) benefits, such as 10% off retail and all gift certificates purchased. In this way, clients can feel as if they have some control over what they pay for their services.
It always feels a little risky to change a good thing by raising prices — especially when people are feeling the constraints of a soft economy. However, business moves and grows and changes even in the lean times, and risk has always been the front runner to success. Clients understand prices go up, and they are better able to accept it when the change is incremental instead of severe. “Don’t wait five years to raise prices and then add $10 to a service,” says Haynam. “A 3%-4% increase is always easier on clients.”
Your goal is to continue to offer value in your service that a client can’t get somewhere else and to understand what it is about your service that creates that value, so you can have the confidence to charge what you’re worth.
Testimonials From Techs Who Raised Prices
I have a standard, across-the-board raise just about every year. This is a cost-of-living percentage increase of 3%. I get my brochure ready in October, along with notices for the wall and a new wall menu. In November, I hang the notices, and in December I start handing out the new brochures to all my clients. Thus far, I have not had any complaints or loss of clientele doing it this way. I experimented with a less-frequent, but larger increase years ago, but it did not go well at all. Since I started doing it this way, it has sailed through without a murmur.
— Claudia Iacovetto, C-C My Nails, Newcastle, Wyo.
I raised my prices after I had a baby. I let my clients know about the increase in writing before my due date, and again when I called after my maternity leave was over. I explained that it was necessary due to the increase in product cost and a rent price increase. I chose to raise my prices $3, which was $1 for each of the years since my prices had gone up. My clients understood and made the adjustment very smoothly.
— Shannon Chomanczuk, A Polished Image, New Windsor, N.Y.
The last time I increased my prices, my bookings dropped noticeably. Clients don’t care if the price of business — from supplies to power — goes up, but if the service prices increase, I find they will sacrifice quality for price. Many leave and go to a budget salon. I often get them back, but usually not for a number of months or even a year, and then I am looking at another small increase.
— Jillian Wallace-Jones, Murwillumbah, New South Wales, Australia
I raised my prices at the beginning of November. It was the first time in 26 years. However, eight years ago, I moved to a rural area and had to rebuild my business, so I kept my prices the same; they were already higher than salons in the area. But product prices have all gone up and my profit margin had gone down. So, when my book became full with standing appointments, I raised all my services by $5 and posted a sign six weeks prior to the increase. I was delighted that I did not lose one client and was even more surprised when most clients tipped me based on the higher amount. It feels wonderful when I add up the totals at the end of each week! I should have done it sooner.
— Robin Stopper Renner, Nails by Robin, Tavares, Fla.
I raised my prices by $5 a few months ago because my prices were low and my product costs were high. I announced it to my clients by posting a sign at my station letting everyone know 30 days in advance. For the most part all my clients were fine with the increase; however, there was one lady who told me she should be grandfathered in at the old pricing. Another client politely informed me that she will not be returning after the increase because nails are just not that important to her. She returned to me just a few weeks ago and told me she missed her nails too much. I have other clients who stretched their appointments from every other week to once every three weeks or once a month.
— Jennifer Froese, Bravo Co Hair Studio, Pueblo, Colo.