What to do when you are too CHEAP

Is your salon business competing on price?

I've made my feelings on competing on price in your salon business very clear over the years. I think it is a miserable place to be: a race to the bottom.  I'm much happier working with coaching clients who have a decent profit margin priced into their businesses.

But what happens if you look at your business and realise that you are just too cheap? 

I'v encountered this a few times in my coaching.  In one business we carried out a financial analysis and realised that prices were ineffective - the business was literally losing money with every transaction.  But the salon owner didn't feel able to increase prices - they had only been reviewed a few weeks previously and she had encountered some resistance from customers.

Here are three ways you can be very clever with your salon pricing without necessarily increasing the prices on your tariff.

Are you worrying unnecessarily about your salon prices?

Salon owners often have a fear around increasing their prices. They're so concerned that their customers are price sensitive, they're just going to go elsewhere.

I don't necessarily think the fear is justified: I believe that customers are less price sensitive than you might think. If you have a customer who is happy with your level of service, if you're delivering an excellent client experience, the chances of her leaving lower than you might suppose.

Regardless whether our fears are justified, where sometimes we need a deep dive into mindset - sometimes we just need some strategies we can take into our salon businesses.

Deluxe salon services

The first way I helped the client I mentioned was to go through the entire price card and create deluxe versions of the services that she was already carrying out.  She'd already got this in place for nail services with luxury packages for manicures and pedicures, and there was already a deluxe tan in place.  Together we went back through that price card and figured out how many deluxe versions of existing services she could add.

That meant that we had to then go back and train the salon team so that they consistently offered those upgrades. And yes, sometimes the deluxe service would take a slightly longer time, but the increase in profit was actually quite profound.

Take the time now, go back through your price card.  Don't make any assumptions, but ask yourself what  a deluxe version of this service could look like?  What would you need to build in?  How can you provide extra value?  Does it need to be a slightly longer service so that it feels more relaxing, deluxe experience? Or is the opposite true? There are some customers who will pay a premium for an express version of a treatment because they just don't have the time to sit in a salon for an hour.

Look at your salon service timings

If there are services that your team are consistently finishing slightly early, I strongly suggest that you go through and look at the timings that you are allocating on your booking system.  It's rarely a popular move with your team: the chances of them clapping their hands with glee at having to see more customers in a day is very, very slight, I'm afraid. But if you can sell it to them in terms of increased productivity, linking it to increased profit for the salon and increased commission for them, then there is a chance that they will embrace it.

If we can't increase the amount that we're charging per hour, maybe we just need to get more services done in an hour. Even shaving five minutes off a service  feels like a small win.  But over a week, over a month, over a year ... it can make an enormous difference. Figure out how many more extra clients you could get through the door.

This does, of course, rely on the fact that you are busy: there is no point in squeezing service times if you have a lot of unused salon capacity.

Who is carrying out the service?

For many years, in my own salon coaching business, I had a rough rule of thumb where I would charge £250 per hour for my coaching services. That figure is on the rise now, that for a long time that was the rough guide.

It is only logical, therefore, that I should spend time on a regular basis looking at the task to actually carry out each day. There is for example no point in me editing training videos if I can outsource or delegate that task for a few dollars per hour. Whether I enjoy the task or not, it is not serving my business to do those tasks myself. And this can translate to your hair salon or beauty salon business too.

This works better if you have tiered pricing in your salon, and genuinely believe that without tiered pricing in your salon now, you are leaving money on the table.

Generally, if you have people who are on higher tiers: those team members who have been with you for a number of years or contribute a lot to the business, it makes sense to go back through and remove the very low value services from their availability.

For example, if you have a senior beauty therapist or an expert aesthetician and they're still carrying out 10-minute brow waxing treatments, I'm afraid it's probably not the best use of their time. By taking away those cheaper treatments, pushing those onto the lower-tier members of your team, we can get make space for our most profitable team members to be generating more per hour.

Still struggling with pricing?  Check out my free cheat sheet: 5 Reasons Why Your Salon Isn't Paying You a Decent Wage