Time to RAISE your salon prices

I know you don't want to - but you MUST raise your salon prices

I doubt this comes as a surprise to you - but prices of the things we must buy for our salons to operate are going through the roof.  Not only our product prices, but some of those costs we usually regard as 'fixed' are soaring too - just check your latest utility bills.

Add in the expectation from your team that their wages will keep pace with inflation, plus your own personal costs increasing too and there's a solid economic case for raising your salon prices.

Yet I very often meet resistance from salon owners who fear they will lose customers by raising their prices.  So their prices remain unchanged for far too long and they hover just below 'break points' (e.g. just below £50, £60, £100).  Or even worse, they charge inconsistently: everybody pays the same higher price 'apart from Doris, who pays £35 because she's been coming for years'.  I see this again and again.

The problem is that unless you're increasing your prices, as costs increase there is only one place the extra money can come from.  And that's your profits.

Salon owners have a tricky relationship with profit.  They are sometimes embarrassed by the idea of appearing to do too well.  They feel they're exploiting their teams by making too much money.  Yet it is your job as a business owner to inspire the next generation.  And I don't think it is terribly inspiring to show our younger team members that after 10 years in our amazing industry they can look forward to working long hours, driving a crappy car and never taking a proper vacation.

On top of that, profit is your reward for taking on risk.  Let me explain.

Your team takes on very little risk in working for you. If things go pear-shaped they could just walk away. And in the current economy could probably get a job somewhere new in a heartbeat. But that isn't the case for the head honcho. You have ongoing obligations: you may have a lease for your premises and supplier agreements that continue even in tougher times. And your reward for putting up with these extra risks is the profit you can take from your business. Add to that the salon's need for profit to reinvest in refurbishment, new equipment, training, new team members, etc. and I hope I have made the case for strengthening your salon profits.

In all honesty, you may well lose some customers when you raise your prices. Particularly if you haven't reviewed your prices for quite some time.

That said, generally salon owners lose less customers than they think they're going to. And what's more you have made your business more profitable in between. If, for example, you increase your prices by 10% and lose 10% of your customers you may think you have made no headway. But the truth is your product costs will have gone down so over all the exercise has been more profitable. On top of that you are also tapping into a new, more profitable potential market.

You see, there may well be customers on your books who would never pay, let's say, £50 for a haircut or £100 for a facial, no matter how good a job you do. And we may well lose some of those customers when we review our prices. Some may return in the longer term, when they start to understand what other salons do at a lower price point.

But there are also customers out there who don't believe you can get a decent haircut for less than £50 or a decent facial for under £100. Whether we like it or not our potential customers are making judgements about the quality of our work every time they see our prices advertised. Not only will these new customers be more profitable from the get go, as long as we continue to review our prices regularly they will also learn that annual (or even better, bi-annual) price reviews are a feature of their favourite new salon.

So be brave! Don't allow the current economy to destroy your profit margins, erode your self-confidence and motivation, and jeopardise the long-term future of your business.

Get those prices up! You'll be glad you did.