If you missed some of the discussion in this series, you can find Part 1: Identifying A Major Problem In the Beauty Industry and Part 2: The 3 Fundamentals to a Successful Salon here!
I’ve always heard stylists say that they’re artists and that they would bring beauty to this world through their craft, just for the love of it. I believe some of the challenges that our industry has with defining their pricing and raising prices, lies with the emotional desire to serve their art form, first and foremost, even before the consideration of what they can earn. The mission of increasing our average median income will be an enormous task, primarily because it goes against the very nature of who we are. Our industry, often times, runs their businesses on emotion and instinct rather than concrete financial information or projected business strategies.
I believe there are 10 steps that you can take to begin our path to more confidence and profitability. With diligence, the result will catapult us into significantly higher incomes therefore, more sustainable businesses. Steps 1-5 to translate your artistry into your skill value are below.
Step 1: Calculate your productivity metrics. This is how booked out you are during the hours that you’re scheduled to produce income. For example, monitor your income producing hours. Review your reports on what days you’re most productive and what percentage you’re booked out. I would suggest maintaining a minimum of an 80% productivity rate for 2-3 months, which translates to being about 80% booked on a daily basis. Start this process by clocking in and out, especially if you’re an independent stylist. This ensures accuracy of your productivity metrics as well as being eye-opening to how many hours you’re actually producing income.
Step 2: Evaluate your retention rate. This is how many clients you convert to loyal fans. Maintain a minimum of 80% retention rate. Here’s how to increase your retention.
- Listen to every single one of your guest’s needs.
- Suggest solutions for these ethically and consistently within the 3 solution centers.
- “Teach” guests how to achieve results at home by educating them on ideal services/products.
- Deliver excellent customer service regardless of your personal issues. Always explain the maintenance program in your services within the consultation. Re-booking and loyalty lies with the maintenance of services.
Step 3: Review current pricing and get accurate with your charges.
- Are you accurate with your fees? Have you assessed what your hourly rate needs to be?
- Are you discounting your services frequently?
- Are you applying the extra color charges or extra time considerations onto your fees?
Harvard studies found that even an extra 1% in a pricing shift can re-adjust your revenue growth up to 11% annually. Additionally, If you’re not accurate and consistent with your fees, how will you know what to increase?
Step 4: Analyze which services need to be raised, do not solely consider an across the board price increase. Certain services like corrective color or advanced/specialized treatments or peak services need to be increased way before a haircut at times. Meaning, if a haircut doesn’t need to go up, your color services or speciality services could need a big increase immediately. Think through your services dimensionally and increase certain services that need to be raised and maintain the price level on services that need to stay the same.
Step 5: Be accurate with the timing of your price increase.There’s wisdom in waiting for the right time, until your metrics match up, but then there’s courage to know when you’ve gone past the time (or way past like some overworked stylists may be able to tell you)!
You can take the guess work out of the timing by researching all of the metrics involved like:
- Productivity % (How booked out you are)
- Client Retention % (How many clients that you keep)
- Pre-Booking % (How precise are you with your consultations and planning a maintenance program)
- Retail to Service (RTS) % (How well you offer take home solutions)
- Referral% (How many new clients you draw in) and the all important …
- Peak season metrics (Which is when are you’re the busiest)
To put it in a nutshell, measure your DEMAND and offer solutions. Strategically planning the timing of your price increase will not only place the higher prices within a moment of time that will be less impactful on your business, but will also take the emotion and fear out of the price increase.
These first 5 steps to raising your prices speak to your preparation and gaining clarity. Once you’re informed, the anxiety behind establishing skill value will minimize (maybe not completely disappear). Benjamin Franklin said it best when he stated
“By failing to prepare, you are preparing to fail.”
I would venture to say, this day in age in our beauty industry, by failing to prepare, you may not even do it at all…
Arthur Ashe, who was no stranger to success in all he did, put it so wisely to say…
“One important key to success is self-confidence.
An important key to self-confidence is PREPARATION.”
Join us on our blog at The StatementsProject.com for the next installment of steps 6-10 of, How to Raise Your Prices, to learn how to implement your price increase.