Why a price increase is important?
Raising your prices is not only important. It’s necessary in today’s business. If you are working off of prices from two years ago you are most likely losing thousands of dollars in revenue in your business. Aside from losing revenue you are also losing money in profit as well. EX: If you have a $10 increase and see 20 clients a week. You just increased your revenue by $10,400 for the year. Are you leaving that money on the table? I hope not! You deserve more!
There are many factors that go into having a price increase. We look at productivity and how booked out you are. This would be supply and demand. If you are running 80-85% booked for 2 months straight. It's time to reassess and have an increase. If you are turning clients away on a regular basis, this would be cause to also look at an increase. We also want to look at your expenses. We are well aware that the cost of goods has increased over the past year. How much have your supplies increased? 2-5%? This typically is not the ONLY reason to have an increase but it does make a heavy impact on the decision. How long has it been since your last increase? Has it been more than a year/ year and a half? These are all areas you want to consider looking into when thinking about increasing your prices. Now how do you do it?
1. Come up with a plan first before you just roll out the new prices. Are you just increasing haircuts or colors? Or will you have a blanket increase on all of your services? I am also very big on clear communication and brand alignment. I suggest you give your guests a 4 week notice. Share this in an email marketing campaign to give your guests a heads up or tell them in person during their next appointment. This business is all about creating relationships and although it’s not necessary to give them a heads up, you have to do what aligns most with your brand core values and mission.
2. Add Value. Add a scalp massage with a hot towel and choice of essential oils to choose from during their shampoo experience. Adding value shifts the focus from the increase and allows the guest to see the time and attention you put into them and their salon experience. Plus, it really elevates the guest experience overall.
3. I suggest using a percentage when raising prices as opposed to a dollar amount. Although increasing prices by $5 is a great start. It may not be enough. The average increase percentage is anywhere between 10-15%. Some may need to do more and some less. There are so many variables, but this is a great start.
4. Increase your prices with confidence. Stand behind why you deserve to have an increase. When you make decisions based on facts, not fear. You will deliver that increase without hesitation.