How to properly figure out the prices you should be asking for in your salon.
In the salon industry, the issue of pricing is so important. Yet, for some salon owners, it’s a total mystery.
Setting your pricing strategy usually means finding out what nearby salons are charging. Once we have that information, we then categorize our services against our competition by measuring our image, team members and standard of work – and presto, ee come up with a number!
Knowing your competition is useful, but it is not the correct or profitable way to price services.
The only way to be accurate is to take into account productivity levels and expenses.
In a recent seminar, I asked which salon owners knew how much their salon cost to run per day. Three people out of 70 knew the number. Salon owners must know how much it costs to open their doors each day.
Also how much does your salon cost you per hour? Easy to figure out, right? Just take your daily break even number and divide by the number of hours you are open each day. Well, that’s not exactly correct either.
How many hours do you have to sell per month? That’s all the hours for all the days you are open multiplied by the number of stylists working per day.
How many of those hours do you actually sell? This is the important number.
To find out your productivity percentage take the total hours available and divide it by the hours sold and hit % on your calculator. Since productivity is so important, you should do this for each service provider on your team.
Now comes your expenses. Take absolutely everything that you pay out for the whole month. That includes bank charges, any interest you own (not the actual monthly payments) wages, supplies, rent, magazines, marketing, education, coffee and tea, office supplies and anything else that comes out of the salon income.
Once you have that number, divide it by the number of SOLD HOURS and there you have the exact amount your salon costs you per hour. (This number often shocks many people.)
These numbers need to be run over a three month period. Then average those three numbers out.
Next, you have to figure out how much profit you want to make, and put that number on top of the hourly cost. That is what you need to charge in order to be profitable and stay in business.
Time is money. Your team members need to be aware of this, so a time limit per service must be applied. For a women’s cut – if you allow an hour, that’s how long it should take. Not 1.25 or 1.5 hours. This applies to every service you perform in your business.
If this sounds daunting, you can purchase a “fill in the blanks” Excel spreadsheet, which comes with an audio tutorial, to help you find out what you really should be charging.
Marion Shaw is an author and a leading business coach/consultant in the beauty industry. She has been a stylist, salon owner and educator, and is now a sought after speaker at major shows and educational events, bringing ideas for success to industry professionals across the country. She shares her words of wisdom and other helpful resources for salon professionals for at www.salonbizessentials.com