Is it about time you raised the cost of a haircut in your salon? Here’s a complete guide to increasing your prices.

Money can be a sensitive topic, which is exactly why raising the price of a haircut should always be handled in a gentle, delicate manner.

1. Justify the increase.

The first step is the salon owner and stylist needs to assess why the price increase is happening, which will eventually make it easier to explain to clients.

Helen Hooper, founder of Helen Hooper Consulting Inc., says, “Every stylist wants to earn more money, but performance is what should constitute an increase in the cost of the service to the client. If a stylist, for example, is fully booked or 100 per cent committed every hour they are in the salon for three consecutive months, we then justify a 10 per cent increase in cost of services.”

Gianni Gagliardi, business development consultant for Venus Beauty Supplies, says price increases can be based on myriad factors. In the Venus Profitability Program, a stylist must track at a certain number of clients, referrals and retail dollars consistently over a period of six months in order to justify price increase.

2. Make sure pricing matches your salon image.

Enhancing the calibre of the salon can also signal an increase, like major renovations or raising the level of services like specialty coffees and a treatment pre/post service. Other elements to consider are location, whether you carry basic or high-end products, stylists’ education levels and the cost of inflation.

3. Determine the right amount to increase.

Although price increases will vary depending on the salon, 10 to 20 per cent seems to be industry standard. “Your increase should not scare clients away. Regardless of who your clients may be, no one likes to feel like they are being ripped off, so know when to draw the limit,” says Luis Pacheco of Toronto’s Hair on the Avenue.

4. Do it at the right time.

Gagliardi says that price increases should be addressed at least bi-annually and aligned with your cost of goods’ increase.

Wendy Betts, owner of Q Hair Design in Edmonton, says that at her salon, “the price of a haircut is raised once a year by a small amount instead of a large increase with a longer time in between.”

5. Come up with a plan of action for telling clients about the increase.

All of our experts agree that giving clients plenty of notice and time to adjust is key. When two of Pacheco’s stylists graduated from the blowdry bar to the cutting room, for example, they gave clients a solid 60 days notice. Betts says, “We notify the clients with mirror talkers about the minimal increase six weeks in advance. If clients questions it, we react without anxiety and that eases their minds.”

6. Handle customers who may be prepared to leave.

Another big fear in raising the price of a cut is the potential loss of clients. Pacheco says, “If you are good at what you do, treat your clients well and can justify your modest price increase, then I don’t think you should experience much havoc. That being said, different people have different budgets, so have a junior stylist or colourist available in order to give your clients options.”

This article originally appeared in the April 2010 issue of Salon Magazine.