Should salons and spas raise prices?

Why it Might Be Time for Salons and Spas to Raise Prices

March 30, 2022

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Learn how to effectively raise prices at your business without upsetting clients and staff from John Harms and Neil Ducoff

Raising service prices is a territory no business owner likes to enter, but it is necessary for growth. But where do you start?

Industry experts John Harms, Founder & CEO of Millennium Systems International, and Neil Ducoff, Founder of Strategies, gathered for another installment of their Facebook Live series where they speak on raising service prices and the Key Performance Indicators (KPIs) and specific costs a business owner should take into account to make these decisions.


Salon vs. Individual Service Provider

Raising prices goes hand-in-hand with maintaining sustainable productivity rates while focusing on staff retention and preventing potential burn-out of salon management. When looking at where to make increases, should the focus be on salons as a whole or individual stylists? General productivity, or as Strategies refers to it, “capacity,” is explained heavily by Neil with pointers on how to determine where to add more hours per employee versus more employees and how to calculate your business’ cost-per-hour to utilize in your decision-making.
Here are a few signs that you should raise your prices:

  • You cannot keep up with supply and demand
  • You’re notoriously turning away new clients because you’re overbooked
  • The cost of running a business is not balancing out with your profit margins
  • You invest in education and quality products and are not seeing a financial return
  • Your competitors are charging significantly more than you for similar quality services


How to Raise Prices at Your Salon

  1. Calculate your worth- Do the math and figure out how to calculate exactly how much your and your teams’ time is worth to help calculate the right cost changes. Using Meevo 2’s productivity report, you can determine that once you reach 75-80% productivity, it’s time to raise prices because you’re maxing out your capabilities, turning away new clients, and struggling to rebook repeat clients. Millennium Tip: We recommend raising your prices by a significant percentage like 20% to achieve the results you’re looking for, as it is a percentage significant enough to make a difference in bookings.
  2. Explain your costs- Be straight forward and communicative! Let clients know that you’re raising your prices and why- (the quality of your work, the education for your team, etc.) and show why it’s a worthy investment. Make sure to explain, but don’t apologize. Communicating openly with your clients is the key to maintaining strong relationships based on trust to minimize the amount of client loss that occurs with any price increases.
  3. Plan the rollout- Make sure to inform your clients of the price change at least 1-2 months in advance so that they can prepare appropriately. Socialize the changes on social media, through signs throughout your salon or spa, and consider adding a small note at each station notifying your clients of the upcoming changes.
  4. Coach your team- Ensure that your team is up-to-date with the price modifications rolling out in your salon or spa so they can speak to them confidently and intelligently. Coach them on key points to best equip them for customer questions or potential confrontations.
  5. Provide value- Make sure your prices and services are worth it. Consider rewarding long-time clients or clients with memberships by adding a little something extra to their next few services, like a hot towel treatment, or small upgrades to thank them for their continued loyalty during this period of change.


When to Announce Price Increases

A great rule-of-thumb is to announce a price increase 30 days prior to when it launches. While product costs and inflation are happening around the country, building cash reserves is a preventative measure a business owner can take with their service price increases sooner than later.


Time is Money

Extra service time means a higher service rate! Small add-ons quickly add up, and service prices should reflect that. With a customer in the chair asking for a quick beard trim or a few extra foils during a balayage, while it is a quick and easy addition, staff should not ignore those add-on costs. Time is money, and it is why learning your cost-per-hour and charging accordingly is imperative to business growth.

Increase Trust

Transparency in why the prices are being raised will create trust in your employees and your clients. It’s no secret that costs are going up across the board among brands and companies. Product and shipping prices have increased, and it’s happening in every industry. When the team understands the intent behind price increases, they can relay that to the clients early on and create understanding and support that keep them always coming back!

“Raising prices is short-term pain and can be a hair salon marketing disaster.” John Harms and Neil Ducoff did an incredible job communicating the necessary measures that need to be taken and KPIs to consider when entering this crucial part of being a business owner. Catch up on this Facebook Live and stay tuned for even more thought-provoking conversations coming up with MSI and the Strategies team.

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