Customers automatically assume that you will not drop your price below what it cost you to do a job. The problem is…you don’t really know what the job cost you. This is why service providers across so many industries struggle to price their services correctly.
Hair stylists especially struggle because the close connection they make with their clients.
- Everyone has to eat.
- It is okay for you to make a profit.
- Your business needs to charge more than what it costs for you to make money.
- How much do you charge when you are the product?
- How do you make sure that what you are charging covers your time labor and materials?
Don’t wait until after you’ve completed a job to find out how much it cost you. You need to KNOW that you are making money.
Most stylists drop their prices a little below the market rate to capture new business.
This is the worst way to price your services.
You don’t know why the other stylist is pricing their services so low.
- They could be a maniac.
- They could just be looking to do something to fill out their day.
- The may not even care if they’re profitable.
If you want to run a profitable business...you need to understand your numbers.
You need to price your services appropriately. But how?
- How are you going to figure out what to charge your clients so that they are happy to pay.
- How are you going to price your services so your customers love you?
- How are you going to price your services so your customers come back?
- How are you going to price your services so your customers recommend you?
Most stylists just price their services low to get a customer base. The idea is that once you have a good customer you will raise your prices.
Are you going to charge your loyal customers more money in the future?
Probably not. When you raise your prices your customers are going to start leaving. There is always someone new willing to price their services lower and steal your customers.
HOW DO YOU AVOID THIS?
You have to get confident in your numbers...
but what are your numbers?
- You have rent
- You have product cost
- You have labor cost
- You have marketing cost
- You also may have a variety of other overhead costs.
How do you use these costs in combination to identify how much to charge your customers?
The answer is far simpler than you might have guessed.
Below we have attached a spreadsheetthat breaks down all of your costs to a per unit level. When you break down all of your costs to a per unit level you will know exactly what to charge for your time.
Today we are going to make sure that each of your customers is paying you appropriately.
This article and spreadsheet are a specific set of instructions to help you become profitable every day.
Identify the services you offer your clients. You need to identify these at an individual level. We are not going to put haircut and color together. These are two separate jobs. You must break down your services to the individual level before you start bundling them together. Make a list. Haircut, hair color, wash and dry, Silk press, box braids, Weave install, wig install. Etc…
Take the list you created in step one and make a conservative estimate of the time it will take you to complete the service. If you own a salon use the average time across all of your stylists.
Take the list you created in step one and make a list of all the products needed to complete the service. Make a conservative estimate of the amount of product you will use to complete the average service. I understand that there is variability between each client. The goal here is to get a good conservative estimate of how much product is used on average. You also need to list down the cost you pay for each product. i.e. an 8oz bottle of Ola Plex shampoo is $28. You use 1 oz per client on average.
Write down the hourly rate you want to be paid. Also, write down the hourly rate for each of your employees.
Write down the hours you are open.
Write down how much you’re paying in monthly rent.
Write down how much money you feel you need to spend each month on marketing.
Identify how much money you want to reward yourself for setting up a good business. Remember you are already being paid an hourly rate. You are paying yourself for the time you spend doing clients hair. This profit is your reward for setting up the business. 100% means you would like to double your money. This profit goes to the business and is your reward for setting up a good business. This is pure profit and will help you grow. Most new businesses reinvest this money in themselves.
Punch all of this information into the spreadsheet below. This spreadsheet will crunch your numbers and identify what you need to charge your customers.
Click the link below to download our Salon Pricing Workbook
Do you need help completing the workbook?
Schedule time with our client services team for help.
CEO - AdeKerr