How to Prepare Your Salon Clients for Annual Price Increases—And Stay Busier Than Ever

Raising salon service prices is an important part of advancing your professional career—to say nothing of how it contributes to a better work/life balance! Despite knowing this, many stylists and salon professionals are hesitant to raise prices, fearing that their client base will disappear with a price hike. This couldn’t be further from the truth. Increasing your price annually helps you stay on top of your salon business finances and avoid racking up avoidable debt. But did you know that small, regular price increases can help you maintain your client base—or even become an even more in-demand salon? Here’s how to prep clients for a salon price increase, increase the perceived value of your shop, and even bring in more new business!

What’s Perceived Value, and How Can it Work for My Salon?

Perceived value is how valuable a customer thinks your products and services are. The way clients decide on that perceived value is by comparing you with your peers. For example, there’s a saying in real estate that you don’t want to be the most expensive house on the block, but you want to be the house next door to the most expensive house on the block. The reason? Perceived value! The trick about perceived value is that it’s a balancing act. If your prices are too low compared to your competitors, you won’t necessarily attract more business—in fact, you might even lose some clients! That’s because they’ll see the low prices and assume your services “aren’t as good” as your competitors who charge more. But, like the real estate saying, you don’t want to be “the most expensive house on the block” either. For a price increase that’s reasonable and achievable, use data and analytics to figure out what your business needs to stay profitable. Then, use those calculations to frame your cost increase in terms of added value for your clients. Finally, compare your price lists to those of your most similar competitors, to make sure you're keeping pace with other salons who serve the same market.

How to Use Vagaro Reports to Calculate Your Ideal Price Increase

Reports are the first tool you should use when it’s time to calculate an increase in your salon prices. It’s a good idea to be in the habit of running reports regularly, so that you’ve always got an up-to-date view of the standing of your salon finances. To stay in front of your finances, it’s good idea to re-visit your price list every 12-18 months. That’s because inflation tends to creep up on small businesses, and you might not even realize how much your cost of doing business has risen until you sit down with the numbers. It’s a fact that whether we’re aware of it or not, the cost of living goes up every year. That means that your operating costs go up as well— and so should your price list.

Your Salon “Break Even” Number

For example, it’s always a good idea to know your “break even” number. Let’s say you’re a booth renter in a salon, and your weekly booth rent is $250. In this example, your average supply expenses are also around $250 every week, bringing your weekly business expenses to $500. If your average client’s ticket price is $50, then your “break even” number is 10. That means that to stay in business, you need to service at least 10 customers at $50 per service before you begin to earn any income. Knowing your “break even” number can certainly put your pricing into perspective—especially for salon owners, whose operational costs are considerably higher. Use Vagaro’s dashboard reports, combined sales reports, and transaction reports to calculate your “break even” numbers, then compare against your average service costs. Remember, while you may feel compelled to set prices that seem “fair” to customers, your prices should also be “fair” to you, the professional. If you’re losing income or only breaking even on each service, your business model isn’t sustainable.

Communicating Salon Price Increases Through Email, Text, and Social Media

Communicating your service price increases to clients is like communicating your salon cancellation and no-show policy. Both communications may feel uncomfortable at first and are likely to be met with resistance by some customers. However, they’re investments in your business that pay off long-term and raise the perceived value of your salon. Use the Vagaro templates below to customize your message to clients before a planned salon service price increase. The more you prepare clients, the less likely you are to encounter resistance. You may also lose fewer clients if you give them adequate time to adjust and provide transition options for them before implementing the new price list. Here’s how to communicate salon price increases through email marketing, text message marketing, and social media marketing.

Template: How to Use Vagaro Email to Communicate Upcoming Price Increases to Clients

Dear Acme Studios Client,

This message is to keep you in the loop about price increases that will be gradually going into effect at Acme Studios starting Friday, January 3, 2020. In order to continue providing you with the quality services you’ve come to expect from Acme Studios, we’ll be raising our service prices 7% in 2020. This modest price increase will allow Acme stylists to continue providing the same level of service to you without compromising on quality, accessibility, or the salon amenities we believe our clients deserve.

We will be using transitional pricing for appointments over the next six weeks, to streamline the price shift for both you and your stylist. As a special thank-you to our customers, all color clients booked during the transitional period will receive a complimentary deep conditioning treatment. Acme’s 2020 price list will be fully effective on Friday, February 14, 2020. We hope to continue serving you in the coming year, and feel free to contact us with any additional concerns you may have. We appreciate each and every one of you and look forward to making your hair beautiful in 2020!

Template: Using Text Marketing to Alert Clients to Price Increases Before Appointments

Acme Studios 2020 price list rolls out next week! Transitional pricing effective 1/3/20 – 2/14/20. For details, visit our website, social media, or read the email here.

Template: How to Use Social Media to Let Clients Know About Upcoming Price Increases

New decade, new prices! To continue providing customers with an uncompromised, elevated salon experience, the Acme Studios 2020 price list will go into effect 1/3/20. Transitional pricing will be implemented 1/3/20-2/14/20 to streamline price changes, with 2020 prices fully effective 2/14/20. We appreciate our clients and look forward to making your hair beautiful in 2020!

How to Talk Reluctant Clients Through Price Increases (and Stay Busier Than Ever)

When it comes time to raise your service prices, many customers will be tempted to try and talk you down on the increase in price. There are a few ways to work through the price increases with customers, to help educate them of the realities of your profession and its associated costs. Along with your cancellations and no-show policies, you should remain firm on your posted pricing policies and service price increases. Your time has a value, in addition to the specialized nature of the services you provide and the professional-grade products required to deliver your services.

However, going into a price increase, it’s important to remember that with every raise in prices, you’ll be “weeding out” your garden of clients—and that’s not necessarily a bad thing. With a 10% price increase, it’s realistic to expect to lose 10% of your clients. But before you read that number and panic, it’s important to keep perspective. Realistically, the 10% of clients you’ll lose is 10% that you need to lose to stay profitable—they’re not your ideal clients. Yes, on one hand, you’re losing clients. But on the other hand, you’ll be earning more while working less. And you’ll re-gain that 10% of lost clients, replacing them with more ideal clients: clients who believe your services are worth the cost.

A Step-By-Step Guide to Raising Your Salon Service Prices

Use this step-by-step guide to ensure you’ve covered all the bases to prevent clients from sticker shock at the register due to salon price increases.

• Use reports to estimate your current business expenses

• Calculate the price increase required to cover operating expenses and stay competitive

• Plan how you’ll communicate price increases to clients

• Follow-through on communicating price changes to clients using multiple platforms

• Be transparent about reasons for price increase

• Don’t apologize for positioning business needs first

• Make yourself available to talk reluctant clients through price increases

• Provide transition prices for a short period of time to streamline the price change and allow clients to adjust

Small, regular price increases help you stay in front of your salon finances and elevate your perceived value to customers. Use Vagaro reports to calculate the service price increase that’s best for your salon—then use Vagaro email and text message marketing to communicate the change to clients. When you know your value, your ideal clients will come to you!

Header Image: Keren Perez on Unsplash

Icons made by Kiranshastry from www.flaticon.com