While the need to raise prices is usually good news for your growing salon, it’s not always music to your client’s ears, especially for those clients who have been with you for years (maybe even from the beginning of your career as a salon professional). We interviewed several industry professionals to see what best practices they’ve employed when raising prices successfully and compiled these top 10 steps. We also have a template letter you can display or mail to your clients to help get you started.
1. Be Honest. Don’t try to hide it. Explain to your clients upfront that you’re raising your prices. Be sure to tell them that you’re moving with the industry and increasing your level of expertise, which has improved dramatically since they first started coming to you. You should still try to offer some form of bulk discount so they can save more by purchasing several gift certificates at a discount. This not only gives them a discount up front, it also generates cash for you up front.
2. Thank Your Clients. The first thing you should do when you increase prices is to say thank you to clients. You should sincerely express your appreciation for the risk they took on you when they first came to you, and then be transparent with them about why you need to raise prices. Make sure they understand why you’re asking for more money and why your product(s) and services are worth more now than when they started coming to you. It doesn’t always work, but most clients tend to be understanding.
3. Explain Your Costs. Sometimes you just need to raise your prices. How many years has it been since your last price increase? Explain to your clients why you are raising your prices and how you are using the additional funds they will be paying each visit. If your own expenses are going up, then explain to your clients why that is happening. If you are spending more money on your products and services, then explain to your clients how the additional features will benefit them.
4. Add Features. When you add a value feature to your services, it gives you a reason to increase your prices with your clients. Early clients will understand that they joined you at the beginning stages of your career and that with your improvement and growing skill set, your prices may change.
5. Give a Lower-Priced Option. Let clients focus on value by giving them a second, lesser-priced option to their service. Then there’s a decision to be made, which focuses on the value that your service sets rather than the price increase. This is especially helpful if the lower plan is a little less expensive than what the client currently pays. For example, if you typically do a 5-minute scalp massage with every shampoo, you could offer it without the massage for a few dollars less than your current price.
6. Over-Deliver. First, be sure you can demonstrate that the value you provide is increasing more than the price. This way, clients know that they’re still getting a good deal. As a rule of thumb, over-deliver and really impress your clients for at least 100 days before communicating a price increase. Simple ways to do this would be to add new features to your studio: new furniture, mood lighting, soft drinks, snacks, wine, etc.
7. Add More Value. It’s important to add more value to sweeten the deal. Your services should always be improving, but it’s simply counterintuitive for somebody to pay more for the same thing they got for less before. Justify the price increase by adding features or providing some other type of added value. Some ways to add value include can include eyebrow waxing, eyelash tinting, scalp massages, shoulder massages, makeup touchup, etc.
8. Explain, But Don’t Apologize. As your salon grows, your products and services should be worth more. Briefly explain how the higher price is going to allow you to better serve them. Then move on. If you’ve proven your worth, then they won’t walk away.
9. Inform Your Customers Ahead of Time. Give clients a heads up about price increases at least a few appointments prior to it taking effect. Make sure your price increase notice is posted on your mirror around 2-3 months before the change takes place. There is nothing worse than a surprise price increase!
10. Send a Letter. To help communicate your price increases it may be useful to send a formal letter to your clients as a personal communication regarding the change. The letter should be carefully written so they understand what is changing as well as what they will get out of it. You could even hand them the letter as they are leaving your salon and explain to them that you have something for them regarding upcoming price changes and how it will affect them. And remember, smile and be positive when communicating price increases.
Even if you don’t need to increase prices, Norm Brodsky’s classic piece, “The Case for Higher Prices,” presents plenty of reasons to do so, such as maintaining your brand image. “By not raising prices on a regular basis,” he asserts, “…You’re gradually undermining the perceived value of your products and services. Like it or not, there’s a natural tendency to link quality and price. We’re not saying you always have to charge as much as the most expensive stylists out there, but if the gap between your prices and theirs gets too large, customers will start to regard you as the cheap alternative in the market.
BELOW IS A SAMPLE LETTER REGARDING A PRICE INCREASE:
To my wonderful clients:
I would like to take a moment to thank you for your loyalty to me as your hair stylist, beauty consultant, and friend. Some of you have been with me since the beginning of my career in this industry, but regardless of how long we’ve know each other we have all made lasting memories together at my salon.
As always, I am committed to constantly improving my skills and abilities as your hair stylist to ensure you are getting the best service, the best style, and the greatest experience possible at every appointment with me. And on top of that, I promise to always make you look beautiful J
In every industry prices rise year after year, and I do my best to operate my salon as efficiently as possible without compromising your experience with me. In addition, my skills as a hair stylist are being constantly improved with ongoing education to keep me at the top of my game so you get the very best service possible. As a result, some of my prices will be going up starting January 1, 2014. The following services will slightly increase as follows:
- Women’s Cuts : 40+
- Men’s Cuts: 27
- All Over Color: 115+
- Partial Weave: 75
- Color Correction: 125+
- All other services will remain the same price as before
To show my appreciation for your loyalty I am allowing my existing clients to purchase gift certificates 10% off until January 1, 2014. This will allow you to lock in an even lower rate on my services than you pay now if you choose to do so. To purchase these gift certificates, please call or text me at 801-555-5555 and I will be happy to help you.
Thank you!
Jane Doe
Owner, Studio 101 @ Image Studios
To download a Word Doc of this letter template, click here.
