Price it up

One of the toughest parts of running a salon is figuring out exactly what to charge for your treatments and when to put those prices up. Multi-site salon owner and coach Lilac Miller shares her advice on getting it right for your business

It’s crucial to understand your business’s operating costs when trying to set your treatment prices.

The best way to do this is to try to calculate how much each treatment actually costs you to carry out. It can be a longwinded process but it’s worth putting the effort in to make sure you charge appropriately. You might get a pleasant surprise and find some treatments are more profitable than you think – or you may find some are actually losing money.

How to calculate your treatment costs

1 Calculate the product cost for each treatment you offer. Try contacting your suppliers because many will already have calculated this and have information they can share. Most companies can give you the cost for their individual facials or a set of nails. If they can’t, it’s back to basics, working out how many spatulas, strips, cotton wool pads and other consumables you use for an average client.

2 Next, calculate how much the treatment costs in wages. If it’s a 60-minute treatment, that’s one hour’s wages. Remember to add extra if you leave gaps between your treatments for changing over the treatment room. If you are selfemployed, still include in here what your hourly wage would be if you were employed.

3 Finally, calculate your overheads for the time you are doing the treatment. For example, if your business is open 40 hours a week, you need to calculate your overheads by splitting them into 40 sections to calculate overheads per 60-minute treatment. If you have three team members, you would divide that 40 by three = 13.33 hours.

If you have management accounts, you could use the overheads section in there for this calculation, otherwise get a recent bank statement and add up all of the monthly outgoings that aren’t product costs or wages (already included in the first two steps).

If you add up the totals for these three sections, that gives you a rough idea on what it costs to carry out the treatment and break even. You then need to add on what you want your profit margin to be and then you will need to add on VAT if applicable. That should leave you with your treatment prices. It sounds like a lot of work calculating prices this way but it’s well worth the effort.

When to raise prices

We change our prices on April 1 but I think consistency helps, so sticking to the same time of year will help clients to anticipate it.

There is never an ideal time to increase but the summer is a busy period when you will attract some new business, so if you lose some clients because of the increase it will be easier to absorb over a busier period. April links with National Living Wage and National Minimum Wage increases so it’s also an obvious time to implement the change as wages are the biggest cost for a salon.

Ultimately, costing out your treatments in a realistic way and implementing price increases where necessary protects the future of your business and your team. If you’re not making a profit, it’s not sustainable to continue. All costs are increasing at the moment and no other industries worry so much about increasing prices. We love our clients so we feel bad charging them more, but they are paying for a service and this has to cover our costs so that we have money to reinvest in the business in terms of equipment and training. We also have to increase our prices to be able to pay our teams well.

If you don’t feel there is enough value in the treatment you offer to increase the price then think about what extras you can add in that don’t cost any more money, or consider whether you can reduce the time it takes rather than increasing the price. In our industry, the old saying “time is money” is especially accurate!

Mistakes to avoid

1 Using your competitors’ prices as a guide. All salons have different overheads and costs and some work with value brands while others use high-end luxury brands, so the pricing can’t be the same.

2 Assuming clients will choose you if you are a bit cheaper than someone else. Clients will sometimes opt for the cheapest service but is that the sort of client you want to attract?

3 Not implementing price rises. When setting prices it can be hard to let loyal clients know about the increase but we shouldn’t be scared of telling them and implementing the new prices. Supermarkets and coffee shops don’t apologise or explain in advance about prices increasing, they just change it and we pay it.