Business panel: should you have a competitive pricing policy for your area?

Follow these tips from professional hairdressers and successful hair salons to make sure you have the right price structure for your target market. Name: Hannah Kernick Salon: H&Co Hair Salon Awards: Customer Care, Independent Salon – Business Newcomer and Salon Design “The pricing of services in your salon should reflect the target market demographics and the overall experience you are offering. Running a business is about making a profit. Calculating your running costs, the profit required and your average invoice value will determine how many clients you require to make a profit. One of the biggest mistakes some salon owners make is focussing on a competitor’s pricing. Competitors will almost certainly have copied others and in most cases, this leads to everyone basing their prices on the competition rather than the costs, profits, service experience and target demographic of your salon.” Hannah’s steps to success: 1. Work out accurate costs and calculate how many clients you need per stylist per week to make a sustainable profit. 2. Avoid pricing yourself out of the market and having to reduce prices later as prices can be increased if necessary. 3. Consider your offering – is it unique in any way to warrant a high or low pricing strategy and do you offer more or less than local competitors? Base your pricing on the type of experience you offer and your target demographic. Name: Lisa Walby Salon: Francesco Group, Cheltenham Award: Franchisee of the Year “We keep our pricing competitive by having a wide range of prices at all times. I believe it’s important to keep growing your team from apprenticeship level. This means you always have an introductory price and there after £3 to £5 differences between stylists. Senior stylist prices increase due to request percentages and demand but it’s the lower end that you need to keep competitive.” Lisa’s steps to success: 1. Keep refreshing your entry level stylist prices so everyone else can start moving up. 2. Avoid having massive leaps in price between lower end stylists. 3. Create tiered pricing for colour as well as cuts and finishes. Name: Steve Rowbottom Salon: Westrow Academy Award: Training Award “A big mistake that people make when setting up a salon is failing to plan a pricing strategy that will appeal to the target customer base. It’s incredibly important to do as much research as possible before deciding on a competitive pricing structure. This will give you a good understanding of what other salons are charging in your area and help you reach your business goals. Have the confidence to offer more for the same price and over deliver with an unforgettable client experience. This will give you the option to increase your prices rather than reducing them. If you hit the right price your clients will be happy, your profits will increase and your bottom line will be healthy.” Steve’s steps to success: 1. Keep prices realistic for your salon and don’t compare them with others. 2. Keep the client in mind as price is not a concern for someone who wants a premium service. 3. Build your brand because people won’t pay premium costs for a brand they don’t recognise. Shout about the products you use, your professional employees and satisfied to build a strong brand for your salon. Name: Salv Mulé Salon: Academy Salons, Cobham Award: Retail Salon of the Year “Take your unique selling points into account from convenient parking and your opening hours to your amazing team and professional product range. Knowing what your strengths are over your competition is a key marketing tool to highlight why clients should be coming to you and not another salon. Don’t discount – it can send out a slightly ‘desperate’ message that undermines your strengths. Instead, consider a loyalty scheme that drives repeat custom to avoid targeting bargain hunters. Feature your price list on your website – this can be updated at any time and it’s a great communication space for showing your special offers.” Salv’s steps to success: 1. Spend time visiting other salons in the area and take note of what they’re doing well and not so well. 2. Ensure your team consists of stylists across all levels so as to suit everyone’s budget. 3. Always include the cost of products used, and therapists’ time in your calculations as this will ensure you maintain profit margins. Name: Christian Wiles Salon: Christian Wiles Hairdressing Award: Male Grooming Salon of the Year “We maintain a pricing policy that is tailored specifically to our business. We focus on our running costs and expenses and work out our prices accordingly. We've built a successful business over many years that drives loyalty and lasting client relationships by combining hairdressing excellence with realistic and transparent pricing. This strategy has always ensured that we remain competitive locally.” Christian’s steps to success: 1. Market special promotions to work with the needs of your business rather than to undercut the competition. We offer graduate styling discounts to help our graduate stylists gain experience and build their column. 2. Understand your clientele and ensure you cater for each audience ranging from students to VIPs and review this regularly. 3. Deliver excellence and price according to your own running costs rather than trying to undercut or price match your competitors. Name: Ian Hendry Salon: Maxwells Professional Hairdressing Award: Salon Team of the Year “Consider tiering the prices you charge as clients will often be happy to pay for a more experienced and highly trained stylist, however everyone has different budgets. The quality of the service should never change but experience, training and technical ability has to be charged for so you can continue to invest in you stylists and pay them correctly. We have a seven-tiered pricing structure from trainees in training sessions which are free through to senior designers and colour specialists.”  Ian’s steps to success: 1. Offer a tiered pricing structure that will appeal to all budgets. 2. Make it clear how your pricing works – all staff, especially reception staff, should be able to explain the cost of services clearly. 3. Be open and transparent, especially with new clients. Give very specific quotes on services as clients do not like hidden charges. Name: Janet Maitland Salon: Janet Maitland Hair Excellence Award: Business Director of the Year “In today’s economic climate everyone is price sensitive. When the recession hit salons entered into an offer and discount-style culture to attract and keep clients. I believe it is important to gauge your price on surrounding businesses and if you are using quality products and have well trained staff, refreshments, entertainment and a beautiful clean salon you will be a success without having to put offers on your hairdressing services.” Janet’s steps to success: 1. Be aware of what the competition is offering in your local area. 2. Add value to your services with a variety of refreshments, good music, magazines and highly trained staff. 3. Encourage junior staff members on to the floor with a special price list for blow-dries, waves and limited-edition services. This means all of your staff will bring in revenue and you can offer a tiered pricing structure. Name: Natalie Love Salon: Edward James London Award: Salon of the Year 1 “Like most salons in London, our local area is abundant with competitors. Our salons have a higher than average price per service than our neighbours because we want to ensure we remain accessible and inclusive to a broader clientele, not just our target demographic. We introduced a new price point for an entry level stylist instead of reducing our prices as this would ultimately under sell our more experienced stylists. This allows guests to have the same salon experience at a more competitive price. It also reduces the pressure on less experienced stylists who are new to the floor and working with guests’ full time.” Natalie’s steps for success: 1. Research your competitors but make confident choices relevant to your business rather than adopting the same approach as what works for one business doesn’t necessarily work for another. 2. Consumers love to feel appreciated so focus on added value experiences based around a promotional activity calendar focussed on areas that require the most growth. 3. Don’t under-price yourself or your team. If you provide additional touches this must be reflected in your price, otherwise your bottom line will take a hit. If you invest heavily in education tell your guests about your well-trained team who truly care about their craft. Name: Phil Smith Salon: Smith England Award: Salon of the Year 2 “For me, pricing starts with brand values and these should be reflected in your location.  Smith England is a lifestyle brand that believes in offering local, quality luxury at affordable prices. You need to work out your overheads first of all, from here you can look at the true costs for each service. This should offer the correct pricing policy for your location and for your business to grow. Stay true to your brand, offer a continuous quality service and you should never need to discount your services.” Phil’s Steps to Success: 1. When looking at overheads, build in a 10% contingency to allow for unforeseen circumstances before calculating the service costs. 2. Build a strategy around price increases. There is a fine balance between increases too often and not often enough for the business to develop. Consider what the conditions are for price increases. Is it because your overheads have increased and you need to recoup resources or has a team member been promoted? Make sure you have considered your options and plan this into your policy. 3. Don’t look at local competition – this will only cloud your decision. If you have calculated your true pricing policy and can communicate this with the team and clients through your brand and salon experience there’s no need to look at other brands.