RAISING PRICES

Janet McCormick, MS, NCA

When owners in our industry discuss raising prices, their negativity shows up quickly. They don’t know when to do it. They are fearful they will lose clients to a crippling degree. And many just stay where they are out of fear!  This can bring disaster to a business. Developing a strategy or protocol for raising prices can alleviate this fear, bringing clarity to when it should happen.

So, when do you raise prices? You raise prices when your clientele tells you to raise them! How does that happen? Every successful business has a strategy to determine when and how prices are raises are raised, and this strategy is tied to the clientele. Salons/nail technicians should also allow dictates of a strategy tied to its clientele to define when to raise prices. It has been shown that this strategy should be decided early, before the first year in business passes, to establish that raises will occur regularly.

Raising prices has several benefits beyond raising income. First, the clients view the salon as a serious business and not a hobby.  Many factors influence this attitude, but raising prices is surprisingly a major one. The technician that does not do so breeds the "not a business, just a hobby" view by clients which affects the salon's relationships with them in many negative ways. Second, raising prices on a regular basis is one of the major factors towards stability for the business, of course. Third, complaints towards raises in prices and loss of clients (as long as the amount is reasonable) are reduced to almost none over time when a strategy is tightly followed because the clients seem to become accustomed to raises. Fourth, the accompanying changes or improvements are seemingly appreciated more when tied to a raise in prices... they appear to "own" them. And fifth, clients associate raises in prices with business expansion and growth of the business, a situation they appreciate in their salon.

Strategies

Defining a strategy for raising prices takes a high amount of stress off the owner. Initially, it relieves the pressure of thinking of it at all until it's time to do it, but also, scheduling it supports planning of the business over time. Several strategies have developed over time.  One that fits well with the MNT niche in the industry is Event Celebration. Raises with this strategy are tied to when something is happening/has happened. For example, a course is being discussed that the technician is considering or is taking, it's complexity, time consumption, cost etcetera, and when the certificate is achieved, the technicians celebrate the hanging of the certificate with their clients. And then raises prices! Another example would be discussing the why's and cost of purchasing an autoclave, or such - and when it is purchased and installed, salon prices are raised!  Surprisingly, then, the clients seem to expect the raise in prices and all goes well.

Another method is Scheduled Raises, such as choosing a month when prices are raised each year. For example, it may be January 1, to begin the new year, or October 1, before busy season, or on their opening anniversary, or May 1, after taxes - everyone has their own way of choosing the month, and they look forward to defining the amount every year.

Percent-of-book is another method. This method ties raises to a comparison of the hours actually booked to those that would be booked if scheduled 100% of the potential time in the salon. To find percent-of-book, divide your booked time (hours) by the total time (hours) you are available for booking in a time period (month? 3 months? 6? Your choice) and it comes out a percentage. That is your time booked. It can be done for individual professionals, for departments, or the entire salon.  An example is if you are measuring a month of appointments and the technician is potentially in the salon for 160 hours, but was actually booked 120, then 120 is divided by 160, and it will  come out .75 or 75% percent-ofbook.

At 70-75% book, you are successful (if you are charging the right prices) and can raise your prices with little repercussion. Surprisingly, at 70-75% book, you have some built-in loyalty in your clients that will counter the negatives when they see a higher service price. At 70-75% book, most of your clientele has purchased services from you or others in the salon at least 3-4 times and can be labeled a “regular,” a client expected to come back. Even if you raise your prices (reasonably).

At 80% book, always raise your prices. A salon will stay at 70-75% for a while, due to booking tactics of our industry, but then, suddenly the book will be at 80%. You have a stable book and can raise your prices a reasonable amount with very few comments. But horrors, the abominable wait list is growing fast.

At 80%, you MUST raise your prices to alleviate those clients who complain about pricing and allow those who are eager to get in to replace them. (Over the years, I found 1-2% left – and that was great! They were the ones I wanted gone!) It won’t alleviate your wait list, but will make it more manageable.

When you get to 85-90%, you have a wait list, and you are losing clients. They find someone else because they cannot get in, even if they love you!  You MUST raise your prices to open spaces and hire an assistant or another technician. If not, you are soon going to have problem and complaining clients, and you will hate to get up in the morning!

At 90%, burn out is on the horizon and setting in unless you have an assistant to relieve the pressure or a new added technician to grow. Raise your prices enough to pay for the assistant – plus you can do more clients. “30% growth with an assistant shows quickly, with this scenario,” says Denise Baich, MNT, The PedicurePlus. Town and Country, MO, “with more to follow, and it is wonderful to see the wait list shrink dramatically.” Pay for the assistant with a reasonable raise, plus added profit. OR, raise your prices and cut back to four days to prevent burn out. OR, raise your prices and go on a four-day vacation or staycation monthly. Really. These are all great tactics that do NOT cut into your profitability.

This is heady stuff, but once you get a handle on it, it is easy and routine. Know that this is a wise piece of information to seek out often; it will show you many things about your business.

Excerpt from “Becoming a Six Figure Nail Technician,” a voiced program by Janet McCormick, to be published on NCA, Summer, 2023.