Best Practices for Salon Price Increase Notices

The cost of being a salon owner or booth renter has increased so much over the last year. You've probably thought a lot about raising your prices - but by how much? And how do you actually do it if you've never done it before? 

Today's article will help you sort out everything to do with raising your salon prices in a way that feels most comfortable and profitable for you. 

Why should you raise your salon prices? 

Before we dive into the specifics of raising your salon prices, you might be asking yourself - can I really justify raising my prices? Do I deserve to? Have I been in business long enough or am I busy enough to do so? 

If you don't automatically know the answer to this, you might be suffering from a mindset issue: do you feel like your services are worth a price increase? 

It can be hard to feel like anyone special in town in your first few years as a salon owner, especially if you've struggled to grow your clientele. 

Let's put this to rest right now. 

You absolutely deserve to raise your prices in the same way as all of your competitors have and will, and here are a bunch of good reasons to do it:

• Rising inflation and cost of living 

• Rising cost of products, shipping costs and retaining staff 

• Providing a valuable service by increasing the well-being and confidence of your clientele

• Improved education and skill level of your staff

• Providing consistently great service 

• Recouping losses from the pandemic 

• Increased demand for your services

Pick any of one of these reasons (or all of them) and feel 100% confidence that you can, should, and deserve to raise your salon prices. 

So now the question becomes, "How much should I raise my prices?" 

How to calculate the amount you should raise your salon prices

Most salons have a general profit percentage of 8-10%, with 15% being the benchmark for a healthy profit margin. 

The best way to figure out how much more you should increase your salon prices is to calculate the following:

• Add up all monthly costs of running your salon (staff salaries, electric bills, equipment and product costs, rental costs, shipping costs, marketing costs, and any other monthly incurred costs such as health insurance deductions)

• Add tax percentage 

• Add profit goal (this includes both your saving and personal profit goals)

Now, divide this total number by the amount of days you're open every month.

You’ve now got how much it currently costs to run your salon per month. 

Now, calculate your average profit per month.  

If your current average profit per month is less than your current monthly cost to run your salon, you now know the dollar amount that you should increase your prices by.

Don’t worry if it’s significantly higher than your competition or seems like a huge different in price. In the next section, you’ll learn different ways to easily adjust your current price list without shocking your clients with a major jump in price.

Different ways to increase your salon prices 

There are a variety of ways you can change your price list to reflect price increases at your salon without shocking your clients: 

• Tier pricing

• Introducing membership programs 

• Upselling higher-priced retail beauty products

Tier Pricing

If you have a team of stylists, aestheticians, waxers, etc., they will naturally have different skill levels based on their experience. Likewise, based on how long they’ve worked in the area or at your salon, they’ll have developed reputations that will differ from one to the next. Some of your stylists are booked out months in advance, while others have a handful of faithful clients to keep them busy, but they always have more space in their books. 

When this is the case for your salon team, you can adjust your prices using tier pricing. 

For example, you can gather your differently-skilled team members with varying reputations and experience into Master, Expert, and Apprentice stylists.

You can put premium prices in place for your Master stylists or team members, average prices for Experts, and affordable prices for Apprentices. 

Introducing tier pricing will have a few effects on your team and your clients, so be sure to have a team meeting before you introduce it to discuss this with everyone. Your team will have lots of questions and probably a few concerns, so this is your chance to discuss it as a group and get ahead of any potential drama that could occur. 

Additionally, it’s a good idea to send out an email to your client list explaining the tier system and introducing each stylist with a short bio. This will create some exciting buzz for the changes, increase your bookings, and give clients some time to get used to the idea.  

Introducing membership programs 

You probably have some super fans, right? Those loyal clients who love to be pampered and beautified a couple times a month…you know the ones!

Your clients (especially those super fans) will enjoy this next option: a membership program for your most popular services.  Instead of installing membership rates that are above the price for the standalone services, you’ll keep it simple: whatever your base hourly price is currently, your hourly rate for membership will also be. For example, if you charge $60 an hour for a facial, your hourly membership rate for a facial should also be $60 an hour.

The way you raise your prices using a membership model is that from the point at which you activate your membership program, all non-members will have to pay a price increase of an extra 5-20% of your hourly charge. 

The price difference will encourage more of your clients to sign up for the membership as they’ll be saving money, and it’s a great chance to advertise some of your lesser-known services. 

Membership programs are super easy to set up when you use a salon software like Mangomint that lets you streamline every step of the process from registration to payments to customer communication. Save time, automate everything, and start collecting automatic monthly revenue - it’s too easy! 

Upselling your higher-priced retail beauty products 

If you find you often have an overstock of salon retail items and you’re ready to raise your salon prices, this is a more subtle approach that can have a huge positive impact on your profit margins. 

Upselling is a great way to bring in more revenue instead of technically raising your salon prices. 

Upselling is offering higher-quality hair care products, eyelash growth serum, at-home waxing kits etc. to all clients that you think could benefit from them. You can upsell these higher priced items by talking them up while your clients are in your chair or on your table. 

Often, clients only need to try these products out once and then they’re hooked. If you encourage them to leave reviews on their salon experience and the products they purchased, word can spread fast and suddenly, you’re selling out instead of being overstocked! 

The knock-on effect of upselling higher-priced retail beauty products is that you raise the reputation of your salon by doing so - and a salon with a high-ticket reputation can charge high-ticket prices. 

You’ll soon find that your clients won’t bat an eye at spending big bucks on both your luxury beauty products and your services…win-win.

How to send out salon price increase notices

Once you’ve decided which method you’ll use for raising your salon prices, you’ll have to announce it to your client list. 

The easiest way to do this is by using your email list. 

If you’ve decided to set up either tier pricing or a membership program, be sure to write an email to all of your clients explaining the changes. 

For tier pricing, introduce each stylist or team member, their new title, what they specialize in, and a tiny bit about them. Be sure to include general availability of each stylist or team member so that clients can manage their own expectations when it comes time to book.

If you’re starting a membership program, announce the program details (including various tiers, if applicable), the prices, and how they can sign up. Here you can mention that non-member pricing is increasing. If you’re upselling higher-ticket items, send “New Arrivals!” emails to your clients giving them a glimpse of each product, some reviews on the product, and that these products are available now at your salon.

If you don’t have an email list for your clients, you can post notices about your new membership and salon price increases in these ways: 

• Use your social media accounts to announce changes

• Record a voice message on your answering machine in the salon announcing the changes 

• Train staff to tell new clients about memberships

• Print flyers announcing changes 

• Use sidewalk signs to announce membership programs and new pricing

Your clients will have lots of questions, so be sure that staff are available and enthusiastic to answer them. 

And remember, above all: your hard work deserves good pay. Your prices should reflect the quality, care, and commitment you bring to your work in your salon every day!