If there’s one thing today’s economists agree on, it’s this: consumer behavior is changing.
Some economists estimate that consumer behavior has adjusted 10 times faster than average and we wholeheartedly agree. Whatever the rate of change, every business owner can feel the shift in behavior.
And that shift comes down to one thing: expectation.
What consumers expect today is miles away from what they wanted in 2019, 2020, even last year.
Let’s be real: the change in consumer demand we adapt to is not small, making it even more tricky. And to keep up with the shifts, a lot of stylists and salon owners are making some fairly reckless pricing decisions.
But here’s the problem…this is not the recession of 2008. Using the pricing strategies from more than a decade ago is shooting yourself in the foot. Same thing if you try to price yourself above the market.
Today, let’s dig into the top pricing don’ts in today’s economy and what you should focus on instead.
What’s going on with the economy?
But before we talk about pricing, we need to set the stage. What is going on with the economy?
Mostly due to PPP loans and COVID stimulus checks, we are facing radical inflation. In simpler terms, the price of everything has gone up because there is more available cash.
Many people look at this and think that, since prices are currently so high, they’ve got to go down soon, right? So they wait to make those big purchases like a house.
The problem is that it slows down the entire economy. Because people are waiting to make purchases, less income is generated by producers (a.k.a., you), and less cash flows through the economy because everybody’s waiting for cheaper prices.
However, prices generally do not go down to pre-inflation cost. Meaning, you need to adapt your pricing to meet today’s reality without making massive mistakes if you want to continue to grow and thrive in your business.
Pricing Don’ts
Don’t implement a cost-of-goods increase
Chances are high that the cost of running your business has gone up too and yes, clients should pay for that. But telling your clients, “The cost of running my business has gone up so I need to pass that price off to my clients. Sorry,” essentially ruins your business in one short sentence for one reason: the messaging.
Cost-of-goods increases sends a negative message to your clients because you are actually telling them you expect them to pay for your business. Instead, raise your prices when you’re due for an increase, don’t say anything about the cost of business, and guess what? You look like a professional, your client feels taken care of, and your costs are managed.
Don’t implement or continue legacy pricing
If you have longtime clients that get some sort of discount, it’s hurting your retention, referrals, and income.
Really. Even a $10 discount per guest will cost you thousands of dollars a year. You actively hurt your income because the spot that longtime client is taking could be worth 10–40% more than it’s being offered now.
We get it. It’s tempting to raise new client prices and keep them low for your current clients so they don’t leave you, but here’s the thing: if you raised your prices properly, many of those longtime clients would stay with you.
Don’t negotiate your price increases
Negotiating your prices is not an option.
If you roll out your new pricing and notice your guest’s body language is suddenly uncomfortable, don’t say, “…but let me know if my rates are too high.” That just sets you up for trouble.
Instead, if you notice they’re nervous about your new pricing, it’s okay to say, “I want to continue working with you and I want this to be something that’s comfortable for you. There are adaptions we can make to your service so we can work within your budget.”
Notice that doesn’t say anything about discounting your services. It means adjusting what happens in your chair to fit their budget.
There are things you can do to make your guest happy, allow the value of your time to be served, show up as a professional, and compromise. But do not cheapen yourself and say your prices are negotiable.
Don’t do promotions or specials
In 2007–2008, promotions and specials were everywhere. Groupon and coupon clipping was the order of the day. But that recession was rooted in the mortgage rate crisis. Today’s is due to inflation, meaning there’s not a lack of cash.
The game is no longer offering the best discounts and promotions. You can still offer them, sure, but you’ll get a bargain-hunting clientele and, chances are, you might see more clients, but you’ll work harder for that revenue.
Don’t change price point and method at the same time
If you’re moving from charging a la carte to hourly, great. But do not raise your prices at the same time. For at least six months, guests should pay the exact same thing. If you’re due for a price increase and want to roll it out after that, great.
If you change too much too fast, it’s scary for your clients…making it scary for you.
Don’t announce your price increases on social media, email, or text
Your price increases should always be shared in person. Always.
Sharing a price increase on social media, email, or text might be easier, sure. But it’s less professional and can be a huge turn-off for clients.
If you’re nervous, practice, practice, practice what you want to say beforehand. Practice on your best friend, your partner, your dog, on the way to the salon in the morning. The more confident you are, the more professional you’ll appear.
Pricing Dos
Now that we’ve talked about what not to do, what should you do when it comes to pricing in today’s economy?
Ensure your marketing and retention funnels are stellar
Today’s consumer expect more and they’re looking for it in two places: your online presence and your in-salon experience.
Making sure your Stylist Success Hourglass is implemented and efficient is key to increasing your perceived value. Without it, the perceived value isn’t there, consumer expectation isn’t met, and guests won’t want to pay your prices.
Level up your website
Our industry loves Instagram, but it’s going through an identity crisis. Stylists are still embracing the platform, but engagement is at an all-time low because consumers are burning out on it.
Your website is the one piece of digital real estate that you fully own, so now is the time to elevate it to meet consumer expectations.
Need help with your website? Check out Website Academy Templates!
Raise your prices on metrics
Too often, stylists and salon owners raise their prices based on emotions, fear, or fear of emotions. We get it, but this practice puts your business in danger.
Instead, lean into the seven factors of a price increase to determine if you’re ready to level up your pricing. (Dig into them here.) And, as always, make sure you have the perceived value to back it up so your clients don’t get a wandering eye.
Incorporate more flexibility into your service menu
One of our favorite quotes is Liz Cambridge’s “You can’t please everyone. You’re not an avocado.” And whether or not you like avocado, Cambridge’s message rings true. Not every single person is going to be a fit for your services, business, and pricing, and that’s okay.
Take a look at your current service menu and determine if and where you can offer:
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Mini and maintenance services
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Low maintenance options
And, possibly a peer at a lower rate you can refer to.
This gives you the flexibility to support your clients if they are not comfortable with a price increase.
No matter where you are in your business right now, know this: the glass ceiling has been raised. For every stylist struggling right now, there are two who are blowing up because they dialed in what it takes to build and grow a business today.
It’s not luck or “putting in the time.” It’s a formula, and mastering your pricing is key to it.
If you want to dive into the tried-and-true systems that have helped thousands of stylists and salon owners get more new guest requests, increased retention and income without working more hours behind the chair, check out Thriving Stylist Method! Plus, every Thrivers Society member gets access to our Scaling Stylist Pricing Method course to help you find the right pricing for you!
