Learn how to effectively raise prices at your business without upsetting clients and staff from John Harms and Neil Ducoff
Raising service prices is a territory no business owner likes to enter, but it is necessary for growth. But where do you start?
Industry experts John Harms, Founder & CEO of Millennium Systems International, and Neil Ducoff, Founder of Strategies, gathered for another installment of their Facebook Live series where they speak on raising service prices and the Key Performance Indicators (KPIs) and specific costs a business owner should take into account to make these decisions.
Salon vs. Individual Service Provider
Raising prices goes hand-in-hand with maintaining sustainable productivity rates while focusing on staff retention and preventing potential burn-out of salon management. When looking at where to make increases, should the focus be on salons as a whole or individual stylists? General productivity, or as Strategies refers to it, “capacity,” is explained heavily by Neil with pointers on how to determine where to add more hours per employee versus more employees and how to calculate your business’ cost-per-hour to utilize in your decision making.
When to Announce Price Increases
A great rule-of-thumb is to announce a price increase 30 days prior to when it launches. While product costs and inflation are happening around the country, building cash reserves is a preventative measure a business owner can take with their service price increases sooner than later.
Time is Money
Extra service time means a higher service rate! Small add-ons quickly add up, and service prices should reflect that. With a customer in the chair asking for a quick beard trim or a few extra foils during a balayage, while it is a quick and easy addition, staff should not ignore those add-on costs. Time is money, and it is why learning your cost-per-hour and charging accordingly is imperative to business growth.
Increase Trust
Transparency in why the prices are being raised will create trust in your employees and your clients. It’s no secret that costs are going up across the board among brands and companies. Product and shipping prices have increased, and it’s happening in every industry. When the team understands the intent behind price increases, they can relay that to the clients early on and create understanding and support that keep them always coming back!
“Raising prices is short-term pain and can be a hair salon marketing disaster.” John Harms and Neil Ducoff did an incredible job communicating the necessary measures that need to be taken and KPIs to consider when entering this crucial part of being a business owner. Catch up on this Facebook Live and stay tuned for even more thought-provoking conversations coming up with MSI and the Strategies team.
