Dear Clients, we are sick and tired of your complaints about our prices.
Let me introduce myself. I’m a salon management consultant who specializes in financial structuring. I turn around failing salons and create budgets, compensation systems, and pricing for new salons to ensure they never require corrective consulting in the future. If, somehow, you are unfamiliar with how costly it is to run a business, it’s understandable that you wouldn’t understand the prices you see on our service menus. This post will help clear that up for you (as will this one).
First, some industry statistics: Salon businesses have failed in a substantial way to keep pace with inflation, which is why a reported 85% of them fail in the first eighteen months and why 99% of them will not make it to their fifth anniversary. Salon owners tend to not only overcompensate their workers, but set their prices far too low to do any better than break even (if they’re lucky).
Many salon owners choose to keep their prices competitive out of courtesy and what they believe to be necessity.
These owners believe that by keeping their prices on the low end, they will not lose your business to their competitors, who are all too willing to drop their prices to make a quick buck. Those salons they perceive to be their competitors often don’t understand their own costs and are therefore willing to participate in asinine price wars.
The less than advantageous part of this whole deal is that no matter how much these owners drop their prices, uninformed clients don’t seem to appreciate the sacrifices salon owners and professionals are making to keep them looking pretty without emptying their purses. Instead, clients form the false impression that their services aren’t worth more, based on nothing but the opinions they form through their (likely inadequate) comparison shopping.
A Quick Lesson on Salon Economics
Let’s pretend your nail technician charges $15 for a fill. This service takes her an hour to complete and you tip her $3. If she’s on the standard industry compensation system, the technician makes 50% of the service total, so straight away she’s made $7.50 in commission and $3 from your tip. That’s $10.50 in one hour (before taxes come out, that is).
The salon owner makes $7.50, around $2 of which is sucked into product cost right off the top, leaving her with $5.50 for that hour. The salon owner then has business expenses to pay–water, rent, electricity, internet, her salon management software subscription, her payroll company, her accountant–all before she can even think to pay herself.
This sounds like a great deal for the tech, except that it is very rare to find a technician who is booked to capacity, especially if the salon owner’s cut isn’t wide enough to cover advertising costs. Your technician may see up to eight clients a day, but some days, she might not have anyone booked at all. Since many beauty professionals only get paid when they have clients (and many salon owners aren’t aware of or compliant with labor laws), your technician may spend a lot of time sitting around without compensation of any kind. At those insanely low prices on a slow week, your nail technician might make around $80-150. On a very good, extremely busy week, they can make $300+.
Either way, once you break it down into hourly pay, many professionals are making less than minimum wage.
Typically, the owners are the ones who really get shafted in the end. If your salon lowered the prices on services any further, the owner would barely be able to cover product, let alone labor costs and operating expenses. (Are you starting to understand why so many salons fail?)
Pardon me if I get a little pissed off when you complain about service pricing without having the education to devise an informed opinion on the matter.
By complaining about paying $15 for a fill, you’re saying that your professional is not worth the $10.50 (minus tax) they make in the hour it takes them to do the service. You’re saying that their education is worthless to you. You’re saying that enjoying having a service performed for you, leaving you with beautiful nails for two weeks isn’t worth $7.50 per week to you. (If that $7.50 per week sounds steep, I encourage you to assess the cost to value ratio of your daily Starbucks runs and your monthly cell phone bill.)
Pardon me if I get exasperated when you complain that “the salon down the street does the same service for $12.”
Most salon professionals and salon owners couldn’t afford to give you a $12 fill if you begged them to. Moreover, the “salon down the street” has different expenses, different service protocols, different service execution times, different per-service overhead, and different ways of offsetting their losses. Our businesses are not all identical, so the prices set by other salons are completely irrelevant. Your insistence that our businesses can be compared on any level based on your absurd, inexperienced visual analysis of our prices does nothing more than showcase your extreme ignorance.
Instead of complaining about the service price, ask why the prices are what they are. Your professional and the salon owner will generally be happy to explain what sets their salon apart and help you understand their value in a way you are likely not capable of noticing as a consumer. You may leave with a new appreciation for the business, and perhaps, you’ll be less likely to make such silly assessments and comparisons in the future.
When it comes down to it, these services are a luxury; not a NECESSITY.
Should you still feel the prices are unjustifiably high, please remember that we aren’t operating a medical clinic, dentist’s office, or grocery store. Nothing we offer in our salons is crucial to your survival, and salon professionals are not charity workers.
If you can’t afford salon services, quit wasting our time whining about the prices and demanding that we lower them further and start living within your means.
Professionals, the reason clients devalue our services is because we’ve allowed them to. The discount salons are primarily to blame for this, but many of us played our part.
When clients ask you, “How can you handle all the competition?” remind them that other salons are likely not your actual competition. Just because you perform the same types of services does not mean your businesses offer identical services, nor does not make them a threat to you.
In all businesses, costs dictate prices.
Price your services according to your salon’s needs and inflate them to reflect the value to the consumer. Stop trying to compete with businesses that offer inferior services. Price your services appropriately and prove to your clients that they’re worth it.
If you need help establishing service prices and getting to know your numbers, download The Salon Service Pricing Toolkit today, or it’s counterpart for independent professionals, The Microsalon Owner’s Complete Business Toolkit.