There has been so much talk about price increases “after COVID”.
Should I have one? Should I wait? What if I had one already in the works?
Every business will take a different approach on this very topic, but I wanted to give you some tips and tools to will help you decide what process works best for you.
Start By Considering Your Timing
In my opinion, announcing a price increase right when you open back up will likely be a bit much for your clients. There is a lot of change happening, especially when it comes to them coming into the salon. Most will have to wear masks, the waiting room chairs may have to be removed, maybe you’re now pushing cashless tips, and you’re unable to offer beverages or a snack. It can be a lot for the client to take in.
So then to say, “Oh, by the way…we are jacking up your prices by 20%.”?
My advice isn’t to simply maintain your pre-quarantine prices. But I’d suggest opening and then, once your team and clients get comfortable with the changes, you can implement a price increase. Hitting pause for a month or two won’t affect your business’ bottom line as much as losing long-term clients after this crisis.
Think About How Much of a Price Increase Feels Fair to You
A price increase can range anywhere from 5% to 15%. It can be on all services or on just color services. There’s a lot of flexibility there, and so you can think about how much you’d need to help you offset the lack of business over the last few months as well as buying PPE and even not being able to staff your salon at full capacity. The point is: crunch some numbers to see how much you’ll need to increase and how before making any announcements.
If You Decide to Do It, Give Clients Advance Warning
The best way to implement an increase is to give your clients at least a four week heads up. This can be through email campaigns that you can set up right here in Schedulicity.
If You Had a Price Increase Scheduled, Stick With It
If you already had a price increase in the works before the shutdown, I do recommend moving forward with it — especially if you already started the ball rolling and started to tell your clients that an increase is coming. Follow through with it. You definitely don’t want to go back on your word especially since they’re already prepared for it.
A Note About “COVID Fees”
I personally feel that having a price increase is more attractive than charging a PPE or COVID fee. You can dramatically increase your revenue just by having a 10% increase as opposed to charging, say, a $2 COVID fee.
I do however recommend charging for extra product usage. Let’s just say you are a colorist and have been closed for two or three months. Your clients will come back to you with so much more regrowth than if they were coming in every four weeks. In this case, I suggest coming up with a color pricing chart based on how much color you use so you can start to charge for the extra color you will be using.
This is a system I would implement right away. And this is a system that should be in place beyond COVID. You have to be sure you charge for product in order for you to make a profit.
Example: Let’s say you should be charging an extra $10 for color but you feel bad for your clients and feel guilty charging them extra. But if you have 10 clients per week that you did not charge $10 for extra color, that equals $5200 per year in LOST revenue.
What? Yes. Every dollar counts, and it does all add up so quickly. This is just one area where you can increase prices that will pay off (literally!) tremendously.
Price increases can be scary. I know there is a lot of fear wrapped up in it. But now is the time to plan ahead and communicate this increase with your guests.
The feedback I have been hearing from others in the beauty industry is that clients have been very supportive and truly understanding with price increases. Just be sure to give them a heads up about the extra color charge and the price increase when you decide to take this step for your business.