It's time to raise your salon and spa service prices - right?

I know, in your area, it is not a good time to raise prices . . . . .

BUT,

The Economic Development Indicators are in for the 12 month period ending November 2006. Here are the increases your business, you personally, and your staff has experienced over the last 12 months:

Expenditure Category Unadjusted 12 month % change

Food and Beverages + 2.7

Housing + 2.2

Medical Care + 4.5

Education + 3.2

Apparel - 3.8

Transportation + 4.2

Food + 2.9

Other + 4.7

Note that the only areas= prices are not increasing are in the transportation and apparel industries. Do you want to group your business with the airlines and the clothing stores? Don=t make the mistake of thinking prices are not rising and you are Adoing fine@ by not raising your prices.

You need to raise your prices (a little bit) every year in every category. There are some less painful ways to raise prices in your salon and spa. Try out some of these strategies other MIKAL customers use:

Raise prices on different departments at different times during the year. Always increase prices just before the department has a surge in business. Increase haircut prices in August just before the big back to school rush. Increase chemical service prices in October before the holidays. Increase nail services and up dos just before the prom and wedding season.

Never raise prices in January or April. During these two months cash is tight, paying off holiday gifts and paying off Uncle Sam!


Never increase all of your prices at once. This causes sticker shock. What if you went to the grocery store and every price had gone up in one week? Do a different group of prices each quarter, and if you are raising prices every year the prices don=t have to go up more than 5%. A $20.00 service can increase to $21.00. A $50.00 service can increase to $54.50. This type of increase will not disturb customers.

If no one mentions your price increase, you didn=t raise your price enough! Make sure your staff is scripted to respond to customers mentioning a price increase. Have the staff say that the price of this service has not gone up in 12 months, that other service prices have not been increased at this time, and that the specials and referral rewards the salon/spa offers should be used to help customers hold the costs down.

Consider adding levels to your service prices. This allows staff to increase prices as the demand for their services goes up. This gives you a double increase over the year as price increases happen and staff members move up a level. When customers ask why a staff member has increased a level the best response is that the level is based on demand for the employee. The employees that are in the highest demand will command the highest levels of pricing.

If a customer complains that they booked the service at the old price and didn't expect to pay more give them the lower price ONCE. Note that if you are doing small increases each year the price difference will be marginal.

During and after a price increase watch your service tickets and employee average tickets. Make sure that the staff is charging the new price. Change the price in your computer software and make the employees enter a discount reason code it they must charge a lower price. You cannot afford to lose ground against the increases in the consumer price index or you will lose your spending power!

Pricing Questions and Ideas?
Call MIKAL at 513-528-5100
E-mail MIKAL at mikal@mikal.com