The New Cost of Doing Business: Summon the Courage to Raise Your Prices

If you were under a mandate to close your doors and stop working, I can guarantee with 100% certainty that you have been deeply missed by most (if not all) of your clients.  However, being missed and loved by clients doesn’t pay your bills and it doesn’t cover the new cost of doing business. As we re-open after our Covid-19 related closures, now just might be the perfect time to raise prices regardless of the client fallout.


Sometimes people feel like they can never really “get ahead” financially, and often times it can be attributed to not being mindful of little dollar amounts.  The classic example is when people actually add up how much money they spend on coffee per month (or lunches, or a killer handbag addiction, etc).  Well, this is the same as that.  Everything we use in the salon is becoming more expensive, a couple bucks here and a couple bucks there, if you ignore it and think your old business model is still relevant, I’m sorry to tell you, you’re wrong. 


We are in the middle of a global pandemic: Everything is different now. 

Cost of business is rising

Slowly but surely I’m seeing the rise every time I place an order for my salon (or try to).  


For example, before the pandemic I’d buy a case of gloves to use in my salon from Amazon every 3 months.  The price was $42.07 for 1000 gloves, that’s about $0.04 per glove.  Two weeks ago I couldn’t buy them from Amazon because I’m not a frontline worker (fair enough), but now those same gloves are available for $0.25 per glove.  That’s an 84% increase.  Most states are going to require hairstylists to wear gloves during the haircut, as opposed to just the color application, so we will all be going through many more pairs of gloves per day. 


There are also the disposable masks I need to have on hand to give to clients.  They cost $1.25 per mask.  Combined with using more gloves than before, my salon is spending at minimum an extra $2.25 per client.  These numbers always seem so small, but when you start compounding it that $2.25 becomes $3240 per year just for the PPE for appointments, just for one hairstylist.  I know all these little dollar amounts seem non-offensive and tiny, but it’s a trap.  You need to pay attention.


Once you add the cost of PPE for me wear while working, plus the increased cost of sanitizing supplies and laundry additives, and the fact that freight shipping charges are increasing across the board, there is a pretty significant monthly expenditure that wasn’t there 2 months ago.  Plus most states are restricting the volume of clients we can see a day, and this all means one thing:  Cost is up, revenue is down.  So, again, now just might be the perfect time for a price increase.


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The Value of a Survey

I send email newsletters through Mailchimp when I need to communicate with my clients.  But a newsletter is so one-sided.  I started realizing I needed to take the temperature of everyone on that email list and try to get a picture of how my clients have been feeling about when my salon will be re-opening and how they feel about a price increase.  I will discuss the details of the actual survey in another post, but the punchline is this:  48 hours after the survey went out, 75% of the readers participated.  


  • 76.2% of my clients are excited to come back to get their hair done 
  • 14.3% of my clients want to wait a little longer before visiting 
  • 9.5% of my clients said I lost them at the price increase


That is a 10% loss, which is exactly industry standard.  I have 337 clients that are active, that’s a projected loss of 34 clients. 


The most interesting thing to me is last year I lost 10% of my clients when I raised my prices 3%.   I just announced a much larger price increase and I have the same projected loss of 10%.  The real take-home point is, in my situation at least, it doesn’t seem to matter what the increase is, the fallout is the same.  If you are planning to do a price increase before re-opening, make sure it’s significant enough to cover your new expenses, as well as the new client volume you are allowed to do per day.  

Curious yet? let’s talk about that increase

If you’ve made it this far in this post, I may as well share with you the gritty details of the increase so you can compare it to your notes.  Since all markets are different, I’m not including the cost of my services, only the percentage of the increase.  I usually do a 3% increase on an annual basis, this time it’s an average of 13% across the board.  Also, you’ll notice that some services have higher increase than others.  Let me explain…  


Since I’m no longer allowed to double book, I needed to increase “lower cost services” to make up for it.  For example, a Toner with Haircut is a service I would have double booked into the processing time of a “higher cost service” (like balayage or foils), but now I can’t do that.  Unfortunately those clients will need to pay more just for the amount of minutes they are in the salon, since they are not piggybacking into someone’s processing time. 


Service Increase
Haircut 16%
Blowout 20%
Single Process 20%
Double Process 3%
New Color 14%
Full Foil 3%
Partial Foil 4%
Balayage 3%
Toner with Blowout 20%
Toner with Haircut 18%
*Haircut Add On 19%
Average Increase: 13%


If you are sitting here trying to summon the courage to raise your prices before you re-open, let me just say to you: Do it.  Trust me, darling, 90% of your clients will come back (some a little later than others).  Make sure you are covering your costs, and really accounting for the new precautions and measures you need to be doing upon re-opening.  You have already taken a financial hit by being shutdown, don’t keep taking those hits by absorbing the new cost of business all on your own.  


You are worth more than that. 


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