Why is it such a challenge for owners and staff to discuss service pricing with clients?

Why do owners have so much anxiety about doing a necessary and justified price increase?

The cost reality

• First and foremost, there is the cost of service payroll.


• There are guest services and administrative payroll costs.


• There is the cost of continuing technical and business education.


• There is a cost to using the finest professional products.


• There are overhead costs in the form of rent, utilities, insurance, maintenance, advertising, etc.


• There is the cost to build out and equip an attractive facility.


• There is the cost and repayment of debt that financed the start-up and/or periodic upgrading.


• There is the need for the business to generate a fair profit on revenues.


• Finally, there are the ever-increasing costs of doing business that eat away at profit.

The salon/spa price discussion reality

• It’s a missed opportunity during consultations.


• It’s a missed opportunity during price increases.


• It’s a missed opportunity when up-selling during a service.


• It’s a missed opportunity on the phone when clients receive complicated and/or vague pricing responses.

• Knowledge = confidence: Service providers receive little to no training on how to deliver a thorough consultation complete with explanations of expected costs to the client. It’s like the price element of the service is an ugly place to be feared and avoided. The further service work continues without the client knowing what the final cost will be … the more uncomfortable the service provider becomes. Too often … simply to avoid an uncomfortable moment at check out … the proper price for a service is lowered or service elements are not charged for. The only solution to overcoming the fear of discussing price is proper training, knowledge and experience to deliver price explanations and options to the client - before work begins. If proper pricing discussions are not part of your skill certification training program … your service and guest services staff will continue to struggle through every price explanation.


• Hesitation = lost revenue: Up-selling is essential in the salon/spa business. Whether it’s a conditioning treatment, a more involved color service or skin treatment, it is a “sales” process. And when it comes to “selling,” too many service providers simply avoid it. Selling is simply filling a need. There is a price to fill that need. When service providers (and guest services staff) hesitate to provide service solutions to fill client needs … revenue opportunities are lost. Simple systems can create the language to guide employees through the identifying and filling needs conversation, the price to fill the need … and the infamous close. It could sound like, “We can do this service for an additional $35. Would you like to proceed?” Identify the need, explain the solution and its cost … and ask for permission to proceed. Hesitation is alive and well in your business - and it’s allowing revenue opportunities to slip through the cracks.


• Complicated = confusion: True story … I called a "very well known" salon to ask how much a men's haircut would be. Answer: "We have a $40 at 4:30pm and a $75 at 7:00pm." Then silence. No questions about my needs or hair type. I knew I was calling a "very well known" salon and expected premium prices. No explanation on the differences between the $40 haircut and $75 haircut. I wanted to ask, "Is the $75 haircut 47% better than the $40?" This is an inherent problem with salons that use a tiered pricing approach based on skill and experience.
  
  
  
  • I've never been a fan of tiered pricing because it complicated the price discussion … and the ability to effectively implement a "team-based service" system.
  
  
  • Every time a client is serviced by a different stylist charging a different price … clients will ask, "Why was my haircut more (or less) today?"
  
  
  • Train stylists to do great haircuts and charge one premium price.
  
  
  • If that doesn't sit well with you, limit your pricing to no more than three levels.
  
  
  • The more price levels … the more complicated the explanation.
  
  
  • And … the more price levels you have for service providers … the more your system is growing columns on the appointment book rather than building a dynamic brand.
  
  
  
  


• Price increase = execution: Every business needs to periodically raise its prices. It's a rather straightforward process of analyzing your service per service hour and adding a profit margin. (If you don't know how to properly price your service time, contact Strategies and get some coaching on the process. Otherwise, you're guessing.) The difficult step is communicating a price increase to clients. Salons and spas are wildly all over the board on this. Some want to give clients months of advance notice. Some want to post signs rather than talk to clients. Some want to do emails rather than talk to clients. Some want to print new price lists and have the client figure out that prices have increased. Why not get your scripting down and just have a conversation with your clients that prices are increasing on May 30th, 2016?
  
  
  
  • Question: How many clients in your salon/spa are still being charged an expired price for their services? Is it because you don't want to have a "difficult" conversation with those clients? Is it to avoid a possible confrontational situation? The longer it goes on, the more difficult that price conversation will be.