How do you decide what to charge? It’s a forever debate on how to charge and what tools do you use to set your prices. There are various ways to do it, but they may not be best practice for you. You must decide what your worth is and what you should charge. There are various ways to think about pricing and what type of pricing you want to be in. You can set your price lower so you can see more people. Maybe you want to set your price higher so you can focus on their experience and be able to take your time to make sure they are perfect and exactly what they are looking for. Neither one is right for everyone. It is a personal decision. I am going to provide you with a few different examples of what to charge. Simply asking the question what you should charge is a very broad question that has a lot of variables that may impact what you should charge.
Competitive Pricing Structure
You may want to stay competitive in your area with pricing. This one is not based on your ability at all. It is 100% based on what your neighboring salons are charging. You want to locate 5 to 10 salons in your area and get their prices for the services you offer. A lot of salons have this posted on their website or on their social media. If they don’t you can simply call and ask. They don’t need to know what you are doing. You could simply be a potential customer. Trust me everyone does it. Don’t be shy.
Pro: The benefit of this pricing structure is customers who are just looking for someone and will not compare your prices to someone else. This does ensure you price yourself on the lower end to try and get more customers based on price. I believe this is the most common practice. The chances are that other salons in your area have based their prices this way too.
Con: The cons to doing this is if you have invested a lot into your craft or have a lot of experience (we will get into this more) you are not necessarily pricing yourself for your skill. Other businesses may have a different budget on expenses than you. Your neighboring salon may buy their backbar in larger quantities there for getting a different price point than you. They may be able to charge less and make the profit they need to. If you base your prices on a neighboring salon, then you are giving control to them on how much money you have the ability to make.
Budget Based Pricing Structure
Budget based pricing structure is very detailed and planned out. You want your cost per service to be less than 15% for the service you are providing. For example, if you are charging $50 for a service you want your service to be less than $7.5. The best way to figure this out is to have a list of the products you purchase and what the price is. Then you need to figure out your services and list all the products you use and the cost per item in each service. Yes, there are other business expenses that are involved with this; however, this is just a starting point of what information you will need to start the process. Other things to consider is your booth rent, yearly expenses, monthly expenses and just what it costs overall to run your business. You should make no less than 50% after all expenses are paid. Knowing your expenses are key and creating good budgeting best practices.
Pro: This is a very detailed way to set your prices. It ensures you will make more than you spend and help you create a good price point on your services. By doing this it will help you know exactly what you need; rather than just crossing your fingers and hoping you make enough money to pay, not only your business expenses, but make the wage that you need.
Con: Unfortunately, most people have not been taught how to do this or understand this process. I will just be honest, if figuring out this structure, you may be better suited in a commission or hourly place that runs the business for you. In the beginning of my career, this would not have been in my level of understanding. Do not feel bad if you are not there yet. The nice thing is we all can grow and learn new things. Find a business mentor, take a class, or do lots of research.
Your Value Price Point
This one may be harder to decide. You may have been in the industry a long time and you are confident in your skill. You may have taken varying continuing education classes to elevate your skill. You want to make sure you get a ROI (return on your investment). Investment can include your time and financial investment. If you are at this point, then you do not care what other salons are charging. You know what you are worth and what your clients and potential clients are willing to pay. This price point is more about how much you want to make a year, monthly and hourly. If you want to have a revenue of $100,000 a year, then you break that down into smaller goals. The formula for this is your Yearly goal / 50 weeks per year (allowing for 2 weeks off) /how many days per week your work. For example: 100,000.00/2000 per week/ $500 for 5 days per week. If you have 5 guests per day your median price point should be $100 per client.
Pro: This price point structure is based on YOU and only you. You have the most potential to make the most amount of money
Con: If you do not have the confidence and believe in yourself this price point could be more challenging to follow. You may be the highest charging in your area and could be harder to gain more clients outside of a referral.
I am going to let you in on a little secret. All three of these structures can be done to help you decide what to charge. There is not really a bad way to figure out what to charge. Other than you want to make sure you are not losing money. You got into the beauty industry to make money. Set your price based on what you need!!!
Lash Stuff offers free Lash Lift, Eyebrow Tint, and Brow Lamination Training.