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How To Raise Your Beauty Service Prices - and not scare your clients

Updated: Jan 8


The beauty industry is dynamic and ever-changing and as a successful beauty services provider, you will want to keep up with these changes. The key to remaining successful is to ensure you are making a profit. By growing your revenue you will be able to offer new innovative services to your clients and new services require both an investment as well as training. So how do you raise the prices of your beauty treatments without driving your customers away?

The key to raising your prices is to ensure you don’t surprise your existing clients as well as establish a positive message. You need to decide the best timeline from sending your initial message(s) to the date of the actual price increase. Your message should be clear and concise and should always start by thanking your customers. Remember they are the reason your business is growing. They should be reassured that along with the price increase, you will be providing enhanced service quality or a new service.

When it comes to announcing the actual price increase amount, be sure you communicate this information to your customers before the price changes come into effect. You can do this by sending out a marketing email or having literature available in your business so customers can see that a price change is coming.

The Cost Reality There are costs to providing beauty services. There are one time expenses and there are recurring expenses. There are the costs of products, the cost of your utilities and the costs for maintenance to name a few. Another cost inducing item could be training/Certification/Re-Certification, essential in the beauty industry if you want to stay ahead of your competitors or offer a niche service. Continuing education is probably one of the biggest one time expenses you will have to cover when it comes to offering your beauty services. If you are considering adding Hair Removal and Skin Rejuvenation treatments with the Dermalase IPL, you may be gratified to know that full training and manufacturers certification is included free with your purchase. Aesthetics is one of the fastest-growing fields of study in Canada. This means you will have increases in competition in the years to come. How can you ensure that you stay relevant in the beauty industry? By ensuring you are offering a top-quality line of services that your clients are requesting. The quality of your services will affect the cost to you, as well as the cost to your clients. While the thought of increasing your prices could be scary, you will find that many of your clients will accept the price increase once they are confident in the level of service you are offering.

Normal Business Client Loss Attrition Rate There will be those clients that will not stick around after a price increase and that is the reality of the situation. According to an article on smallbusinesschron.com, businesses tend to lose 10% to 25% of their business each year. This number just speaks of loss, it doesn’t take into account new customers and so it is not a true representation of your performance each year. So even though you may lose some of your customer base, your price increases could also attract a new set of clientele and you can still end the year better off than you started it. Yes, there will be some customers that will be disgruntled about your increased prices but these will be the minority. We understand why you would be apprehensive about raising prices when it could cause you to lose some customers. The truth is the customers that are with you simply because of your prices should be a minority compared to the customers that are with you because of the quality of the service you provide.

The good news is that any losses from your lost customers will be compensated with the increased sales due to the higher prices. There is a risk to your revenue when you lose customers but the chances you will still see an increase in profits are very high. As an example, if your beauty business is currently running a gross margin of 60% and you implement a 10% price increase, your gross profit loss will be less than 9% if some customers don’t stay with you. At a 9% loss, you are still ahead by 1% and even by 1%, you would have increased your gross profit.

Calculating the Price Increase Calculating your price increase can be very personal and is dependent on the reason for the prices increase. Most businesses will increase prices because their operating costs are increasing. You will have to crunch the numbers to find a fair percentage to increase your prices by. Here are the steps;

  • Look at your operating costs from rent, to utilities, products used, cost of maintenance, wages and any other expense that may be unique to your business.

  • Take note of competitor pricing ensuring these competitors have the same or similar services.

  • Once you have collected pricing data for competitors you can calculate an average and compare your prices to this average.

  • Look at the ways your services are better than your competitors; what is it that you offer that is better than their offering? These are the value-added things that make your service stand out and make it worth the extra money to your clients.

Once you have this data collected you can decide how much you want to raise your prices. You don’t want to go too high but you want there to be a notable difference in your price and your competitors, especially if you are offering a new service or using new products or technology.

According to an article on salonbusiness.com, the average profit margin for beauty salons is 8.2% ad for general business it is around 7.7%. To find your current price margin divide your gross profit by your revenue and multiply by 100 to get the percentage value. Profit margins for IPL laser Hair Removal and Skin Rejuvenation far surpasses most other services that can be performed without a medical degree. In fact, Hair Removal is the second most requested, non-invasive, treatment in Canada - behind Botox - and you don’t need to be a medical aesthetician to perform these treatments.

Executing the Price Increase When it comes to executing your price increase you don’t want to use the word “increase”. Instead of noting that you are increasing your prices you should use the word “changing”. That will soften the blow subconsciously and many clients will not think twice after reading the word changing versus reading the word increasing. The word “change” can reflect growth and customers may be more excited about the growth and new things than worried about a price increase.

You can make your clients aware of the change in rates by email, phone call or by having literature available inside your business. You can add a message to your invoices or receipts indicating the upcoming price “change”. However you choose to make the announcement, be sure to let your clients know how much their patronage has been appreciated. For emails, you can indicate all the success they have helped you to achieve and how you are looking forward to so much more. Don’t apologize, just make the change exciting so that it is something they can look forward to. You can even do something a little extra for the first day, week or month of the price increase. Offer a free or discounted accompanying service or offer a free drink, a small gift, or a discount code for future service. When executing your price change you can create packages for your customers. While you may increase the price of individual services you could make packages to make your spa more attractive. You can include your retail products with service as an additional package or you can package your services as well. Whatever you choose to do, always let them know you appreciate them and are looking forward to working with them in the future. Always remind them of the value that you will continue to provide with them by your side.

Benefits of a Price Increase There are a number of benefits you can look forward to when you raise your prices. You may have at some point thought of simply selling more to reach your financial goals but the truth is that increasing your prices will be a more effective strategy. Quality is always better than quantity in every industry and more so in the beauty industry. So why should you increase your prices?

  • Increase profits This should be self-explanatory and the main reason you found this article today.

  • Get to know your customers; the good and the bad Having the right customers matters more than the number of customers. While you want your services to have a high utilization rate you may have some customers that are holding you back from growth. These are the customers that simply come to you because of your prices. With a price increase, these customers could stop coming to your business and while you will lose some revenue there you should find that you begin attracting a newer different type of clientele that you wouldn’t have attracted before with the previous customers.

  • Improve service levels With a price increase, you have to make a difference in the way you go about completing services. It is not simply about the products, tools, and techniques you use to complete a beauty service. It is also about the way you treat your customers from the minute they walk into the salon. Ensure your customers see the difference between you and your workers with this new pricing.

  • Introduce new higher value items to customers With a price increase, you can add new services and treatments to attract new customers.

  • Distinguish yourself from your competitors Look back at the competitor pricing you gathered previously. Now, look at the services they offer and the quality of these services. What are they offering their clients and what do their clients have to say about the environment, the services and the overall quality of what they have to offer. You want to stand out above that - that is how you attract better clientele, the type of clientele that is more interested in the value of the service that the price.

  • Makes an indirect statement about your services and business You know that saying; “You get what you pay for”? This is usually used when people are talking about the quality of a product or service that is priced lower than average. There are potential clients out there that didn’t choose your beauty business because they think something is wrong based on your current price. A confident price “increase” - change - will show potential clients that you know what you are worth and you believe in your products, services, and techniques.

Conclusion A price increase is a necessary occurrence for your beauty business. There is a looming fear of losing clients, and it may be justified, but the benefits of increasing your prices far outweigh the small number of clients you may lose. Always ensure that your reason for increasing prices is fair and that you will be offering your customers better service.

Increasing your prices may just be the thing you need to establish your company as the quality leader in your area of expertise. Just remember to be transparent and upfront with your price increase and communicate well with your clientele in advance about the changes they can expect. Keep them in the loop and make it a positive experience for them. Thank them and show their appreciation and remind them that it is because of them that you have had this opportunity to offer new and improved services. Going about a price increase the right way can do so much for your business now and in the future.

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If you want to learn more about the Dermalase IPL - the lowest priced, Health Canada approved IPL Laser Hair Removal and Skin Rejuvenation device manufactured and serviced right here in Canada, including training and certification - just give us a call at 604-788-3413 to book your FREE demonstration.


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