Are Your Salon Prices Too Low? (The 3 Signs You're Undercharging)

If you're working harder than ever and not making the profits that you want to, there's a good chance your prices are too low, and deep down, you probably already know it. But I know that raising prices can feel terrifying. What if the clients leave? What if nobody books? Here are three signs you're definitely undercharging, and what to do about it. Hello, hello, hello, my salon friends. Phil Jackson here, your queen of salons, coming all over the internet with another dose of my Wise Owl Wisdom. How on earth are you? Achingly well, I hope, as we storm towards the end of January. How's it been for you? I've had mixed results in my coaching group. Bit of a bumpy start for some, but strong middle of the month, and I'm hoping we're going to get a really strong finish too, because I always think hitting those January targets kind of sets up the whole year, doesn't it? But why not reach out and let me know how things have been for you? Are you looking at big empty spaces in your columns, or are you ticking over quite nicely? Actually, in my own salon, January was never the problem. It was always February. You used to bite me on the arse, my dear. And it was one of the huge reliefs that I had when we brought salon memberships in not to have to face that huge yawning chasm in my takings when we got to February. Anyway, what are we talking about today? Uncle Phil? For God's sake, get to the point, boy. Well, we're talking about underpricing. And before we get into the signs that you're underpricing, let's talk about why you're stuck there. And it's not because of ignorance. You know you're supposed to be charging more. And I get that we don't come into hair or beauty to make a fortune. There are easier ways to make a living than what we do. But that doesn't mean there's not a good living to be made. And there's something stopping you. And usually, these are the three things in my coaching practice. These are the three things, the three fears that my customers have around raising their prices. Fear number one is that you will lose customers. Everyone will go somewhere cheaper if you put your prices up. Spoiler alert. Yes, some of them will. And the clients that leave you over a five quid increase are not your clients anyway. And I promise, price-sensitive customers, you know this, actually. And the biggest exaggeration I ever had of this, do you remember Groupon in the old days? Does anyone even do Groupon anymore? But we used to use Groupon whenever we had a new stylist come into the salon because my marketing's really good. I can get people busy in about 12 weeks. In that 12 weeks, I don't want you sat in the staff room twiddling your thumbs, getting demotivated.

So we used to fill their columns with Groupon with no expectation that we would turn those into regular customers. We knew they would come in once, use the Groupon, and we'd probably never see them again. But those customers, those price-sensitive customers, they're always the ones who complain. They're always the ones who cancel last minute. They're the ones who never tip. They're the ones that always no-show. Such a pain in the neck. I promise, the more they pay, the more they pay attention. The better the price is, the better the customer that it attracts. Fear number two is that you will lose bookings. The columns are going to be empty. We'll be staring at the walls, panicking about the rent. The truth is, when you charge properly, you don't need as many customers to make the same money. So a little bit of white space is a good thing. And I don't like seeing salons that are running at 100% utilisation. It's a very stressed model. There's no give in the model. So when we're looking at pricing, normally what I would aim for is somewhere around 80% to 85% utilisation. A little bit of white space here and there. And the wonderful thing is that when we're charging properly, we attract better customers as well. But here's the crux of it. Fear number three, and the main reason in our industry that people don't charge enough, is that they don't feel good about it. They don't feel they're good enough to charge what the big fancy salons are charging. That's your imposter syndrome talking. And if you've been doing this for years, I expect you're absolutely worth more than you're charging. So let's figure out if you're actually underpricing or whether this is all in your head. So the three signs that you're definitely under... Gosh, we're working in threes. Lots of lists of threes. I've got bullet points all over the place in my notes. Sign number one that you might be undercharging is that you're fully booked but not making money. And this is what I talked about in the intro section. It's the biggest red flag is when your columns are rammed, maybe even turning people away. You're working 45, 50, 55, 60 hour weeks. And at the end of the month, you're just scraping by. And why this happens is you are discounting your time. You're not charging enough per hour for the services that are being carried out. And I see this actually weirdly more in hairdressing than I do in the beauty services. Sometimes people taking three, four hours over colour services and charging 80 quid.

It's just not enough to cover the product, cover the time, cover the rent and the utilities. You're probably netting, you know, 10, 15 quid an hour if you're lucky. And you could be working at Tesco for 10, 15 pounds an hour. Let's face it. So take your average service, calculate how long it takes, figure out how much you're making per hour on your most popular service. And if that doesn't feel comfortable, if that doesn't feel like there's a little bit of altitude there, a bit of extra profit being generated, you're probably undercharging. So what do we do? Well, we raise our prices. If you're fully booked, the market is your local market is literally telling you that you can afford to charge more and a price increase of 10, 15 percent is not going to empty your columns. Yes, you might lose a few, but actually we can afford to. If you're increasing your prices by 10, 15 percent and a few customers leave, that bit of white space is going to be more than compensated by the increased prices on the rest of your services. So those other services are going to be more profitable. It allows you a little bit of white space. Sign number two is if you're attracting those price sensitive clients, if they're shopping on price and choosing you, you're attracting the wrong people. If they're starting to ask a lot of questions about how much a service is or whether they can negotiate with you. Can you do it a bit cheaper or skip the blow dry if you can knock a bit off the price? If they're cancelling frequently, it's because they're not invested. It's cheap enough to just blow your service off. Also, I don't think personally, oh, here's me about to be all controversial. I'm going to annoy an awful lot of people in the salon industry now. Personally, I don't think we should be accepting tips. I think it puts us on a level with people that wait on tables in restaurants. Perfectly valid way of making a living. I'm not looking down on anybody, but we can't call ourselves professionals when you're accepting gratuities. Your accountant doesn't. Your doctor doesn't. And straight away, it puts us on a different level. So I don't think we should be accepting tips. If you do accept tips, though, and your customers aren't tipping, it's because they see you as the budget option. And if they're complaining about everything, it's because they're not there for the quality. They're there for cheap. And the truth is, when you're charging cheap prices, you attract cheap customers. When you charge premium prices, you attract people who value quality. And my wonderful line in the sand is this came from a story.

I was coaching a customer and it was a hair salon. And we were going to be starting to charge over £100 for service for the first time. And it was a non-technical service. So it wasn't a colour service. It was a cutting service. It was going to be over £100. And she was panicking. And she said, we're going to lose customers. And I can't see anyone paying that much. I said, the thing is, every time you price somebody out, you price someone in. There are people who would never spend £100 on a haircut. But there are people who don't believe you can get a good haircut for less than £100. So we open up our books to a new clientele each time we move into a new price bracket. I've seen it again and again where prices go up and actually demand goes up. Revenue goes up and stress comes down. So raise those prices. Difficult customers will leave. The good ones will stay. Sign number three is if you're a lot cheaper than your competitors and you don't feel you should be. Now, I do not obsess about competitors. When I'm setting prices in my Get Paid Properly programme, more on that later, we don't even look at what the competition is charging. It's not my specialism. There are some people who are very, very good at competitor analysis. In fact, if you're listening, Brayden, reach out. Let's do an episode on competitor analysis. That would be really good. It's not my vibe. It's not what I do. And I think the danger is that we end up allowing somebody else's business model to dictate what you're charging. So you're letting the salon down the road decide what you charge, even though they've got a different rent model, different business rates, different staffing model, different overheads, different suppliers. And they're almost dictating what you get to charge and how much profit you're allowed to make. The other problem is we're very often influenced by what other salons are charging and they're not making any fucking money either. So we're allowing someone who's not making any profit to decide what we charge, which is insane. It's like the blind leading the blind. So we're not going to have that. We're not going to be allowing our competitors to decide what we charge. But if there are people in your area charging more than you and you don't think they're better than you, then I think you probably can afford to increase your prices. So if you want to have a look at your top three competitors, check their prices. If you're more than a couple of pounds cheaper than them, or if you're the same, but you offer a better quality of service, you are leaving money on the table.

In my own salon, we promised that we would be the most expensive haircut in town. And if anyone ever matched us on price, we would immediately increase our prices. We made a big deal out of being the most expensive in town. And some people used to come to us just because we were the most expensive in town. And what a wonderful place to be. Premium prices means that you get premium perception, but it also means you get to have the best coffee. You get to have the best training for your staff. You get to have the nicest decor and the most comfortable basins and all of those good things as well. So how do we raise our prices without losing everyone? First of all, stick to your guns. And that means you've got to run the numbers. You've got to understand why you're charging what you do. You're not just putting your finger in the wind and saying, well, we're better than sweaty Betty down the road. It looks like she's got dirty windows and a dirty bra. And we're not as good as the other salon down the road that's got a training academy and everything's cream and chrome. We'll choose a number in the middle. We're not doing that anymore. We're going to be setting your prices according to the profit that you want to make. And then we make that a no-brainer for the right customers. So once you understand your numbers, step number two is we're going to announce the price increase. Don't hide. Don't apologize. Don't spring it on people. But myself, it was just a small notice on reception. Give people maybe four weeks notice. We put a little sign in the salon saying from the 1st of March, these are going to be our new prices so that we can offer you the best experience in the long term. That's it. No apologies. Current customers, if I knew they were going to be a little bit funny about pricing, I used to allow them to rebook today at the old price. So their next appointment will be at the old price as well. It just takes the edge off a little bit. Also helps increase your rebookings. Step number three, if you do get some pushback, if some clients complain, let them. Most of the time, they don't change their spending behavior. They just want to feel heard. So listen, if you've got tiered pricing in your salon, and we could run an episode on tiered pricing, if that's something that interests you, reach out and let me know. But if you've got tiered pricing, you tend to retain more customers in the business because if they can't afford to go to your most expensive beauty therapist, there's someone else on the price card who can do a pretty good job for a few pounds less. So I'm a big fan of tiered pricing. I see it lots of times in hair salons, not so much in beauty.

So we're not going to apologize. We're not going to negotiate. We're not going to give discounts just to keep people in. And that might mean that step four is to replace a few of those customers who have now left. That's a marketing problem. We've got so many episodes we need to do on marketing because marketing is a car crash in the salon industry at the moment. I promise there are so many people getting this wrong. And if you're doing a good job on your salon marketing, please reach out. I'd love to be interviewing you and sharing some of your wisdom because again and again, I'm disappointed with the marketing that I'm seeing. So put a date in the diary. When's your price going to go up? Personally, if it were me, I'd be saying 1st of March. That gives you a couple of weeks to set your new prices and then we can get that announcement on reception as well. If you need help pricing profitably, that's literally what my Get Paid Properly program is built for. Getpaidproperly.com. I've put the link in the description underneath this episode for you as well. If you want my one-to-one help, then also reach out. Buildyoursalon.com is the website and I've put that in the show notes too. What have I missed? What questions have you got on this? Why not reach out and let me know? My email address scrolling at the bottom of the screen, phil at buildyoursalon.com. Just a few short days until I'm coming all over the internet with another dose of my Wise Owl wisdom. And until next time, please take care. Bye. Bye. Bye. Bye. Bye. Bye. Bye. Bye. Bye. Bye. Bye. Bye. Bye. Bye. Bye. Bye. Bye. Bye. Bye. Bye. Bye. Bye. Bye. Bye. Bye. Bye. Bye. Bye. Bye.