Boost your salon profits with tiered pricing

Hello. A big part of running the business you deserve is generating the profits you deserve. So today, I want to explore with you one tool that if you're not using, I think you are seriously leaving money on the table, and that is tiered pricing. So let me give you three reasons, three ways to convince you that you should be having tiered pricing in your salon. Welcome. As well as being a salon coach, I'm also a salon owner, and I've been working in my own salon for over 15 years before I decided to go full-time into coaching. So I know a little bit about the hair business. Through my coaching, I've also explored the beauty side of our industry as well, and I'm going to make a very broad generalisation now. Usually, when it comes to business matters, the beauty girls have us nailed. Us hairstylists are just brilliant at being creative and inventive and innovative, but when it comes to the day-to-day running of our business, I'm afraid the beauty girls have got us licked, in most aspects. But there is one that we're going to explore today, where the hairdressers have won. So here's one for the hair team, and that is with tiered pricing. I see tiered pricing occasionally in beauty salons, but not nearly enough. So I want to give you three reasons today why I think you should be introducing tiered pricing into your hair or beauty salon. My name is Phil Jackson. I'm the founder of Build Your Salon, and I've made it my life's work to help you mastering the skills you need to build a business that you enjoy. So tiered pricing, why bother? Well, I've got three reasons, and the first one is, firstly, I think that we need to get much more into the heads of our employees. Particularly when we're talking about millennials, people will need to feel that they're progressing, that they're striving, that they've got clear targets to aim for, and that you've got their career mapped out for them. I think that tiered pricing is a brilliant opportunity here. I think by having a really clear set of standards, a clear set of targets that somebody needs to hit to progress to the next level, to tie in maybe an increase in their basic pay or their rate of commission as well, I think it just shows that you've got control not only of your salon and your employees today, but you've also got a plan for them to progress and a plan for the future.

I also think it's fair, I think it's fair that if you've got somebody who's making a massive contribution to your business, and they've been with you for some time hitting those slightly higher targets, I think it's fair that their job title and that package of pay and benefits reflects that. I don't think it's fair that we've got junior members of the team, you know, maybe someone who's been qualified two or three years and hasn't got much of a clientele, having the same title, charging the same prices as someone who's been with you for maybe 10 or 15 years even, and actually is a key part of your business. So why not reflect that importance in their job title and what they're charging too. The second reason is that I think it is crazy, when we go back to our cost-based pricing, I think it's insane that we can have two people who cost us a different amount, charging the same amount for their services. It just doesn't make sense to me. If you've got somebody who's been with you for a number of years, and they're a very important part of your business, the chances are good that they've had a number of pay increases over the years as well. And let's say we've got that junior member of our team, that junior therapist who's been with us two or three years, and they're just starting out on their career post-qualification. Then we also have an incentive built in, if they're charging the same for their services, we have an incentive built in to steer clients to that more senior member of the team. She's more expensive, we need to get her utilised. That's going to make it very difficult, if you've got that subconscious thing going on, which is steering clients towards your senior member of the team, it's going to make it very difficult for that more junior member to build a clientele. So let's even the playing field up a little bit. Let's get tiered pricing in, let that senior member of the team charge more for her services, and let's give the junior guys a bit of a break. By being slightly cheaper, the chances are that some clients will gravitate towards the lower end of your price card, and they've got a chance of building up a clientele as well. And my final reason is that I think tiered pricing gives you a lot more control over who does what in your salon. Now I get flown in to all sorts of different places as a consultant in salons, and one of the key parts of what I do is around financial analysis and pricing and targets and commissions. And I was up in Scotland with a client recently, and we were looking at pricing, and one of the things that occurred to me was that for her more senior members of the team actually being booked out for very cheap services,

so let's take a quick brow wax, which was being booked out for 15 minutes, it was impossible for her to make adequate profit to pay the member of the team that was carrying out the service, because she had some very senior members of the team, or experts as she called them, and they were on a very high wage packet, which is absolutely fair, but we couldn't make enough profit to justify booking out those 15-minute slots. So what I'm saying is, by having tiered pricing, we could exclude those cheaper services from being under the expert category, so it's only the more junior members of the team who can be booked out for those services. So I think it gives you a lot more control over who does what, gives you a lot more control on the profit that you're generating per hour, and ensures that what you're paying your team is reflected in the costs that you're passing on to your customer. So three reasons why I think you should be introducing tiered pricing. If you need a bit more help with that, please reach out to me, either through Facebook or phil at buildyoursalon.com. I take on a certain number of coaching clients every year. I would love to hear from you. If you've got some success in this, join the conversation over on my Facebook page, and don't forget to subscribe. I do a broadcast like this every single week, and I would hate you to miss out on the great content that I'm sharing. If you've already subscribed, I will speak to you again next week. Take care.