Unlocking the Potential of Tiered Pricing in Your Hair and Beauty Business

Sit down and see what's going on with the Queen of Salons. Hair, beauty, and more successful tips for business owners. All on Build Your Salon. Hello, hello, hello my salon friends. How on earth are you? Achingly well, I hope. Phil Jackson here, Queen of Salons. Coming in your ears with another business tip, a little tit bit that you can take back into your salon business to boost your success and hopefully make you smile along the way too. How on earth are you? How is March treating you? I hope it's doing wonderful things for your goals. I hope we're ticking things off that we set out to do in January. And I hope that you're keeping your motivation high. Lots of chaos happening around the world and happening around us, but keep your head darlings. I promise you, this is not going to be the year that breaks you. You're tougher than that. And there are some salons actually doing very well. So there is hope out there for all, I'm sure. Today, I want to talk about a little pricing exercise. And generally, I'm going to start annoying some people now. This early on in the episode, darling, and I'm pissing people off already. But generally, I'm going to say that when it comes to the hair and beauty industry, generally, the hairdressers are so busy being creative and inventive that they don't have much time for business. Whereas the beauty guys, you tend to be better at the business side, generally. And that's annoyed all my hairdressers now. But I'm going to say, in this case, when we're talking about tiered pricing, which is the topic of today's show, when we're talking about tiered pricing, the hairdressers are much better at it than the beauty guys. So I've managed to annoy them as well. So if there's anybody listening for the rest of the episode, then stick with me. And I hope I've got some tips for you along the way. But tiered pricing, I don't see nearly enough in beauty. And I think it's because in beauty, you tend to price on results, or certainly we should be marketing on results. And so in your mind, you're thinking, well, if the result is the same, how can two people charge differently? Well, they can and they should, to be honest with you. Now, the one thing I would say is don't overcomplicate things. But if we're not doing tiered pricing, I think you're leaving some money on the table. I think there's extra profits to be had there and a bit of low hanging fruit, in fact. So basically, what we're doing with tiered pricing is we're allowing customers to choose their services and their products at different price points. And that brings a number of benefits for the customer, but it brings a number of benefits for the salon owner as well. And the biggest one, I think, for salon owners is it means you're going to maximize profits.

It gives you some room to upsell. And I think it's about broadening that client base a little bit. Now, I like people to dominate a niche. If you're in America, you're dominating a niche. But I like people to really, really tailor their service to a particular type of customer. So you should have your ideal client in mind. And if you haven't, then please ping me. I will find you a bit of training. I've got a little program flying around the universe somewhere, the internet somewhere called Your Perfect Salon Customer. And it really does help you drill down on exactly who that ideal customer should be. So all of your marketing, all of your services should be geared towards that perfect customer. But when I talk to people about who that avatar is, who that ideal client is, very often in salons, I get the answer that actually we've got a very broad range of customers. We've got some male, some female, some older, some younger. We've got grandma coming in and we've got the grandkids too. And that's fine. You know, when we're tailoring our message, we have our ideal client in mind. It doesn't mean we're turning anybody away. It doesn't mean that we can't offer services to those other types of clients. But I think tiered pricing recognises that there are different types of clients with different priorities and different ability to spend in different areas. So I think that you're broadening the client base just a little by offering tiered pricing. It gives a bit more choice, a bit more flexibility. And particularly when times are tough, I think if people are looking to cut back on what they're spending and there are, whether we like it or not, there are tough economic conditions for lots of our customers and some of them will be looking to save a few pennies here and there. And maybe tiered pricing is a way that we keep them in the business rather than them shopping outside the business. So rather than them going to a cheaper salon, maybe we can just offer a different tier for some of their services. And I think that it's a really useful way to steer customers towards certain team members for certain services. Let me explain. Some clarity, please, Phil. Can we please mop up this confusion from your words? Well, basically what I'm saying is that we don't want our most expensive therapists or our most expensive hairdressers to be tied up with low value services. It doesn't make economic sense because really our prices and our targets and our wages should all be in sync. As people progress through the salon and their wages go up, really their prices and therefore their targets should be moving up as well. Otherwise, what we've got is a very confusing, a very odd situation where actually you've got an incentive to keep some team members quieter than others. What do I mean by that? Well, basically, if you've

got two people on your payroll, one of them costs you £15 an hour and the other one costs you £30 an hour, who are you going to get busy first? You're not going to want to see your £30 an hour beauty therapist sat around doing nothing, are you? So you've got an incentive to keep her busy, or keep them busy, I should say, and steer clients towards them and away from the younger team member. So I think tiered pricing gives, love this is a down under expression, but it gives your younger team members a fair suck of the sav. It gives them an idea around starting to build their own clientele. It gives them a bit more of a level playing field as far as your services are concerned. What would getting paid properly mean to you? A better lifestyle? Less financial worry? Being able to be present and improve your relationships with your loved ones? Maybe even a better night's sleep? I know these are scary times, but if you're continually living paycheck to paycheck, if you can't seem to get ahead financially, I feel your frustration, I have seen your pain. It's time to stop winging it. You know your salon business could be doing more. It's time to finally fix your fear of the figures, take control and charge what you're worth, to step into the shoes of the well-paid, professional salonpreneur you were always meant to be. And that's what my Get Paid Properly program is all about. I'll help you improve your relationship with money, understand the finances in your business, and I'll show you what you should be charging to the penny. All of that without overwhelm and without guesswork. For all of the details of Get Paid Properly and to sign up now, head to getpaidproperly.com. And with the exclusive discount code PODCAST, you can get an enormous £200 off your investment in the program as well. Let's work together to make this the year you finally take control of the money in your salon business. So what I'm saying is that not all tiers need to offer all services. And in my own salon,

for example, if you're one of my most senior stylists, you will not ever have somebody book in for a child's haircut at just, you know, a few pounds. It's not the best use of your time. And in fact, it gives people a bit of an incentive sometimes, you know, if you particularly hate doing kiddie cuts, gives you an incentive to hit the targets and move up the ranks as quickly as you possibly can, where that's no longer going to be something that you offer. But here's where I think tiered pricing is vital. If you've got a team, and you know how hard it is to recruit at the moment, we've got to look after that team. We've got to keep them inside the business and profitable for as long as possible. And let me tell you, the biggest reason, I think, that particularly young people leave our industry and our businesses is because they don't see a future. They don't see a plan for their future. They don't see progression. They don't see how they're going to be moving forward in their careers. And without you taking care of the future for them, they will take care of the future for themselves. So I think we need to be, I think it's perfectly fair to reflect ongoing commitment, ongoing dedication to the business and the industry, ongoing contribution that your team members are making. Why not reflect that in their job title and the prices that they're charging? It shows that we have a progression. It shows that we have a career map for our beauty therapists and our hairdressers to follow. And I think that's more important than ever if we're going to keep young people in our industry. So then as they're progressing, as they're striving, as you have their future in mind, all we need to do is set a clear set of standards and targets for them to move up to the next tier. And that should involve an increase in pay as well. Now, the one thing I will say that I see lots of people getting wrong is they allow therapists or stylists to move up through the ranks just because they've been hanging on for longer than the others. So just because you've been around for a long time, you get to move up to the next grade. And I don't think that's fair at all. I think there needs to be a really clear set of standards and targets that as soon as somebody hits them, they can move up to the next tier. If that means that overtaking someone more senior than them in years, that means that overtaking someone who's been in your business for a long time, then so be it. Because the alternative is just chaotic. What we'd want to be doing is rewarding people's ongoing commitment, rewarding their dedication to our business. But also we need to be incentivising and motivating our high performers. And I think that tiered pricing is a really useful way to do that. So where do we start with this, Uncle Phil? Lead us on our journey. Please give us some hints and tips on how we can bring tiered pricing in. Well, the first thing I would say is

that we don't want this pricing structure to become so confusing for customers that they don't understand it. And I have seen some farcical situations where people have had so many tiers of different services. And in fact, I went into one salon, bless them, they had four tiers of service. This was a hair salon. But they didn't have anyone on tier number three, let's say. There was nobody there who could fill that role. And in fact, they only had three team members. So basically, they might as well have just put people's names on the price card at the top of each column. It didn't make any sense to have those tiers in place at all. So we don't want loads and loads of tiers. I would suggest really no more than about three, maybe four. I think more than that tends to be a little overly complicated and a bit too confusing. Do bear in mind that most new clients will choose the middle one. So if you've got three tiers, and I'm a brand new customer, not quite sure where to start, most people will pick the middle option. So bear that in mind when you're setting your tiers up. But that said, if you've got more price sensitive clients, if you've got people that tend to want to watch the pennies a little bit, then it might be that your lower tiers get busiest first. I have even seen in some salons where as a new client, you always come in at the top tier. And then it's the senior therapist or the senior stylist job to decide who would best serve you as a customer going forward. So I have seen that as a model as well. But I do think you need at least two tiers. Even if nothing else, there should be a tier for everyone else and a tier for the salon owner. There's an interesting thought, isn't there? And I'm not saying it's because you're the most experienced or you have the highest standards or the biggest level of utilisation. I'm saying we need to recognise the fact that some of your time is taken up every week with stuff other than service. And that needs pricing into the model as well. So I think there should be a salon owners tier, if nothing else, just so that you are putting the same amount of money in the till, even though you may be carrying out less service because you've got performance management to do or meeting with suppliers or marketing exercises to do. Even though all those other things are carrying on, we don't want your takings to suffer. So I would definitely put a salon owner's tier in. The other place that I see lots of people going wrong is there isn't enough difference. There has to be a meaningful difference between the tiers, otherwise there's no point. So if you've got a therapist and a senior therapist, but there's only £2 in between, well, I'm sorry, that's not really enough of a difference in the business. So I think it needs to be a meaningful chunk of cash in between the two tiers. And my final

point on this, and I think the final benefit, in fact, of introducing tiered pricing, is that if you're in a position where you know you've got to raise your prices, but you don't think your market will tolerate the increase that you need, tiered pricing can be a really useful halfway house. So if you know, for example, that all of your services are really $10 to $15 undercharged, but you don't feel that your clientele will tolerate a $15 increase across the board, what you could do is increase all the prices by $5, but bring in a second tier, which is another $7 or $8 ahead. So it's not going to get you there in one hit, but it will certainly move you a lot closer to the pricing model that your business needs in order to cover your costs and generate the profits that you deserve. So I hope if you don't have tiered pricing in place, I hope this has convinced you that it's something you really need to look at. If it has, then please reach out. Let me know that I'm being useful to you, darlings. I love hearing from you, and I love hearing your success stories too. Getting some lovely emails from around the world now, and it warms the cockles of my heart, darling, to think that I am impacting your business in a positive way. Just seven short days until I'm coming in your ears again with another wonderful topic. I think next week we're going to talk about project planning and how we get some of those goals marked off in our year. Until then, please take care. Sit down and see what's going on with the queen of salons. Hair, beauty, and more successful tips for business owners. All on Build Your Salon.