5 Biggest Pricing Mistakes Hairstylists Make

Hello, my friend. Welcome back to The Modern Hairstylist Podcast. Today, we're gonna be talking about pricing, which is obviously so important. There's been a ton of, uh, conversations about pricing and around pricing and what you should and shouldn't do over the past couple years.

And, um, I think that, you know, some of my advice that I'm gonna give you today may be a little bit controversial or the opposite of what you may have heard from other educators or other hairstylists, et cetera, et cetera. But the thing is, is you are your own CEO of your business, right? And I am so firm on the fact that, like, especially when it comes to pricing, there is not a one-size-fits-all solution or a right or a wrong. It truly comes down to you making the best educated decision around your pricing that you possibly can in the moment and then testing it and seeing what happens, right?

There's no calculator on this planet. There is no perfect answer on this planet. There's no, uh, hairdresser who's doing it exactly how you should be doing it. Your own business, your own circumstances, and the plenty of different factors that lend to what that decision could be, it makes it so your own situation is so unique, right?

And so that's why there's no right or wrong here. And so regardless of the advice that I share with you today, I want you to know that, like, you have the complete power to either take it or not take it. But I have a lot of experience speaking to thousands of hairstylists at this point about their pricing, um, having my own experience as, uh, uh, uh, as a hairstylist behind the chair, um, even to this day with my own pricing. I've taken a Harvard business class around pricing.

So, um, I'm really excited to get to share with you what I've learned and the biggest mistakes that I've seen, like the biggest blunders or regrets that I've seen hairstylists make with their pricing. So if you're ready to hear those things, then let's get into it. Let's go. What's the tea, friend?

My name's Hunter Donia, industry business educator for hairstylists, but my friends just call me Hunty. Whether it be growing your clientele, making more money, or automating and streamlining your systems, in the next 20 minutes or so, you'll be hearing realistic, actionable strategies to create a beautiful career for yourself behind the chair. So if you're ready to get into it, welcome to The Modern Hairstylist Podcast. So we're gonna dive right into this, and the very first thing I'm gonna talk about where I think it's gonna get a little bit controversial and people are gonna kinda hate me for saying this is, I, I think the biggest mistake that I've seen recently, in recent years is prematurely increasing prices for expenses or desired income.

Here is the thing. I am all about your services being profitable based upon the cost of your product per service and then, of course, your rent and your other expenses. Absolutely, I think that that should be the case. However, when it comes to your prices, you have to remember that if...

Y- you can raise your price to whatever you want to at the end of the day, but if there's nobody who's actually willing to pay that price, then you're not gonna have a business and then you're not gonna make any money at all, right? I would much rather you be breaking even or maybe even profit, n- negatively profiting a little bit to be able to stay afloat and get ahead, so that way in the long run, you can profit more and you actually can have profitable services. But if you're raising your prices so high to cover your expenses but you don't have the demand in your time or the demand of people to actually pay those prices, then it's completely redundant because you won't actually have butts in your chair giving you any money at all. So it's literally the choice between you raise your prices to a place where y- if you do do a service, then your expenses will be covered.

However, you may not have the clients to actually pay it, and you won't make any money at all or you can stay at a range that is appropriate for your demand that, yeah, maybe you're not making as much profit as you would like to, but at least you have momentum behind the chair, fundamental clientele to work off of and build on top of, and you have at least your expenses covered to keep the business open and running, right, in one way or another And, I mean, I'm saying, like, you'll have your base expenses, right? You won't be profitable upon those base expenses. Your profit margin may be low. However, you're still building for the future.

There's ve- it's very rare that any business in its growing phases is even profitable at all. And so you really wanna make sure that, you know, when you're hearing a bunch of rhetoric or advice around making sure that you're raising your prices to cover your expenses, just remember the space and business that you're at and be okay with the fact that, like, right now maybe that's not the right time for you to raise your prices that much. I am all about you raising your prices. I just think it's really important to do it responsibly, which brings me to my next, like, part of this number one mistake, which is also...

We'll talk about, like, oh, just raise your prices to make sure that you make the amount of money that you wanna make in a year. So, like, a lot of people will say, "Okay, well, if you wanna make 100K in a year, then do the math, break that down, see how many days you work, and see amount of hou- how many clients you take in a day or whatever it may be, and then make your price $100 per hour or however much your price needs to be to make that much money." And the problem with that is, again, you may not have the demand to be able to raise your prices that high, right? You have to remember that price is your largest barrier between you and a client deciding to book with you.

It is going to be the number one barrier, okay? And it's something that we, we kind of ignore, I think, a little bit, um, or we try to avoid that conversation because we wanna find other reasons or ways to make clients book with us But you have to remember that price is always going to be the number one objection that any new potential client will have, and that is going to be the, the, the barrier for them actually getting into your chair the majority of the time. And so being really responsible with the way that we're approaching our pricing is so important, and if you're not ready to raise your price to a certain degree, then don't do it because it can really put you in a big setback and it can do more harm than actual good, right? Just because your price is set at a certain price so that you make an X amount of money is not going...

That does not mean you're going to make that amount of money if you don't have butts in your chairRight? If you're not performing services, if you're not generating the money, then it doesn't matter how your price, you're just not gonna make any money, right? Now, on the flip side of that, if you have the demand in your time, then 100% raise your prices. If you can responsibly and sustainably without a significant fallout, raise your price to a space where you are covered for your expenses and you are maybe possibly priced for the amount of income that you would like to make, then fantastic.

Go ahead and freaking do it. I will root you on, right? But if you're not, do not do it prematurely. It's worth you being a little bit less profitable, not making as much money as you are right now because you are right now investing your time and you need that foundational clientele.

You need to be able to invest a little bit of money where you may be not as profitable as you want to be, to be able to become profitable one day. You need that foundation, right? The second biggest mistake that I see is people not raising their prices at all. All right?

So I am kind of a firm believer that every single hairstylist should be raising their prices by about five to ten dollars at least once a year. And the reason for this is because it's inevitable that your expenses are going to go up, right? And so a lot of us are like, maybe possibly, "Oh, I'm okay with the money I'm making right now. I really like the clientele that I have right now.

I don't wanna raise my prices. I'm too scared to raise my prices," et cetera, et cetera. Which is fine, but the problem with that is, is you're not gonna make the same amount of money year over year if you're not also raising your prices to balance out your profit margin because your cost of goods are inevitably going to go up. Because as we have seen over the past couple years, everybody raises their prices.

All of the places that you're buying from, your rent, all of your cost of goods from CosmoProf or whatever distributor that you're having, and softwares, et cetera, et cetera, they all raise their prices. Meanwhile, you're not raising your prices, so then you're going to become unprofitable. Now, I know that I just talked about making sure that you have enough demand to be able to raise your prices. When it comes to a $5 to $10 price increase, I have never heard of any hairstylist having a shit ton of clients leave them or not being able to afford them anymore just because of a measly $5.

So I truly believe that every single hairstylist can afford to raise their prices by at least five bucks every year in order to balance out their profit margin and continuously, uh, stay sustainable with that. Because otherwise your cost of goods are going to go up and you're going to be charging the same amount and then you're going to make less and less and less money over time, right? So it's super important that you are evaluating that on an annual basis and you're doing some sort of standardized cost of goods increase with about $5 to $10. Of course, if we are talking about a revenue raising type of price increase where you're actually gonna make a significant amount more money, right?

Then we wanna raise above $5 to $10. But of course, like I said, you need to make sure you have the demand in your time to do that. And this brings me into my next point, which is charging loyal clients a different price than new clients. So the tea is, is we need to make sure that our pricing is average across the board.

Now I just did a big pricing masterclass that covered this stuff in intense depth in our mastermind, uh, Modern Stylists Movement, which is the alumni-only group for our PBP alumni. And I was talking about how the only exception to this rule in which you wanna make sure that you're charging the same price across the board for all of your clients is when it comes to if you want to be more equitable And it's going to depend on your identity, the privileges that you carry, and how you wanna approach those things when it comes to if you wanna charge, let's say, a veteran's discount or a senior citizen's discount, right? Things like that. If you wanna charge, you know, less for those things, then that's kind of understandable.

However, otherwise, if you are not charging a loyal client the same price that you are charging a new client, then what you are de- genuinely doing is you are losing so much money. This goes for the same kind of reason why you should be raising your price by a minimum of $5 to $10 every year is, on that client, on that client service, you are losing money year over year by not raising their price with your price increases, right? And we don't want to lock somebody into that price because, just because they're loyal, because you're scared of them leaving, because you're scared of their reaction, because you feel bad. Trust and believe it's really hard to dig yourself out of that hole.

I have a whole episode about this topic specifically called New Client Pricing Versus Existing Client Pricing. You can check that out if you would like to. And it's very much can be detrimental to your business, and it can make you feel really resentful of those clients and it can really hold you back from making the money that you wanna make. There's tons of administrative things that go around this.

It makes it more difficult for you as the business owner to make strategic decisions and data-driven decisions because you no longer have a standardized, predictable amount of income that you'll be making per service because it's all over the place, because this one client gets this and this one client pays that, although they're getting the same service, right? So it really holds you back from scaling and it really holds you back from actually making the money that you deserve, right? Because cool, like you love her so much or she has been with you for so long, fantastic But what about you? You've been doing her hair for so long.

You have been providing her an excellent, amazing experience. You have leveled up so much. You've gotten so much more education. Your amenities and your guest experience is so much better and you're paying more to make that happen, so why shouldn't the client as well, right?

Speaking of when you want to be the business owner and you wanna make strategic data-driven decisions, particularly around your pricing, I see this trip up hairstylists so much when they want to price based upon their time, whether that be hourly pricing, whether that even be a la carte or session pricing. No matter what, you can still price for your time in all of those factors. And what, where they get tripped up is, isNot understanding what their standardized timing is across all services, or not having a standardized timing for each service across the board. Now, if you look at any chain, such as Great Clips or Supercuts, what they will often do before they allow their hairstylist, their employees, to be able to actually start taking services is they need to test out and be sure that that person can do specific services within X amount of time.

So, they know that if you are going to get a partial foil highlight into the door, it has to be able to be put on in 30 minutes, and that is what it is, right? That's the only way that you can start to do services if you can get your pr- your timing down to that spot. And that way, that chain, right, will be able to make more scalable decisions, be able to look at their data in a much smarter way, and be able to scale on top of that. It is something- systems, right?

This is a system that allows you to scale and make smarter decisions and particularly with your pricing and figuring out your timing and then standardizing your prices for your time across the board, this is massively important. So, what will end up happening is, is people are like, "Oh, well, I just booked Susie for two hours, and I booked Karen for three hours," although they're getting the same thing in. It's because we- they have different types of hair, et cetera, et cetera, which is fine. I understand that there are anomalies and that you have different people who take you different times.

That's fine. But at the base level, you should have an understanding of, on average, if I am booking a new client for, let's say, a partial foil and a haircut, then it's going to take me X amount of time, period. And that should be your standardized timing, and you should understand what that looks like across the board. It shouldn't be all over the place.

If you don't have a current underst- great understanding of your service timing right now, I'd highly recommend that you do a time audit on yourself for, like, a good week or two weeks and see how long each of those services are actually taking you so that way you can average it out and you can understand on average how long it takes you to do each of those services, because it will help you so much in making sure that you are priced for your time so you can have more predictable income and make better decisions around how you're pricing your services. My last big mistake that I see hairstylists make with their pricing is not being upfront and transparent about your service menu, your prices, and your price increases. Particularly right now, because of all of the shifts that us as an industry have made over the past couple years in a very kind of irresponsible way, people are so untrusting of us hairstylists with our pricing right now. Like, there are so many memes out there right now and so many viral TikToks that have gone around that are like, "This is why I charged this client $6,000 for her balayage," and people are just gobsmacked by that, right?

And if you see the general con- uh, consumer consensus around, uh, luxury salon services, people are so scared and untrusting of the massive amount of money that they may have to spend. And so, because of that, if you are not upfront about your pricing, or at least, if you're not even sure of what your pricing actually will be and you're not able to give a pretty clear quote upfront, then you're going to be losing trust, and you're not gonna be able- able to get new clients into the door. Plus, if you, I hear this from my clients all of the time. I hear this from my clients all the time.

Because I have all-inclusive session pricing, I'm able to guarantee that my client will get, will pay the same price every single time they come to see me as long as they're not drastically changing what we're doing. And I get hair- uh, these clients tell me all the time that they hated going to their last hairstylist because every single time they went, they would pay a different price. So, the less transparent and consistent you are with your pricing, the less trust you're able to build with your clients, the harder it's going to be to get a new client to actually go into the door because they're not gonna be able to see what your pricing is on your service menu online. And that's gonna be really hard for you to actually, you know, be successful and get customers to continue wanna do business with you.

Like, trust is so massively important. It's the number one reason why a, a, a client will either book with you, continue to do business with you, or not, right? This also goes into your price increases. What I will oftentimes hear is, "Oh, why does the grocery store not have to tell people when they do price increases?"

But we do. The reason why is because at the end of the day, what you are providing is a luxury service. It's also one with th- within the parameters of a much more personal relationship, something dealing with, uh, uh, something that is super personal to human beings, um, where people do have the option of possibly doing their hair at home by themselves. And so, being upfront and honest and transparent about your increases is very important as well и it should not be done in a passive way.

You should be doing it in a way where you are very clear and you communicate it across the board to all of your clients that this was going to happen. And we do that in multiple ways. It's not with signs in the salon or posting on your social media. That is not how we do it.

And if you wanna hear more about price increases and how to do it, then I have other episodes on the podcast about that. All right, my friends. I, this was a quick one. I wanted to just get to the nitty-gritty.

I didn't wanna BS you today. I just wanted to share with you what these mistakes were. Hopefully, my friend, you can take this information, and you can run with it, and you can make changes if you would like to. If not, totally cool.

I'm not here to tell you what to do. I'm just here to share with you my experience and advice that I have. So much love. Thank you so much for tuning in to the Modern Hairstylist Podcast.

Peace out, girl scout. Bye-bye.

End of transcript. © 2024 Hunter Donia LLC.