In this blog, we address a series of aspects that you should consider when defining your prices. If you already have your business running, this guide is also useful to evaluate your current price list.
This is question pops up frequently in lash extension online forums. There are many ways you can work out your pricing. There are also many ways you shouldn’t.
Researching Your Competition
This is where most of us start when determining what to charge. But be clear on who your competition is. Are you are a home-based business or a salon? Is your competition new or established in the business?
How wide is the geographical area of your clientele? This will help determine your competition. How do I know who my competition is? Type in “lash extensions near me” next time you are at your place of business and see what comes up in the first page. Do this with the other services you provide.
Book in with your top competitors for the services you are competing with and take note of your experience. What you would like to adopt? What do you do better? The latter becomes your point of difference which you can use in your marketing.
Anything you learn and add from your competitor experience adds value to the services you provide for your clients and keeps you innovative and ahead in the game. If your competitor knows you and you don’t think you would get a true experience of their services, you can send a staff member or ask a friend or family member who is able to report back to you.
Understand Your Market
Who is your typical client? For instance, and generally speaking, clientele from a higher socio-economic background will be less price-sensitive but will expect greater quality in the service you are providing. Clients on low incomes, the price often is the determining factor on choosing where to go.
One of the upsides of the lash and brow business is that our type of business is a destination business. This means our clientele is willing to travel to our business. It doesn’t need to be in the center of a commercial hub to be successful. Business is generated through word of mouth and your online presence and very rarely from foot traffic.
So don’t be discouraged if you want to run a high-end salon in a suburban area and price high. It can and does work. On the flip side, offering inexpensive services with a high volume of appointments can be equally the best way to run a successful business.
In fact, a high volume low prices structure can be particularly good if your business is located in a shopping center where it is often priced competitive. Or you may choose to price in the middle range. It comes down to what your goals are, the maths, and taking a calculated risk.
The Maths
You need to make sure you are covering your costs and making a profit. It is invaluable to keep a cash flow forecasting spreadsheet so you know what is coming in and going out for the next 12 months. It will show you if you are making a profit or a loss per month and the trajectory ahead. If your expenses exceed your revenue work out what expenses you can reduce and or increase your prices.
A general accounting rule is that wages should never be more than 30% of your revenue. However, in beauty this sits a little higher because it’s a one to one service. So if it’s hovering around 40% don’t be discouraged, this is still good.
Do you know how much money you and your staff are making the business per hour on average? Many booking software systems like Timely can tell you at a glance. You will know if your staff are making money for the business or costing you. These types of software can also tell you what your average client spend is.
If you are a solo operator you can also use this data to assess what you are making for yourself. You may be surprised how little you are earning for yourself and this will help you decide if you need to raise your prices or not. Beauty margins are tight and there can be a tendency to undervalue what we are providing and overlook hidden costs of running a business.
Still not sure what you should be charging? If you are charging less than $45 per half an hour in Australia for a service, it’s too low.
If you still feel nervous about pricing too high it is better to price higher and offer discounts or free add-ons than to start too low and try to raise your prices. If your salon is high end, never discount. However, you can offer packages which provide bundled value.