Should You Raise Prices When Salons Reopen?

As salons reopen after state-imposed COVID-19 lockdowns, stylists and salons may be looking at their business and re-evaluating their pricing structure.  Some will not touch their prices, some will raise service costs, and some will implement a COVID-19 fee.  What you decide to do will depend on your area, how your business was affected the last few months and your own comfort level.  We wondered what salon industry experts are recommending...

Steve Gomez, a business coach and trainer, has assisted hundreds of salons, spas, professionals and corporations with accelerating growth through business trainings and systems, specifically targeting increased sales, operational growth, profits and leadership development. He falls on the side of adding a COVID-19 fee and then, after studying your service trends, considering an overall price increase. “I’m a big proponent of raising prices but I believe you need to do it based on data,” says Gomez.  

Lisa Cochran, owner of The Studio Aveda Salon and Studio R3 in Hattiesburg and Laurel, Mississippi, has implemented a COVID-19 fee.  “It’s a $10 fee, and we’ve been prepared for some pushback but have only had one client question it.”

Gomez, who runs Steve Gomez  Business Coaching which supports beauty professionals to build better businesses and realize their goals, agrees that, to start off, salons should implement a sanitation charge.

“They psychology of a customer who has also been quarantined, maybe laid off, and dealing with a cash crisis is that if they see a sanitation charge, they will understand that,” he explains.  “They’ve also had to rush out and buy cleaning supplies or masks for themselves. But if you right away raise prices across the board and claim cost of doing business, a client might balk at that more than they usually would, especially since their mindset may be geared to cost-cutting and conservation, right now.

“There is one service, however, where I do think the service price should be raised and that is for color corrections.  As salons reopen, stylists are going to be so overloaded with regular clients for cuts and retouches. The cost of doing a color correction in terms of the time it will take and the backbar it will use suggests that those prices should go up because, situationally, it warrants it.”

Going forward from reopening, Gomez suggests you monitor your business for the first three months, tracking the services you provide so that after that time, you do raise your services prices but you are doing it based on those numbers.

“While everyone will initially be busier than ever, that doesn’t mean we can maintain that long term. Once you’ve caught up, in about 90 days, you should have a good idea of what your client traffic is going to look like.

“You want to start to identify the service patterns; see what percentage are haircuts, what percentage are color, what’s the percentage of men and women, etc.   When we begin to isolate where the patterns are we can attack those areas where we’re having drop off. If I’m cranking out single process color, for instance, and I’m beginning to see a 10 percent drop off in highlighting services, then I’ll raise my single process color price (because I see higher volume there) to bridge the gap that I’m losing in my highlights, while simultaneously starting to market my highlighting and lightening services.”

At her salons, Cochran did implement  a COVID $10 charge and, “we’re not skirting the issue.  We’re doing everything we can to communicate our polices and how we’re handling it.  I’m not sure if we’ll keep it or if we will eventually do a price increase, instead.

“I will never apologize for running a profitable business,” she continues. “Most people who know my story know that we almost lost everything in 2006 and I’m never going to apologize for knowing my numbers. And right now numbers tell stories and we have to listen to those stories. My cost per hour tells me I cannot operate at the same numbers I operated at before.”

Cochran did secure the PPP (Payment Protection Plan) loan for her business. “But we’ve had a lot of supplies we’ve had to purchase—from air conditioning filters to cleaning supplies and gloves—so our normal cost of operations is a lot higher.”

When the cost of doing business goes up, so too should your prices, she says. “If you’re on the fence, I would encourage you to do it because your business has to be profitable to make it through this time.”

Visit Steve Gomez’ site for COVID-19 support materials, including free downloadable templates to help you through the process of reopening and staying open.