Charging Salon & Savvy

We hear so many horror stories where salon owners are charging employees for products and taking percentages of tips. This often happens because they haven’t set their prices correctly and need that extra revenue to help feed their bottom line. Those practices are not only illegal, they also create toxic work environments for workers. Obviously, your prices should be competitive, but what do you need to consider when creating your service price list?

Time

Valuing your time is essential to creating a profitable pricing structure. Being sure to

A. allow enough time for a service and

B. accounting for the costs associated with that time.

Each service takes more than just the hands-on client time – i.e. a massage requires a few minutes of prep and a few for follow up post massage. Be sure to account for that time so that clients don’t feel rushed¬†and you get paid for that time too.

Business Expenses

These include everything – EVERYTHING – you need to run your business. From towels to color to liability insurance, if you need it to operate, you need to include it as part of your pricing. Be sure to include marketing, licensing fees and continuing education too.

Tax Reporting Costs

Depending on how large or small your business is, hiring a bookkeeper or CPA adds not only value but cost. To run your business efficiently especially when it comes to tax reporting they are vital to have but there is a cost associated with them so making sure you have that covered too is a must!

Employee Costs

If you have employees, there’s more to consider than just their salary. As their employer, you’ll need to include their benefits as well as health insurance, state and federal taxes as well! The following is a further breakdown of employee costs…

 

  • Benefits – Health Insurance (if applicable)
  • Employment Taxes – FICA, FUTA, Medicare
  • Unemployment Insurance
  • Training time

 

Things to Avoid

Complicated pricing structures and discounts (seniors, children) are costing you money. If a service takes the same amount of time as another type of client, then it should cost the same. You don’t get a discount if you don’t take a bag at a clothing store, why should you give one when a client leaves wet instead of staying for the blow out that comes with their cut?

Remember, quality should be the goal, not necessarily quantity. Setting prices too low to attract lots of customers could backfire if you can’t cover the cost of the service. Find the sweet spot that makes a price attractive, but doesn’t leave your books in the red.