As you become more skilled and experienced in operating your spa, salon, or barbershop, it’s only natural to consider increasing your prices as experience, reputation, and client demand go up.
And you’re certainly alone— businesses of all shapes and sizes spend a considerable amount of time and energy figuring out the right price point.
This can be a daunting step to take. If you haven’t raised your prices before, there can be a lot of confusion as to what justifies an increase, its workability, and how to effectively communicate your new prices to your new and existing clients without raising eyebrows.
To help you sort things out, we’ve put together a complete guide
Two major factors come into play when deciding why you should raise prices. There’s an economic component as well as a personal one.
The economic case for raising your rates
Let’s start with the economic side of things. The cost of living inevitably increases over time. In the United States, the economy had an average inflation rate of 1.77% from 2010 to 2019
Find more statistics at Statista
Inflation leads to a higher cost of doing business. You often see a price increase in the products you use, the wages you pay, and other essentials required to keep your business running.
In short, you have bills to pay and like all businesses, you need to be profitable. You won’t be able to do either of those things if you don’t ever increase your prices.
The personal component of a price-increase
Beyond economics, there’s also an emotional component to price increases. You need to feel fulfilled and rewarded for your work in order to continue providing services with the same high energy and enthusiasm your clients expect of you.
Yes, a genuine passion for hair and beauty is essential, but let’s get real: compensation matters, too. It’s hard to show up as the best version of yourself if you don’t feel like you’re getting paid what you’re worth.
Beyond profitability, inner peace, and fulfillment, raising service prices can have a positive impact on the perception of your business and what you provide.
You can invest in your business
Raising your rates and having more money in the bank doesn’t just mean you can pay the bills, it’ll also give you the opportunity to invest more in your business. You could hire additional (or more skilled) staff members or you could purchase better-quality equipment.
All that can enhance the experience that clients have in your business, which in turn keeps them coming back.
You’ll boost your perceived value and reputation
While some clients love the cheapest solution, many will actually find it a deterrent to go to a hairdresser or beautician whose price point is low. Increasing rates can increase appeal.
Beauty industries work on value-based pricing. Of course, there are costs to be covered within your service prices, but for the most part, the price tag of a haircut, blowout, manicure, or beard trim is set based on the perceived value of this service.
It is often less about whether the hair was cut, and more about the experience and the intangible benefits they’ll get out of your services: getting to de-stress and take a break from their daily lives, the feeling of having a fresh start, or the confidence boost that they get when they don a new look.
While it’s often uncomfortable to just add a big price tag on yourself, doing so is a direct signal to potential customers that your service is valuable. And everyone wants that experience.
You can weed out difficult clients
It’s ironic, but more often than not, those who haggle or balk at your rates tend to be your most difficult clients. They’re likely to be more entitled, they try to squeeze every dime out of the experience, and they’re not always easy to deal with.
Meanwhile, clients who would happily pay your higher rates already recognize your value. They trust your expertise and they’re more pleasant to do business with overall.
When you raise prices, you may lose some clients, but bear in mind that these customers are probably the ones who don’t recognize your worth and are thus not a great fit anyway.
Existing clients are the main segment of the customer base that deter service providers from increasing their rates. You may worry that they will have become used to your usual pricing, and may challenge your motivations for changing. This could certainly happen, but more often, your customers will understand.
Consider this: In a 2020 ISSE discussion, salon business coach Steve Gomez explained that the majority of your clients will likely continue to book with you after a price increase.
To illustrate this, he polled the audience and asked people to stand up if they’ve raised prices in the past 6 months. Sixteen people stood up, and out of those individuals, only 2 lost more than 3 clients.
The poll may have been anecdotal, but it still illustrates an interesting point: your fears around price increases may be overblown.
The real issue is often not about your clients, but about how you perceive yourself or your market. Doubt tends to creep in when you aren’t convinced that you deserve the increase you’re proposing. The easiest way to nip that in the bud is to crunch the numbers, run an analysis on the market, and gather the information you need to prove to yourself that you do indeed deserve a raise.
Crunch these numbers in your business. Factor in your expenses, current rates, and your capacity, then estimate the percentage of clients who may leave when you increase your prices.
From there, find a fair price that works.
Some people suggest that January is a good time to raise prices, as it’s common practice for many businesses to start a new year with new processes. But really, your prices can be changed at any point throughout the year. How much notice you give your clients is more important than when you raise the price of the service.
In most beauty services, there is a cycle that ranges from a few weeks up to 6-8 weeks between visits. Depending on what this cycle looks like for your business, it’s recommended that you give 4-8 week notice. This gives your regulars a chance to come back one last time before the rates go up.
If your calendar has space, this price hike can even be used as a loyalty marketing campaign to encourage customers to book in quickly before the price increase comes into play. You could even offer vouchers that allow customers to pre-purchase at that rate before it disappears.
Offering ample notice to your customer base, through in-store signage, your website, and social media, plus text and email communications will give them plenty of time to adjust to the idea, rather than feeling caught off guard.
So, what’s the magic number or percentage for rate increase? If you raise prices every year, the figure will likely be quite minimal, but if you’re correcting for years of missed increases, you may want to go a little higher.
The rate is ultimately up to you and what fits your business, but the general rule is not to exceed 10%. A 10% increase is enough to give you a boost in profits, without raising the service price too much for your clients. Sticking at a cap of 10% is the easiest way to avoid raising eyebrows.
Now that you understand why you should raise your prices and how to figure out when you’re ready to raise them, it’s time to look at how exactly to go about increasing your rates. Below are some tips and templates you can start with.
Prepare for your in-person conversations
You’re going to have a price change conversation with a few clients in person, so it’s best to prepare and practice if you need to. This should be a simple conversation:
“Hi [NAME], you might have heard that we’ll be increasing our prices next month, so I wanted to check and see if you would like to lock in your next appointment before we implement the new rate?”
Hopefully, you won’t need to justify your prices, but if someone wants to quiz you as to how you came up with this change, you will want to be armed with a few key points:
Be polite but firm
While you must be polite when communicating, avoid the temptation to apologize. Doing so sends the message there’s something wrong with raising your rates. But you should recognize that increasing your prices isn’t a crime, and you have every right to do so.
So, be confident in your delivery.
As part of your communication strategy, you will want to put up signs throughout the business — perhaps on your checkout counter or in each individual booth. You should also send out communications via email, text, and social media. All of these will need to go out at the beginning of the notice period you want to give your customers.
In-store signage
Dear customers,
As of the 1st of October, ABC Hair will be introducing a small xx% price increase to ensure that our stylists and colorists can continue providing amazing services and experiences, without compromising on quality and availability.
We look forward to bringing you beautiful hair in the months ahead!
ABC Hair
Email template
Dear [NAME],
We’re so delighted to be your trusted partner over the years and want to keep you up to date on our upcoming price increase. This move will allow us to continue providing the high-quality services that you expect from us at ABC Hair Salon.
As of the 1st of October 2020, we are introducing a small price increase of xx%. This increase ensures that our stylists and colorists can continue to give you the experience you deserve, without compromising on availability, quality, and services.
As a valued customer of ours, we wanted to give you plenty of notice, so that you have another chance to visit us before the changes come into effect. We are also extending you an offer to pre-purchase services at our current price, which can then be used at any time, even after the price change. Book now: [insert your booking link.]
We look forward to welcoming you back to ABC Hair soon!
Many thanks,
The ABC Hair Team
Social media template [can also be added to your booking portal page]
ABC Hair Salon is your partner in fabulous hair, and to bring you the best premium hair services, we are introducing a brand new price list to ensure we never have to compromise on availability, quality, and customer experience.
Before coming into effect on 10/1/2023, ABC Hair is extending a transitionary offer for customers who wish to pre-purchase services at the current rates. Get yours now! [insert booking link]
SMS template
Hi [NAME], we’re running a special offer that lets you book any service at ABC Hair’s current pricing before our rates go up in October. Feel free to call us at 555-5555 for more info or book your appointment today: [insert your booking link]
There are some mental barriers to overcome when you’re increasing your rates but to recap, you can — and should — do it if you want to continue having a thriving salon, spa, or barbershop.
Raising prices shows your clients that your business is growing and your service is valuable. It also enables you to invest in your business and yourself so you can provide even better services.
So, run the numbers and if the figures make sense, you can confidently raise prices at your salon or spa.
