With our weak economic status, customers are taking a closer look at how they spend their hard earned dollars everywhere from the grocery store to their local hair salon. In order for salons to be profitable, they must take a look at their pricing structure and anticipated client volume and weigh this against their business expenses. A solid financial plan is imperative to making a salon profitable.
Many profitability mistakes start with pricing. Salon operators will base their pricing structure based upon the competition. A common rationale is: "If the salon down the street is charging X amount of dollars for a haircut, I better charge X or less to drive customers to my salon". This way of thinking is limiting and places the focus on cost not value. How much do your clients value you? Providing a service that is exceptional will bring customers in who are willing to pay for the experience and attention to detail your salon can offer. Just as there is many different salon types each with a varying level of service, there is also a wide array of pricing structures.
In order to ensure your salon will be profitable you must base your pricing upon salon expenses and other costs expected to grow your business. Profitability doesn't mean, "just paying the bills". It includes paying the bills, saving, and having extra cash to re-invest in your business. Start with adding all up all of your monthly expenses (rent, compensation, equipment, and supplies) add some money for savings and reinvestment to your expenses. This is how much revenue needs to be generated for profitability. To find the right pricing structure to meet your profitability goal divide your expenses by the amount of clients you expect to see in one given month. Are your prices in line with your profitability calculations?
Many profitability mistakes start with pricing. Salon operators will base their pricing structure based upon the competition. A common rationale is: "If the salon down the street is charging X amount of dollars for a haircut, I better charge X or less to drive customers to my salon". This way of thinking is limiting and places the focus on cost not value. How much do your clients value you? Providing a service that is exceptional will bring customers in who are willing to pay for the experience and attention to detail your salon can offer. Just as there is many different salon types each with a varying level of service, there is also a wide array of pricing structures.
In order to ensure your salon will be profitable you must base your pricing upon salon expenses and other costs expected to grow your business. Profitability doesn't mean, "just paying the bills". It includes paying the bills, saving, and having extra cash to re-invest in your business. Start with adding all up all of your monthly expenses (rent, compensation, equipment, and supplies) add some money for savings and reinvestment to your expenses. This is how much revenue needs to be generated for profitability. To find the right pricing structure to meet your profitability goal divide your expenses by the amount of clients you expect to see in one given month. Are your prices in line with your profitability calculations?
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