John Harms on Raising Prices

“John, I can’t believe 2017 is only a few months away. How can I raise prices in the new year without scaring away my clients?”

Raising the prices of your services is an exciting milestone in your business’s growth. As your salon or spa thrives, your revenue stream will too. However, growth also brings more overhead costs, and increased prices are a must in order to balance rising expenses. Raising the prices of your services should come when your demand is greater than your supply. Price changes can be shocking for your clients, so it’s important to be transparent and create a positive experience for your clients.
Your clients continue to return to your business because they trust you. Clearly communicating your pricing changes well in advance will help maintain healthy relationships with your customers. Let your clients know that because of them, your business continues to grow with new services, perks and service providers, but with that, comes higher prices.
How and when you communicate new prices to your clients is important in order to successfully transition them through this change. Your software should be able to provide you with an email list of all active clients. Notify these clients a few weeks in advance via email before your new pricing structure goes into effect. Make sure your pricing changes are also visible and clearly stated within your salon or spa. Your team should be well-versed on all of your business’s changes, and act as the liaison for clients.
Another way to ease clients into higher prices is through promoting individual service providers. Millennium clients can use the MA200 report to analyze a service providers’ productivity. If you run the MA200 for 3-4 months and see an 85% or higher productivity rate, many times that can indicate that a service provider is probably maxed out and not producing more revenue. More importantly, their frequency of visit of their clients will most likely start to decline. Raising a service provider’s prices by “promoting” them from Senior to Master stylist (as an example) will make the clients happy for their stylist, but at the same time, know they have a choice to stay with another Senior stylist at the old rate. The goal, believe it or not, is to transfer some of the clients that don’t want to pay the higher price to other service providers that are building their books. This will open up room on the appointment book to keep increasing frequency of visit. So you get the double hit… you increase prices AND the service provider’s frequency of visit goes up per guest. It’s a win-win for the stylist and the salon.
Offering tiered pricing can help ease the transition by providing your clients several pricing options. Depending on your business structure and services, you can “grandfather” loyalty program members into a set service or membership price. You can also incentivize clients at check-out or in email messages to sign up for current membership rates before they increase.
As you continue to grow your business, price changes are inevitable. Be confident your trusting and loyal clients will follow you lead as you transition into a new chapter of success.  You can ease clients into the new prices with tactics such as tiered pricing, or raising the costs of certain service providers. Increased prices are not secluded to salons and spas, so with clear and well-timed communication, your clients will be understanding and accepting.

John Harms
Millennium Systems International, Founder and CEO

About: John Harms, Founder & CEO of Millennium Systems International, creator of Millennium Software, has been designing industry leading salon scheduling software and educating the beauty & wellness industry since 1987. Today Millennium is utilized in thousands of businesses in over 38 countries and operating with approximately 150+ employees worldwide.  Millennium currently runs its corporate headquarters out of New Jersey and its international office is based in the U.K.