Going, Going, Growing
It’s no secret the prices for items we normally buy have skyrocketed. Remember the great toilet paper shortage last March? There hasn’t been a time when I’ve gone to the grocery store recently and am not shocked by the cost of toilet paper. It’s a basic concept of supply and demand, for when an item is in such high demand, the cost for the product or service also goes up.
The same has been happening to salons in regards to ordering supplies. There has been a huge price hike in items such as barbicide, gloves, even general hand sanitizer etc. These aren’t new items you would carry in your salon, but due to sanitary standards carrying more has become necessary. Because of the increase in demand for sanitation products, plus rent, shampoo, hair color, education, taxes, and you get the point.
Additionally, the increase in expectations for hair, has resulted in clients sitting in your chair for longer too and requiring lots of color products. Trust us, we love the two-tone, blended babylights, icy blondes, all of the hair. But owning a business is not cheap, and all of these expenses incur, eat at your bottom line. Plus the time to complete these more intricate looks too. If you’re not pricing for profit, you’re likely not making much money. (Want to price for profit? check out our guide to labour pricing!)
When you look into ways to prepare your business for inflation, one of the first they tell you is to adjust your pricing and reduce your debt. The goal is to increase the cash available in your business to help you stay afloat. But the purpose of doing this is because of the increase in prices for products. When comparing prices from years ago, one would look at the cost of milk in 1957, but you have to keep in mind, what was the average household income in the 50’s too? The same concept applies to hair color, but now we also have intricate techniques involved too.
Over time everything is adjusted with inflation. And for the most part it’s out of our control, such as our expenses. However, it is in your control to adjust your business along with inflation, so that you can grow with the economy.
As mentioned above the first thing to do is reduce your debt and adjust your pricing. You must pay off those debts, that is your number one priority. Second is adjust your pricing. So you can’t just start to increase your prices when you don’t know why you’re adjusting them. Here is a link to our labour pricing class. This class goes over everything from type of expenses to what each chair should charge per hour to keep your doors open. (plus – how to honor your long-term staff!)
Another way to help set your salon up for success, is to use technology to help reduce costs. Technology can help in so many ways! If you keep a track record of historical data that can help you to easily know where you’re profiting or where you’re losing money. SalonScale hair color management software helps you to see just that – but it also helps you to weigh and track hair color used during each service to help your (1) price for color services accurately and (2) be able to track the actual cost of hair color to your business. I also want to challenge you to once a month look at your order forms and see if the cost of color is increasing — so that you can then adjust your pricing accordingly. (Try SalonScale 30 days free!)