Understand your costs
Before you can set your prices, it's crucial to understand all the costs you need to consider as it’s often more than you initially think. You’ll need to include:
Product costs
This isn’t just your core treatment products like dyes, builder gels or lash lift creams, but it also includes all the disposables, hygiene products, etc. No matter how small the cost may seem, if you’ve used it in your treatment, add it to your costings.
It can be a bit of work to figure out exactly how much of a product you’re using per treatment, but you can often reach out to the brand that make the products for a breakdown of their cost per treatment.
Overheads
The next thing to consider are your overheads. Of course this includes things such as rent, utilities and insurance, but don’t forget to factor in any other little extras. It’s easy to forget about the brew and biscuit you give to every client, or any marketing expenses.
Labour
This is often the factor that’s missing from costings but it’s such an important one. You have spent a lot of time and money to offer your treatments, so you deserve to be paid well for your time. If you were to be paying employees you would want them to earn a fair hourly rate, so think of yourself the same way.
Determine your desired profit margin
Profit is what sustains and grows your business, so it’s a good idea to give yourself a minimum profit margin that you want to achieve from every treatment. To determine your desired profit margin, consider your business goals, the competitive landscape, and the value you provide.
A great place to start is to aim for around 80% margin on your product costs and work from there, as overhead costs can vary hugely depending on your business model and location.
To work out your profit margin as a percentage, use the following sum:
Profit margin % = (revenue ÷ profit) × 100
For example, if you are offering a treatment for £50 and your costs are £20, that gives you a profit of £30.
You would then work out £30 (the profit) ÷ £50 (the revenue) = 0.6
Then, you just need to multiply the answer by 100 to get the percentage: 0.6 x 100 = 60
Therefore, the profit margin for this example treatment is 60%.
By having a target percentage you want to achieve for your treatments, it makes it easier to check if the money you are making is bringing you a good profit.
Other factors to consider
Even after you have worked out all your own costings, there are still other factors to consider when setting your pricing.
Location
Location can play a huge part in how much you can charge. Overheads for a salon space in central London will generally cost more than an at home salon in a rural location, meaning you will need to charge more to cover your expenses. However, those clients will on average earn a higher salary and expect to pay more for their treatments, so don’t let this put you off an increase.
Research your competitors and the market trends. Understand the pricing landscape in your area for similar treatments. This will help you position your services appropriately. You don't want to be the cheapest, nor do you want to overprice yourself out of the market.
Your unique selling points
Think about all the things that make you the brilliant artist that you are. Have you completed lots of courses and masterclasses to become an expert in your field? Do you invest in the highest quality products that deliver the best results? Are you an award-winning artist? Have you ever worked at an exciting event or on a celebrity client?
Shout about these achievements in your marketing to show clients the value in booking with you.
Implement a tiered pricing strategy
Offer different levels of service at varying price points. For instance, a basic facial might be priced lower than a deluxe facial with premium products and extended treatment time. This not only caters to different client budgets, but it also allows an opportunity for you to upsell.
Don’t overdo the discounts
During quiet periods, it’s always tempting to offer big discounts to get clients booked in. Do this too often and you run the risk of clients always expecting a discount from you. Instead, try offering an added value incentive so you’re not always dropping your prices. For example, you could offer a free lash serum with any lash lift booking or free brow gel with any brow treatment.
How to communicate price increases to clients
Know your worth
We know it’s starting to sound repetitive, but we’ll keep saying it until every artist knows their worth. Think of all the training, practice and hard work you put into your business. Your clients come to you as a trusted expert, so price yourself that way.
Give clients notice
It’s always best to give clients prior warning that prices are going up so it's less of a shock when they come to pay at their next treatment. Put posts on your social media and send out an email to clients letting them know that prices will be going up from a certain date.
Communicate openly and transparently
In your communications, be sure to be open and honest about why your prices are going up. Let them know that you’re available to answer any questions they might have.
Never apologise
You need to be strong, confident and back your prices to show clients that you are charging exactly what your work is worth. Stand your ground and never apologise.
Do an annual price review
By reviewing costs on an annual basis, you will be able to make small increases in line with inflation instead of having to make a big jump. It will also get your regulars used to your increases and make it far easier for you to communicate.
Setting the right price for your beauty treatments requires a thorough understanding of your costs, market trends and the unique value you offer. It can be a big job but it’s worth it. We hope this guide makes it a little easier to navigate the confusing waters of costing and pricings.
Remember, confidence in your pricing reflects confidence in your services, so charge what you're worth and watch your business flourish.
Looking for more help on setting your prices? Check out our free online Price Like A Pro masterclass in collaboration with Solo.
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