2 REAL Reasons You Should Raise Your Prices

In the salon industry, it is common to let emotion play into your pricing. It is also common to look at competitors to compare your pricing. While these may be minor factors of how pricing is decided, these shouldn’t be the final factors that contribute to your salon’s pricing.

Price point depends on things such as geography, demographics, luxury level of the salon establishment and technical service offerings. There is no such thing as pricing that is “right” for all salons. A small town may have an average of a $50 haircut while a more metropolitan area may have the median price point of $100 for a haircut. Both price points may be at the top of the industry in their respective areas. Cost of living and local economic factors must be considered while studying and deciding on pricing.

As a salon owner, here are the main data points that we evaluate when moving towards a price increase. It is best to not only evaluate other salon’s pricing or worry about whether or not a client might move on because of the increase.

1. Utilization AND retention is consistently above 80%

As a salon, if the collective utilization (also known as productivity or amount of time booked behind the chair) and retention for the salon is 80% or above for 3 months consecutively, it is likely time for an increase. This data shows us that clients are coming in and they are also coming BACK. These two metrics are paramount when measuring success behind the chair (high sales are nice but these percentages give the most insight into the health of a salon or hairdresser). At 80%, it is typical that clients have to book out far in advance to reserve times which is a sign of health for a hairdresser or a salon.

When evaluating individual hairdressers, the same is also true. If they are hitting about 80% productivity and retention consistently, they are likely a great candidate for an increase based on numbers.

If a salon or hairdresser stays at the same price point with a high level of productivity or utilization, this can stunt growth and build the wrong expectations of cost with the clientele. 

2. Annually to account for the cost of living increase.

Every year, the cost of living increases. Every distributor and  product company raises their prices annually to account for this. If you as a salon do not pivot your pricing once a year at least, you will fall behind and eventually be in a tough spot. 

Every year the cost of living typically increases somewhere between 2-4% (this information is publicly available). In order to maintain where you are currently, it is likely necessary to plan for a cost of living increase once a year in order to maintain healthy margins in your business.

Remember you might be running a salon, but you are a business owner!

Cheers to 2025 my friends,

Melanie 

xx