Intro: You Put In The Work To Be Able to Charge Your Worth.

 

Don’t let that small but important fact get beyond you. Beauty industry professionals are something like medical professionals in that they go to school and acquire the necessary training to provide a service. Like doctors, most states require beauticians to have a license to work in a shop and provide certain services. Not only that, but cosmetology school, training, and certifications can be quite costly. It’s always important to re-invest into yourself and your skillset. Because you re-invest in yourself, you should charge accordingly for your services. Keeping tough competition in mind, it's important to know how to price your services. In this blog, I will not only provide you with some things to consider as well as provide sound advice on how to price your services. Read On.

 

Some Things To Think About Before Setting Your Prices

 

Operational Expenses

Calculate your annual operational expenses, and break them down to cost-per-minute before figuring your cost for each service. Do you pay booth or equipment rent? Supply costs? Insurance? How many hours of operation per day do you work? Do you have employees? How much do you pay them? Depending on the service you provide the list could go on. Determining your monthly operational expenses sets the roadmap. Look at your operation costs and account for every little detail. This gives you a pretty rough estimate on how much you need to bring in every month.

 

Cost of Service

Something else to consider is the cost of each service. Services require different products and equipment. Naturally, each service will have its own cost. Factor in the overhead cost of each service. The cost of products is one thing, but don’t stop there. Think about your profit margins as well. If it costs you $10.00 worth of products to apply lash extensions to a client, then to turn a profit the service charge should at least be 50% more.

 

Profit Margins

Essentially you need to figure out how much money you’re making after all expenses have been paid. If it’s too low, examine your products, services, and processes to figure out where you're losing the most money.  If the profit margin is already at a good number, pay special attention to sustaining and growing those numbers. There’s too much money in the beauty industry for any beauty business to not have good profit margins. Strategize, strategize, strategize.

 

Time of Service

You’ll notice on many booking sites, services are listed with appointment times such as 60 minutes or 90 minutes and so on. That’s because these beauty professionals have figured out that the old saying is true. Time is money. Again you want to dive into every little detail of how you spend your time and money. For each service you provide, calculate how much time it takes and how much you’re making per minute. For example, a nail technician may charge $50.00 for a 60-minute full-set.  That breaks down to $.83 per minute. Now this nail tech can compare how much she makes per minute per service against her operating costs per minute.

 

It may sound confusing, but essentially you are calculating your bills, hours of operation, and breaking the cost down to the minute to compare it to what you make per minute. If you need help making your beauty business more profitable, we can help.

 

Competitors

Worth billions of dollars, the beauty industry is one of the most competitive. It’s always smart to know what other prices are in the market. A quick Google search of similar services in your area should give you enough information to gauge the right rates. Consider the experience your competitors provide and how it measures up to the price. How many years of experience do they have? Are they booked months out which could warrant an inflated price? Are they located near major attractions? Think about these things in reference to your business as well.

 

The Labor

We mentioned before that employees may be one of your operational expenses. You also need to account for your labor. Be Realistic and think about your needs.

 

Most beauty professionals spend a large amount of their day on their feet. Be reasonable with your prices, but don’t go so reasonable that you have to over-exert yourself to meet your goal. Also, don’t go overboard with the pricing. Sure having your expenses covered by seeing two clients a week sounds great, but is that realistic for your target market?

 

Remember, a customer spending a consistent $50 every week is better than one customer who spends $300 once. The most important strategy to pricing your services is to build relationships with your customers and sell an experience, not just a service.

 

Ad-On Services

Make add-on services available to your clients. Whether it’s a lip-wax, a deep-conditioning, or a take-home kit – there are many different options of services and products to add. Use the same pricing strategy to price these items. The key to selling add-ons is to make them quick, affordable, and they need to make sense with the current services already being purchased.

 

Take some time to brainstorm different add-on services and get incremental sales.

 

 

Essentially, the price must be right.

Ultimately there is no one-size-fits-all pricing strategy. Finding a happy medium might take some tweaking, but anything in business does. Two of the most important rules in business are 1)know your target audience and 2) follow the money. Determining the perfect pricing strategy will require you to do both. One thing we know for sure is that people will always spend money to look good, you just need to get them to spend it with you.

 

If you need assistance with following your money and can’t quite figure out why you aren’t turning larger profit margins, work with MATS on developing a strategy to take what you make, and make more.

 

 

 

Thanks for reading. Madison’s Accounting and Tax Services is a financial service provider that specializes in helping beauty brands control and grows their financial power, while also passionately providing financial knowledge and resources to communities in local Midwest communities. If you enjoyed this blog please subscribe and share.

 

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