Intro: Do you feel like you were meant to have a kick-ass career as a hair stylist? Like you got into this industry to make big things happen?
Maybe you’re struggling to build a solid base and want some stability. Maybe you know social media is important, but it feels like a waste of time because you aren’t seeing any results. Maybe you’ve already had some amazing success but are craving more. Maybe you’re ready to truly enjoy the freedom and flexibility this industry has to offer.
Cutting and coloring skills will only get you so far, but to build a lifelong career as a wealthy stylist, it takes business skills and a serious marketing strategy. When you’re ready to quit just working in your business and start working on it, join us here where we share real success stories from real stylists.
I’m Britt Seva, social media and marketing strategist just for hair stylists, and this is the Thriving Stylist Podcast.
Britt Seva: What is up and welcome back to the Thriving Stylist Podcast. I’m your host, Britt Seva, and today, we’re going to stay on this roll that we’re on talking about pricing, and we are going to talk about the seven components of a solid price increase.
I can remember when I was in the salon the indicators that we looked at when we were looking at a price increase, and a lot of those indicators now to me are so incredibly dated. It was based on this very specific set of criteria that was like pre-booking and new guest requests and how many service dollars you did and they were really good benchmarks. They’re still the things that I think dictate the predictability of a business and they’re good things to look at when we look at retention. It’s not that it’s not valuable data, but to me, it’s not the data that dictates a price.
So I want to share with you how we look at the cost of doing your business in a different market.
One of the things people ask a lot is, “If I move, can I sustain my price point?” No, likely you can’t. That will have to shift and change.
I was coaching somebody really recently who felt like her brand was so solid and what she had built was so beautiful that she should be able to charge more. But when we ran her through this system, despite the fact that her brand was gorgeous, it was very clear that her market wasn’t going to be able to pay what she wanted to make.
This is why I say it makes me nervous when I see advice being thrown around the industry, like “Just charge your worth! Decide how much you want to make and charge for it.” None of that is relevant if your market isn’t able to bear it.
So what we’re going to talk about is the seven different factors that we look at when we’re determining anybody’s price point.
Now, I will say at the top of this episode, if you’re already wondering, “Is this going to be for me?”, we are going to talk about several different pricing structures. We’re going to talk about a la carte, we’re going to talk about hourly, and we’re going to talk about session-based. I coach to all three in Thriving Stylist Method and Scaling Stylist Method and Thriving Leadership.
For me, it’s fairly irrelevant how the money comes in so long as the way of charging you’ve selected makes sense for your target market. That is the most important thing. All three of those pricing methods I just listed off work. They’re all super successful. None of them work perfectly in every single market. They all also have their flaws. I have another episode about that. You can go back in the files, or if you head thrivingstylist.com and you search in the podcast search area for the word pricing, you’ll see a lot of my blogs and podcasts come up about that. It’s also something I coach to at length in all of my programs, but all of those methods to me are just fine. It doesn’t matter where the money comes in from or what that looks like. What matters is that you’re priced in a way that works for your market.
So one of the things I talk about is the market opportunity formula. When we look at the market opportunity formula, it is your market, meaning your community, the people that you’re serving, the talent you’re working in, your tangible market, multiplied by the perceived value of your service or product, not the value you think it’s worth. Not, “Well, it cost me $11 for a box of color,” not that. The perceived value of your service or product.
When I was just mentioning a moment ago the stylist who built this beautiful brand and had this beautiful website, her perceived value is very high. Like this is a stylist that could honestly do well in any market. The way she’s built her brand is just flawless. She had done such an incredible job. However, the market she was working in wasn’t a market like New York City. It was a much smaller community, and so even though her perceived value was very high, her market wasn’t a New York City or a San Francisco type of market.
So when we multiplied her actual market times the perceived value that dictated her potential earnings and, spoiler alert, when we did this in her lower market where it wasn’t really possible for her to charge more than $50 for a cut and color. Cut and color, $50. That basically where it maxed out, we still were able to get her to produce 78 grand a year in services.
When we say like, “Well, if it’s a smaller market or if it’s a market that doesn’t have a ton of income coming in, you can’t make more than 25 grand.” Yes, you can. You just have to understand what this opportunity formula looks like and execute it in full.
The challenge is most people aren’t understanding their market or they haven’t positioned their perceived value in a way that they can really make the most of the opportunity that they’re given.
Let’s talk about these seven different factors so that you can hopefully be as strong as possible and on the right trajectory when you’re looking at your pricing this year and in the future.
The first thing we look at is annual income for the city that you live in. That should be pretty obvious. This is one of the reasons why when I go into Facebook group forums or anything for our industry, or I see things tossed around like, “Hey, can everyone on this thread let me know how much you charge for a balayage?”, it is so irrelevant. It does not matter at all what the person down the street charges, what the person across state lines charges. All of that data is no good for you because we don’t know how that pricing came to be.
You don’t know how Alexis determined what her cut and color cost should be. Did she make it up? Did somebody tell her what to do? Did she hear somebody in the class say something and it sounded good? You have no idea what that’s based on.
Instead of looking at what anybody else is up to or look at what others in your area generally charge—that’s one of the things I hear about a lot. “Well, the going rate in my area…” Based on what? You don’t know what the going rate is. Based on the fact that everybody in your area is not charging properly and is just looking around to see what everyone else is doing. And they’re like, “Yes, $60. That sounds great,” because they’re afraid to be too high or too low.
Instead of pricing based on fact, we price based on fear, right? So we don’t want to price based on fear. We want to price based on what’s actually happening in our business.
The first thing we look at is annual income for the city that we live in. Then we look at how many hours you are available each week. If you’re available 16 hours a week, it dictates a different price point than if you’re available 40, right? It’s not the same and it’s not as simple as like, “Well, if you’re not available as much, you should be charging more.” Nope.
Some of you aren’t available very much because you don’t have the clientele to withhold it. So that’s not what it takes into account, but it’s one of the factors we use in our formulas. How many hours are you available each week.
Then next, how do you generally service your guests? So the way I see the industry looking right now is we have those who are mostly focused on cut and color and have fairly standardized pricing. It doesn’t have to be cut plus color. It could be cut or color. It could be cut and color together. It could be barbering, but more of a simplified, like your clients are mostly in your seat for 45 minutes, an hour, two hours. That’s like the average client, sometimes two and a half hours, but that’s pretty much the max.
There’s one clientele that looks like that and then there’s more what I call the specialty services clientele, which is those of you who are doing things like color corrections or really long blonding services, extension specialists, those kind of things. Texture services that take more time. So those would be more specialized.
Factor number three is how do you generally service your guests? If you’re only able to see two guests a day because you’re a specialist, I can’t price you the same as somebody who’s able to do eight guests a day because they do more basic cut and color.
So that’s another factor in our formula is how do you work? What does your clientele look like? What is your volume capacity, right? I just shared with you that market formula, so your market is not going to be the same as somebody who works differently than you do.
One of the things I talk about when I talk about branding and target market is what is your area able to withstand? So for example, if somebody wanted to—I’m in a very small California beach town and it’s generally speaking an agricultural community more than anything. So it’s probably population about 14,000. It’s not teeny-tiny, but it’s not massive by any means, and we have a handful of hair salons. If somebody were to come in and say, “I want to be a vivid specialist in this community,” you’d have a really rough go because the community is so small and there’s just not a lot of volume for that there.
However, you’d be a specialist working within our community and I’d have to coach you to price differently than the average person doing regular cuts and color. It’s not the same. You’re not serving the same market, even when you’re in the same community. It’s a different clientele, right?
So we take that into account of the service type that you’re offering, whether it be more basic services or more advanced, elaborate, longer services, that has to take into account.
Then we have factor four: How many guests do you see on average each month? Do you see 20? Do you see 80? Do you see 200? Of course, that’s going to take into account, but here’s where it layers on. So somebody who only works in the salon two days a week, but sees 40 guests is doing quite well. Somebody who’s in the salon five days a week can only see 40 guests is in a really struggling place in their business, right?
That’s why we can’t just look at things at surface level. We have to take all of these things into account. So how many guests on average are you seeing monthly? Then we look at how many weeks are you booked out. Zero to three, three to four, six to eight, eight to 12. If I called you tomorrow and said, “Hey, I’m looking to get my hair done,” how long would I have to wait to come in to see you? Right? That’s going to take into account. If you could get me in tomorrow, your price point’s going to be lower than somebody who I’d have to wait 12 weeks to see.
Now I will warn you. I’ve said this on the podcast a hundred times, you knew it was coming. If you’re booked out 12 weeks and I have to wait 12 weeks to come in and see you, friend, I have half an inch of gray, like I can’t wait that long. I need to be coming in. So I’m going to try somebody else, and maybe I won’t like that person I had to try, and I’ll ultimately come in to see you for 12 weeks anyway, or I’m going to fall in love with them, and you just miss the opportunity to see me.
So you’ve locked in your income, yes. By being pre-booked out that far, you’ve locked in your income, but you’ve also lost the potential to make more. You’ve essentially created an artificial glass ceiling, right? You lost my business and you got Jennifer’s business instead, but wouldn’t you like to have Jennifer’s and mine? Wouldn’t amazing to have both of our revenue streams without having to work more? Of course it would.
So how many weeks are you booked out, then next we have, how many referral requests are you receiving monthly, even if you aren’t able to fit them in. How many times do people reach out to you and say like, “Hey, I’d love to come in and see you. Do you have any time next week?” Even if you’re turning them away, how many people are reaching out, trying to get in to book with you every single month?
If you’re saying only two or three people, that’s going to have a dramatic effect over somebody who’s getting 12, right? We have a lot of established stylists, not just newbies and rookies, but really established stylists who were seeing 12 to 20 referrals a month. They’re not going to be able to service all those. That would be impossible. They don’t have the capacity for it, but it’s an indicator of their demand and that’s why it counts.
That’s why I don’t say how many referral requests are you receiving? How many referral requests are you servicing? That’s why I don’t ask that because how many referral requests are you receiving is the indicator of your demand and that takes a dramatic effect on your pricing, right?
Then what are your product costs? Then we take into account all of the different product costs in your business. If it costs you $12 to do a root touchup, and it costs Nick $8 to do a root touchup, innately your pricing has to be higher because your costs of goods are more.
When we look at the Scaling Stylist Pricing calculator, I take all these different factors into account because they all matter. So what I’m going to do in real time is enter in some data here. Let’s say that I’m doing a client’s pricing or a stylist’s pricing, and in the area where they live, the annual income for the city is 60 grand. And let’s say the stylist works 25 to 32 hours a week. Let’s say they do basic cuts and color. They’re not a specialist. Let’s say they see 43 to 58 clients per month. Let’s say they’re booked out for four to five weeks, but they’re not really seeing a lot of new guest requests. We’ll leave that at zero to three. And then let’s say the average cost of permanent color is $15 and the average cost of demi, let’s say is 12 and we could go all the way in cost of lightener per ounce, let’s just say two bucks. I’m making up prices right now just so we can get through this.
Okay, great. So once I’ve entered in that data, then we’re taken to a secondary sheet, which leads us into our final factor: Your speed. Your speed is also going to dictate your pricing and this is something I think people don’t often take into account.
When we say like, do you try charge hourly? Do you charge a la carte? Do you charge session-based? It’s all pretty much the same. It doesn’t matter. You should be charging for the value of your time and covering your cost of goods, period. However you want to wrap that up in a bow is cool for me, but if it takes you 15 minutes longer to do a haircut than the person next to you, you shouldn’t be charging less. You should be charging more. There’s a value for your time.
Now on the flip side of that, you’re like, “Oof. But the reason why the client is sitting in my chair is cuz I’m not confident.” Okay, so then you’re not providing an exemplary experience. You are not confident. You’re not skilled enough. You need to take more classes.
This is why I say like a lot of times in this industry, we focus on the boo-boos instead of like the gaping wounds. If you are slow in haircuts or you’re slow in foiling or you’re slow in color application because you don’t have enough reps in or you don’t know a way to be more efficient or you’re not confident in the service that you’re providing, that is the gaping wound.
The bandaid that you’re putting on it is like, “Well, you know, I serviced her for four hours, but I only made $200.” Is that because you’re undercharging or is that because you’re not really confident yet? And so you’re almost still doing models? Like you’re not doing model models, but you’re like, “Honestly I wouldn’t feel confident charging $500 because I don’t feel like the result was worth it.”
Okay, well, then you’re still in the learning phase, which is okay, but we take all of those things into account, but your speed counts. So if somebody takes 60 minutes to do a haircut, based on all the factors I just rattled off to you, their haircut price would be $40.35. Now, if they take 45 minutes to do a haircut, it goes down to $30.26, and this is why timing matters.
Also when we look at the color costs for this particular stylist that I ran through the system, let’s say that they are doing a root touch-up with an ends refresh. If it takes 60 minutes to achieve that service, we’re looking at $67.35. If it takes ’em 75 minutes, we’re looking at $77.43. If we’re looking at a virgin relaxer for this particular stylist, if it takes them, let’s plug in, let’s say 150 minutes, it goes up to 165 bucks on that one.
So we take into account all seven factors, and then this tool, which is included in Scaling Stylist Method, will show you how those seven factors relate to each other in order to give you a price point.
For example, I had just said that the haircut price, let’s say it’s 60 minutes, let’s say it’s a cut and blowout, and the haircut price for 60 minutes is going to be $40.35. Okay, great. But watch what happens if we change some of the data.
So let’s say this stylist decides to shift their schedule and they go from 25 to 32 hours a week to 17 to 24 hours a week. In shifting their schedule, let’s imagine their demand stays relatively the same, their haircut price now goes up. It’s now $47.85 because of their schedule shift. Their schedule shift dictated an innate price increase. They had to go hand in hand.
Now let’s go back. Let’s say this, person’s working 25 to 32 hours a week again, and let’s say that their demand is about the same. No, let’s say their demand has gone up. Now they’re booming. They’re seeing a lot more guests. They’re seeing 84 guests a month and they’re booked out. Let’s say that they’re not booked out as far though, they’re booked out zero to three weeks, but they’re seeing four to six new guest requests every single month. Well, now their haircut price is $50.10.
This is why we use the seven-factor formula. Every time something changes in your business, it’s going to have an effect on your pricing. We could change any of those little levers and it’s going to change the pricing.
So for this same stylist that we’re running through, when I go to the tab, that’s about hourly pricing. This stylist will be priced at about a hundred bucks an hour, so two hours would be 200 bucks.
And then we look at the session rate. The first hour for this stylist session is suggested to be $150, then additional two-hour session, we got $250, then $350, then $450. So go up from there.
So when you look at more session-based, we have that increased cost of product and things like that, so when we use a tool like this and we break down all of the different factors—like I said, it doesn’t matter how you tie it with a bow. It doesn’t matter if you decide to go a la carte, it doesn’t matter if you decide to go hourly, it doesn’t matter if you decide to go session-based. What matters is that you are creating your pricing based on the data points that are actually tangible to your clients. Because if you don’t, you run the real risk of overcharging or undercharging.
And like I shared with the example of the stylist I was talking about recently, her brand was so gorgeous, like absolutely stellar. However, her market couldn’t withstand what she wanted to pay, and I actually showed her how to use this tool and how to manipulate her pricing so that she made more money by actually charging less, because instead of charging what an LA stylist would charge, she charged what the best stylist in her area should be charging based on the perceived value she’s created. And now she’s set up for massive success.
That’s what success looks like. It doesn’t look like following some mega influencer on social media and saying, “I want to be that person, So I’m going to do what they do,” or “I’d be able to be more successful If I was doing hair in Dallas instead of in this other place.” That’s not success. You can be wildly successful anywhere so long as you understand exactly why you’re doing what you’re doing and you’re not just making emotional decisions or fear-based decisions. You’re making fact-based decisions with all that you do.
If you want to get your hands on this pricing calculator, if you need any help determining your pricing, the best place to go is to thrivingstylist.com and from there, you can learn more about the Thriving Stylist Method, Scaling Stylist Method, Thriving Leadership, and get your hands on this incredible calculator. It’s one of six that’s offered within the programs, and they’re all exceptionally helpful in helping you to streamline your efforts in your business. But until then, I hope these seven factors have given you some clarity.
And as I always like to say so much love, happy business building, and I’ll see you on the next one.
