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 I’m very excited this week to answer a question from one of my beautiful listeners, this is going to be for Kendra.
Kendra asked, “I’d love to hear your take on different pricing structures. I’ve started to see a lot of stylists move towards the hourly pricing, and I wonder if that’s the future of the industry. I currently charge a la carte for color services and a package price for extensions. If I switch to hourly, the cost of my extensions would decrease, but my color services would go up significantly. Do people charge different hourly rates depending on the service? Thank you.”
I think that’s such an incredible question for a hundred different reasons.
Essentially, Kendra’s already running two different pricing structures and it’s considering eliminating those and adding in a third.
Well, there are three different pricing structures as I see them today. I’m going to be honest, when I first saw this rating and review from iTunes come through, which is how I get most of the podcast inspiration, I was like, “Kendra, I just talked about pricing. I’m not going to talk about it again.” And then Kendra, I had to eat my words because I went all the way back and I realized it’s been almost two years since I’ve done a real deep dive into pricing.
I want to share with you some of the resources, some of the previous podcast episodes I’ve done on pricing because they’re still great and so going back and listening if you want some pricing insights would be helpful.
But this is actually going to be a little two-parter. I’m going to talk about all of your pricing options today. Then next episode, I’m going to talk about things to keep in mind with your pricing as we head into the massive shift that our industry is going to be enduring for all of 2023, likely all of 2024. It will make a significant impact on the future of the industry overall, because what we need to think about as it relates to pricing is not the same now as it was even a year ago. The conversation has changed radically and so I want to prepare you best for it.
But this week, we’re going to stay a little bit more generic. I’m just going to talk about all of your options, things to keep in mind, share some resources and insights, and then next week we’re going to dive deeper and talk about how to know exactly what’s right for you, what to keep in mind as we step into a real shift, an economic shift for the world as a whole, but specifically our industry.
The emerging pricing structure that I’m seeing come up now, it will be a fourth structure but is not yet widespread but I want you to stay out ahead of it.
Let’s first talk about the previous podcast episodes where I talk about pricing that I think could be great for you.
Episode 79 is called the Big, Fat Pricing Mistakes Stylists Are Making. Episode 164 is called Pricing 101: Common Mistakes, Price Increases, and Price Balancing. That’s a classic, a great one as well. Then episode 183, which is the pricing model breakdown.
Now, in that one I do talk about the three different pricing models, but we’re going to go over a lot of that today. If you want a deeper dive or you want to know what I said about all the pricing models two years ago, you can go back and listen to that one. But I am going to hit on 183 specifically quite a bit today as well.
First of all, before I get into the three primary structures and how to know what is best for you and for your business, we need to talk about the eight different factors that affect your price point.
I was DMing with a stylist just over the weekend and they were saying, “I feel like I’m in this tough spot because I need to charge a hundred dollars an hour for color services to make ends meet. But your pricing calculator is telling me to charge $50 or $40 an hour. I can’t survive on that.” While I can understand that challenge in that position of being like, “When I use your tool, it tells me I can only charge half of what I need to be charging,” empathetic, hear you, understand your frustration, been there. However, the calculator is not based on emotion. It’s not based on a stylist’s lifestyle. It’s based on what the market can bear and I think somehow in this industry, we lost our way in that a little bit.
And I’ll tell you exactly why I think that pricing has become such a hot button and where we got jacked up if I’m being totally honest.
I’ve been talking about this a lot on the podcast and if you’re sick of hearing it, too bad, ’cause I’m probably going to keep talking about it. 2020 and the pandemic that occurred worldwide forever changed our industry. We will not go back to a pre-2020 world in this industry. It’s fully impossible. Too much has changed. We’re entering into a season of massive evolution, so there will come a time where we’re like, “Man, I wish I could go back to 2022, 2021.” Those years are going to be gone too.
What happened in 2020 is we lost about 10% of our industry. 10% of our industry walked. We’ve never experienced such a massive walkout. We know our industry—I call it churn and burn. Our industry is one that is very high…very few licensed cosmetologists even renew their license two times because usually within five years people are no longer working in the industry or if they renew their license, they’re just doing it for shopping discounts but not actually to do hair. We see that a lot and we see it in aesthetics and barbering and cosmetology and everything in the personal services industry. Massage therapists, same thing. It’s tough and people underestimate how hard it is to start, run, grow, manage, sustain these businesses. Empathetic, understand it, totally get it, been there, struggled, whole thing. Got it.
What happened on the flip side of losing 10% of our workforce is there was this clientele surplus. It has been arguably easier than ever before to build clientele as a stylist or salon owner in the past two years. It’s truly never been easier. So if you struggle to grow clientele in the last two years, no judgment, but it’s about to get harder, not easier. I need you to really listen up and really at some point ask yourself, “When am I going to put my foot on the gas pedal and make some strong decisions that are going to allow me to really grow in this industry?” Because for end of 2020, 2021, and 2022, those were likely the easiest years as you’ll ever see growing clientele in our industry.
If you feel like your business blew up in the last two years, congratulations. I’m proud of you. That that work was not done in vain ’cause there’s a lot of people who did not reap the benefits of that surplus. But if you got to reap those benefits, congratulations, you really took advantage of the gap and you blew up at the right time.
Here’s the thing: the gap doesn’t exist anymore. It’s closing and it’s closing rapidly, which means it is going to be harder to gain clientele in 2023, 2024, and likely beyond. I’m predicting three to five years. I don’t know exactly how long it will take, but that’s what I’m going to guess at this point as we see a shift in the industry, which we’ll talk about a little bit more next week.
But the reason I am saying that is because I watched some of my own coaching students, I watched other people make these announcements about these really radical shifts to pricing and boundaries and structure that they were making to their business. And I mean, I said it on the podcast, I sent DMs to some people. I said, “Be careful that you’re not making a short-term decision with a long-term implication.”
Sometimes we make these pricing decisions that it’s really hard to walk back from and I tend to think some people will end up in a bind as we head into 2023, 2024, because they did not really look at all the facets and factors of a proper price increase.
Let’s talk about what they are and then we’ll get into structure.
The eight proper factors of a price increase are going to be local annual income. The resource I used to share—I shared this old resource in Thrivers Society many years ago. It was called City Data. I don’t suggest that anymore. We have a new resource we share in the program, but you want to find the annual income of your target market clientele. Then we factor in how many hours you’re available in the salon, what services you offer, and there’s different types of services offered and I coach to those as well. There’s a couple different options. The total number of guests you see on the average month, how many weeks you’re booked out, total monthly referrals, your product costs, which I bake into pricing, I just account for it from the jump so it’s not an additional layer to add on, and then your timing.
When you think about if you are fast or if you’re slow, all of those things affect your pricing as well. Should a client have to pay more if you’re slower? I don’t know. It’s debatable. It depends on what kind of specialist you are. Sometimes yes, sometimes not. Some clients really value, like if you can make my hair look just as good twice as fast, are you not twice as valuable? For me the way I am as a working wife, mother, person to everybody in my life, the faster you can get me done in looking good, the happier I am. I don’t need the three-hour VIP experience. I need the can-you-get-me-in-and-out-in-75-minutes experience.
When we look at timing and different value factors of anybody that you’re serving, these are the things we keep in mind. These eight factors determine what the market is willing to pay for you.
All of these different factors which I coach to in my pricing method take into account your demand, your market, the specialties that you’ve chosen, your timing, your products, all of the factors of your business. Because even though I can understand if you want to be making a hundred dollars an hour, I can understand if you want to be making $3,000 an hour, but if the market’s not willing to pay it, it hardly matters what you want to charge. Do you see what I’m saying?
Have you ever seen, I shared this example fairly recently, I’m not a fan of really expensive handbags. It’s just not my thing. But if you are, some of you will pay like $3,000, $4,000, $5,000, $6,000, $12,000, $50,000 for a handbag. There’s a really specific market for that. You won’t catch me paying that kind of money, but that’s okay, there’s a market for it.
The question is have you positioned yourself and your marketplace to be a Birkin bag or if we’re being honest, are you a Coach tote? And it’s okay, there’s nothing wrong with being a Coach tote, like Coach is a multi-billion dollar brand. It’s no worries, but it’s not Birkin. If you know handbags, you know what I’m talking about. Both can be successful, but sometimes we want to be something that our market will not bear and I’ve seen really reckless pricing decisions made because people want to be a Birkin bag when they’re in an area where that doesn’t serve their market.
That’s what I want this episode to be specifically about. I’m going to talk about the three different pricing structures. What matters the most is that you choose the one that your market can get down with. You can’t choose the one that’s trending. You can’t choose the one that’s sexy. You can’t choose the one that somebody that you deeply admire chose. Because unless you are serving an identical clientele in an identical market, you could actually kill your business.
I shared a story a few weeks ago, but it bears repeating of a stylist I’ve been coaching for years and she DMed me early in 2022 and was like, “Britt, something weird has happened. I changed my SRU pricing structure and my demand is decreasing and I feel like something’s off.”
I told her, I was like, “You just shot yourself in the foot.” I was like, “This might get ugly before it gets pretty, but we can fix it.” I talked her through how to fix it and she was like, “Thanks so much.”
I actually did a podcast on it. If you go back and listen, I did a whole podcast out on it. It was totally anonymous. She recently, like in the last few weeks, came back around to me and was like, “The advice you gave me saved my business.” I hadn’t heard from her for months, like we hadn’t talked about it. I was like, “Good luck. Let me know if you need anything,” and she just did the damn thing.
She worked it out, but she was like, “I lost so many clients. I was losing so much money,” because she changed her pricing structure in a way that was trending but not in alignment with her clientele, her market, her goals, the services she was offering, and she literally was in a panic about sustaining her business.
That happens when we do things based on emotion rather than fact and I want to prevent anybody from doing that this week.
Let’s first start with service based pricing. We call that a la carte or service-based. It’s like if you were to go to a restaurant and you just order off the menu. “So I’ll do a calamari appetizer, I’d like the Caesar salad next, sea bass for my entree, and chocolate cake for dessert.” If you’re a four courser, maybe your a la carte order would look like that. Then what would happen is you’d get the bill at the end and you’d be charged $14 for the calamari, nine bucks for the Caesar salad, $32 for the sea bass, and $14 for the chocolate cake, and it would end up being like, I don’t know, rough math, 65 bucks or something, 80 bucks. I have no idea. You would add on gratuity and you’d pay for everything that you ate, right? That’s a la carte.
That is pretty much traditional pricing in our industry. That’s what most of us were born and raised on. If we’ve been in the industry for any length of time, clients pay per service.
Who is that pricing structure good for? I’m going to be honest. It’s good for most of the industry still. The vast majority of the industry is going to do best with that structure. Why? Because it’s what consumers today understand. Sometimes we try to force consumer behavior, we try to push the timing, we try to create demand for something that the market just isn’t ready for. I think that sometimes we get six steps ahead and people who jump out of a la carte pricing too early generally jump the market and it’s why they can have an adverse reaction.
A la carte pricing is good for those who are in the Sinking, Struggling, or Sacrifice phases, which holy moly, thanks to Kendra again, I’m just realizing I don’t have a podcast on. So that podcast will be coming soon, but if you are Sinking, Struggling, or Sacrificing, which represents over 80% of our industry, a la carte makes sense for you because you’re focused on refining your target market and your business. This model is perfect for that. Guests get what they pay for. Your expenses are always covered when you use the eight factors of pricing I talked about. Very easy to understand.
Then we have hourly rate pricing. Hourly rate pricing really started to emerge in the last few years or so. I really like hourly pricing, but I like it for a specific segment of the industry and a specific segment of the market.
When you talk about hourly pricing, if we’re to relate it to a restaurant, it’s like an all-you-can-eat buffet, but I don’t mean like a low-end buffet, I mean like a high-end buffet.
In my area, there’s a restaurant called Foga de Chao. I’ve used this example before. I believe they are national chain. We just got one in the San Francisco Bay Area, probably in the last like 10 years, something like that. But it’s like a high end all-you-can-eat buffet. It’s on the more expensive side. I’ve actually never been, to be honest, but I think it’s like 150 bucks a person depending on when you go.
The way that they serve is called continual service experience. Essentially you can eat as much as you’d like to within the time you’re there for a specific price. People are literally coming around on carts and they’re offering you stuff and offering you stuff. There’s a salad bar you can get up and go to, but you can eat to your heart’s content during the time that you’re there. It’s a flat fee.
Would you take a child there? I mean even the child’s price is very expensive, especially for my kids. Even—my adult daughter’s going to be so embarrassed when I share this, but she’s like a kid’s menu girl still, she’s 19, but she’s going to eat a little bit of mac and cheese, a small plate of salad, and then ask for dessert. She’s not going to eat $150 worth, but that’s what they’re going to want to charge her. And so Foga de Chao, probably why my family and I haven’t been there is for a very specific market, like that works. There’s a lot of company holiday parties of Foga de Chao, a lot of date nights, adult experiences. It’s not for everybody, it is for a very specific clientele.
Translating it to the industry, a guest would book for a certain period of time and whatever can be achieved in that time is covered by the hourly rate. So if your hourly rate’s a hundred bucks an hour, that would cover one hour of services. Maybe it’s a cut and blowout on average length and density of hair. A two-hour block would then be 200 bucks and maybe that would include color, cut, and blowout, or balayage and blowout, or highlight and blowout. Whatever it is you could get done in that length of time is what could be included. It would be dependent on your timing. That’s why I talked about time being such an important factor, right?
Going back to my example of the expense of all-you-can-eat buffet, there are certain clienteles who love the predictability of hourly pricing and then there’s some that it just doesn’t work for.
What markets do I think are really good for hourly pricing? I think higher-end clientele in markets. If your demand is already very high, you’re not struggling to build a clientele, your demand is already high, you know what your specialty is, and you’ve really created a name for yourself in it, then I think it is something to consider.
There are some downsides to it the way that I see it. When you do it, you create a temporary financial cap. If your rate is a hundred dollars an hour and you work eight hours a day, you can only make 800 bucks in a day. Whereas with a la carte and the next type of pricing I’m going to talk about there is the potential to make more.
Now the argument that could be made is “Yes, but I can raise my hourly rate at any time.” Absolutely. But how many hourly rates are you going to increase throughout the year? Are you thinking about doing five hourly rate increases throughout the year? Because when I look at how much people charging a la carte or the next pricing method are increasing their income just month over month. The math doesn’t math for me that much.
Just make sure going into it that your financial growth is uncapped. You can make as much as you want to in the course of a year. There is no risk to doing several price increases a year and again, that relates back to demand, which is what I said was important when you do hourly.
Then the last has lots of different names. I tend to call it session-based. I started off calling it block-based many years ago when I introduced it. I first started talking about block-based pricing in 2016. Then it started to be called session-based. Then it started to be called all-inclusive and now I see people calling it hybrid. It’s the same as it always was. It’s not necessarily a new way of doing pricing, it’s just emerging in the way that hourly is as well.
When I look at block-based, session-based, all-inclusive, hybrid, whatever you want to call it, it’s more like eating off a prie fixe menu at a five star dining restaurant.
My very first job was at the Ritz Carlton Half Moon Bay. If you’ve been following for a while, you’ve heard me talk about this. I was the head hostess in Navio, which is the main dining room there and on weekend nights we had this prie fixe menu. I always looked at it and thought it was the weirdest food and it was so overly expensive. That’s through the eyes of a 17 year old. But you go into the restaurant, there’s five things or six things or whatever on the menu, and that is what you’re eating tonight. There’s no choices. You can choose the wine you’re drinking or the beverage you’re having if you want to, but that’s it. You’re having what’s on the menu. We’ll see you at six. That’s what prie fixe menu looks like. It’s a set price, very limited selections, but it’ll be delicious as long as you trust the restaurant and you like the chosen cuisine.
It’s the same for a salon. The price is set, limited choices within the session or block or whatever, but you’ll get a good result so long as you’ve chosen a good provider, right?
What I like about block-based, session-based, all-inclusive, hybrid, whatever you like to call it, is it’s simple and easy for the stylist. The way it would work is you’d create anywhere from three to six sessions. Maybe one, the first session you offer is 90 minutes. Maybe nobody’s in your salon less than 90 minutes. And in the 90 minutes, they can do a handful of things, but it mostly looks like full consultation, deep conditioning treatment, haircut, color touch-up of your choice, and blowout. I’m literally not even reading notes. I’m making this up on the fly, so I don’t even know that that could be done in 90 minutes, but that’s what you decide. Okay? That’s session number one.
Session number two is more extensive. Maybe it’s for somebody who likes to be more of an all-over blonde. It’s an intensive balayage or a highlighting, or maybe it is session two for you as an extension move up. Maybe session three is an extension install on thin to medium hair. Maybe session four is an extension install on thicker hair.
To do this, you have to sit down and really—and that’s why I say you need to be specialized. You need to deeply understand your market because you’re only going to create three to six different options on your menu.
So how many of you are a la carte? If you were to sit down and list all the services you offer, there might be 40. There’s definitely at least 20. When you look at the combinations of is somebody coming in just for a haircut only? Is somebody coming in for a haircut blowout? Is somebody coming in for a haircut? Special event style? Is somebody coming in for a root touch-up only a root touchup with blowout only a root touchup haircut blowout. You know what I mean? The list could go on and on.
When you do session-based, block-based, whatever, there’s only three to six things. What I like about this is it is very simple for the client. It’s very simple for the stylist. Any of you hate online booking ‘cause you’re afraid your clients are going to mess it up? This is very hard to mess up because it’s so limited. The reason why clients mess up online booking is ’cause you have 40 different options.
Have you ever, have you ever gone to, oh my gosh, who’s gone to the Cheesecake Factory and it takes you 45 minutes just to flip through the menu and you’re like, “I don’t even know where to start?” Like, “Yes, I need more time.” It’s like reading a book. Some of you have a la carte service pricing that looks like that too. They’re like, “Where do I start?” And that’s why clients muck up the online booking because you’ve made it really challenging with block, session-based, all-inclusive, whatever. It’s difficult to mess that up.
The nice thing is also the guests know without a doubt from the start what they’ll pay for the day. Same with hourly and that’s nice. The predictability is great. Your haircut price goes up automatically just like it does with hourly. That could be a double edged sword. Like I said, some markets can handle that, some can’t, and this is where people can get into trouble.
What I do like about it is you’re paying for a result, not a process. With a la carte, you’re definitely paying for the process, right? I got the highlights, I got the blowout, whatever. Okay, you’re paying for the process. All the parts of the process when you’re doing block-based, session-based, you’re paying for the result. I want to look like this at the end. Cool. This is what that’s going to take, right?
The challenge for me in the block- and session-based is I have seen a lot of stylists lose their profit margin in it. They like it because of the simplicity, but they didn’t really calculate out all the factors. So at surface level, yeah, it’s simple. The money looks like it’s there, but they’ve not created well thought-out packages or service offerings, and so their margin just deflates really radically.
The reason I’m generally a fairly strong proponent, if you can’t tell, like I said at the beginning, I think the majority of our industry still does well with a la carte. The reason is it’s easy to protect the profit margin. Clients are still used to it. It’s like speaking their native language, like what people were born speaking as babies. A la carte pricing is that for clients of our industry, like they get it, they know it, it’s been around forever, so it’s simple and it’s easy to do properly if you have a good system set up in place.
Hourly can be great. Session-based, block-based, all inclusive, hybrid can be great too if you are a specialist with high demand. That’s what I want everybody to understand is that none of these are perfect for everybody. You need to find what’s right for you. Don’t worry about what’s trendy, don’t worry about the way that the industry is going, worry about your own clientele, eyes on your own paper in any business decision that you make because following somebody else’s lead is practically the fastest way to guarantee failure for yourself. You need to know your business and what works for you rather than just chasing a trend. That goes with everything, social media, all of it.
So how do you know what to choose best? If you’re working to build a base clientele or you offer a wide variety of services, I’d go a la carte. If you don’t do many color corrections or complex color services and you deeply know your specialty, hourly could be great for you because you’ll get peace of mind on what you earn behind the chair each day, right?
There’s an argument that the predictability is better than the growth potential. Some of you were like, “Girl, if I just knew that every day I was in the salon, I was guaranteed to make $800. If I was fully booked, I’d be the happiest person ever.” I get that. That’s totally okay. Just how long is that going to last for?
I remember when I was still the salon director—so this is probably back in like 2014 maybe, something like that, 2013 even—I was negotiating a raise and I was asking, I think I was asking to please be paid $60,000 a year. I had been making $48,000 a year and I was working like 65 hours a week. I was killing myself to keep this salon going and I was like, “This is more in alignment with the work that I’m doing. I’m doing so much. Our profit margins are increasing, like this is more in alignment.” They agreed and then said, “But this is going to be it for a while.” I was like, yeah, yeah, I’m going to be totally happy with it. This is it, it, this is it, this is it. Well, not only did my rate of pay never increase from there, it actually decreased, which is a story for another time. As time went on and I realized I had created this financial cap for myself completely unintentionally, and as my insights grew, my knowledge grew, my impact grew, my income didn’t and that became a real problem.
I think that sometimes that can happen. What brings you peace today could bring you pain tomorrow, so just be really careful for that. Block-based is great for Scaling stylists who have an established base, are seeing five to 15 new guest requests a month, and have a very limited service menu.
If you want to take a sneak peek at my pricing calculator, the way that I coach to pricing, and P.S., I coach to all three of these models in Thrivers Society. If you want to do any of these three, you can come to a safe home in Thrivers and we coach to all of them. Our pricing calculator calculates for each as well. But I think just making an informed decision is the best advice I could give you today. There are successful stylists running all of these methods and the most important is to find the one that’s best for you.
All right, so much love, happy business building, and I’ll see you on the next one.
