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 Stylists podcast. I’m your host, Britt Seva, and this week, we’re going to talk about pricing for the market shifts as a hair stylist. This is kind of a part two. Last episode we talked about all of the different pricing structures that exist within the industry and how to know what’s best for you and how to make really informed pricing decisions, but I teased the fact that there is an emerging fourth pricing structure.
I’ll be honest, I can’t stand it, but I need to talk about it because it’s for real and I don’t hear a lot of people talking about it, which makes me nervous because what’s going to happen is people are going to be blindsided and frustrated. Also, I feel like some people are going to choose this structure and hose themselves, and I don’t want that to happen either.
I want to talk about pricing for the market shifts. I am going to use the word recession a little bit, however, let’s play what if. What if all this talk that we’ve been hearing for a year about a recession never amounts to anything and a recession doesn’t happen?
You have to understand what has already happened and what has already happened is throughout all of 2022, people heard that word get tossed around. People got mad about it and it’s already had a tremendous impact on consumer behavior.
When you look—if you study economic reports or anything like that, consumer spending is down. It was down in the holidays of 2022. We’re seeing layoffs from big companies, small companies. The housing market is softening. What that is indicative of is people are living scared, period. Whether it ever gets called a recession or not, people are starting to get much more cautious with their money.
That will affect you. We serve the market at large and most of us don’t serve the luxury market. When you look at what has happened historically in recessions, some people get hit, hit hard. And for some people, it’s like a blip in time and it doesn’t affect them at all. The people who don’t get affected and it’s a blip in time are usually on the extremes. They’re definitely not the middle class. There are those who are struggling, and then those who are so well off that anything could happen and it would hardly matter. Like a Warren Buffet, for example, one of the richest men in the entire world. A recession will happen, he could lose money. Is it going to change his lifestyle? No. Will he lose millions of dollars if there’s a recession based on his investments? A hundred percent. Will he feel it? No, because he has so much, right?
On the flip side, those who are new in their careers or financially tighter as it is, there could be some troubles on the horizon, right? We have to be worried about things like layoffs and economic shifts and changes. But the way that you feel it when you’re at that place is generally a little bit different too.
When the most recent recessions hit, so there was a soft recession in 2001, there was the most recent major US economic recession, which was in 2007, 2008, 2009. In 2001, I was a teenager, and in 2007, 2008, 2009, I was a newlywed, new into the industry, completely broke in my early twenties, barely getting by. Would my clientele have grown faster if we weren’t in a recession? Maybe, but we’ll never know. But I was already struggling hard, so the economic struggle of the recession was like I probably would’ve struggled either way.
The middle class is generally who feels a recession or any kind of economic dip the hardest because it really changes the way they spend their money.
For a lot of you, that is the market you serve. Some of you serve the uber wealthy who are not going to feel any kind of change no matter what layoffs happen. Some of you serve those who are just struggling to get by or struggling in their careers. They’re going to feel it and the middle class is going to feel it.
For the most of us, we’re really going to feel this fear over spending money in 2023. I think it’s going to leak into 2024. It’s going to have to change our hiring practice, our guest experience. It’s going to have to change everything. I’m going to be talking a lot about it as things unroll, but I know a lot of this is speculative now. I like to share the speculative shit. It doesn’t scare me. I think a lot of people say, “Well, it’s like fearmongering.” I don’t find it to be that way. If I share all this and I’m wrong, I’ll come back and own it. I’ll be like, “Remember I did that episode and I was talking about market shifts and they didn’t happen. That was wrong.” But I don’t think so because what I’m sharing, we’re already seeing the signs of, and historically, I’ve not shared incorrect data. I’ve shared it early, which makes people feel a type of way. But I’d rather share it early and make people feel frustrated that I’m talking about it than not talk about it at all. Education is power and in knowing these things, if you adapt to what I’m going to share in this episode and a recession never hits, you’ll still be that much better off for it. Taking this advice can’t work against you, so why not just be open-minded and listen?
I want to talk about what we’re already seeing economically changing in our industry, how that must affect our pricing, our structure, our brand positioning, et cetera.
First of all, I want to talk about the term “lipstick effect” because it’s being tossed around a lot and I think it’s important to understand. The term “lipstick effect” was actually coined in 2001, which was a soft recession, by Leonard Lauder of Estee Lauder. The reason why he called it the lipstick effect—if you didn’t know, now you know—lipstick sales for Estee Lauder specifically rose in the fall of 2021, even in an economic downturn. What he speculated was that it was women specifically—I think it’s just people as a whole—turn to affordable treats when they feel like money is uncertain, money is unpredictable. They don’t want to shut down altogether, but they do the little things that make them feel like they got a little pick-me-up. They maybe can’t do the big, splurgy purchases anymore, but they can grab a new lipstick, grab a new shampoo, try a new hair color, and it’s enough to get them through. We will see that.
What I think it’s important to know is I’ve seen a couple people comment on my posts on Instagram or share with me, “We don’t got to worry about it. There’s the lipstick effect.” Estee Lauder still had a really rough financial year that year in 2001. That’s not to say that you’ll have a rough financial year, but you can’t just say, “Oh no, no lipstick effect. We’re good.” That’s naive and you have to realize what Leonard Lauder was saying.
What he was saying was people didn’t buy our expensive foundations. People didn’t buy some of the higher end products we were selling. They chose the little, he actually said “affordable treats” and that’s what got the brand through it.
I think that’s the piece of the phrase you need to understand. Our market and our economy, as I shared in a recent podcast episode—in my 2023 predictions episode, actually—I shared that our sector of the economy is projected to still financially do well. Not everybody will do well in it. What that economic forecast shows is that consumers will still want to spend money on looking and feeling good. What I know to be sure is they will be very particular about who they invest with, where they invest, and what they invest on. That’s what I want you to really double down on.
Let’s go into the eight facts that I think are important to understand as we price ourselves for the market shifts.
One, consumer behavior is already mid-shift. I get DMs about it daily at this point. I get them coast to coast. Generally, I’m hearing them from bigger markets, not smaller markets, but I am hearing it and we’re seeing people say that clients are starting to stretch out appointment times, like the frequency has changed. People are getting cancellations, no-shows. Some people are saying that they’re not getting as many new guest requests as they were before. It’s a mix of feedback. What is important to understand is that consumer behavior has shifted.
How many of you feel like you had a funky December, kind of an off holiday season? I heard that, very widespread. I actually did a poll on my Instagram and over 70% of those who participated said that December was either an average month, like it wasn’t—In years past, we saw stylists who made 30% of their income just in December. 30%. Now that’s an extreme, extreme number, but even if I said 15%, that’s more revenue coming in in December than in every other month of the year.
Based on the Instagram story poll that I did and the feedback I’m seeing throughout the industry, what I got data on was that 70%, just over 70% actually, said that either December was an average month, there was no income spike, or December felt slow, like people had gaps.
That doesn’t mean that stylists stink. What it means is consumers are changing their behavior. It’s already starting and we have to get out ahead of that shift. We can ask, “Why is consumer behavior shifting?” Well, I just explained the lipstick effect to you in detail and that should go to show like maybe they’re not going to do what they had been doing in a time where you have to understand—I’m recording this podcast in 2023. There has been, I was looking at the statistic recently, 16 trillion pumped into our economy over the last just two years. More money has been printed in just the last two years than in the entire history of the country. More in the last two years than in all the decades prior. Inflation is huge right now. Massive right now.
What you need to know is money is out there, people are just getting particular about where and how they spend it, right? That’s why we’re seeing the softening in the housing market. We’re seeing people losing their jobs because consumers just are not spending like they used to. It’s just the facts.
Number two, something I want people to be aware of and very sensitive to is that if you price yourself above the market, you could shoot yourself in the foot in a way that is difficult to come back from.
Here’s the deal: Whenever you decide what your pricing is going to be, however you decide to price yourself, the perceived value of your brand, of what you offer, of how you show up on social, of what your website looks like, your messaging determines what you’re worth.
All the quotes that float around out there where it’s like, “Charge your worth, know your worth, own your worth.” Do you know who determines your worth? The consumer.
From a confidence standpoint, you better believe you’re a badass ‘cause if you’re listening to this podcast, you are. I know that I am. One of the things that has gotten me through my adulthood is finding my inner confidence and realizing I am amazing. And I don’t mean it from an egotistical standpoint, like I got plenty of flaws, don’t worry about it. But I know that I am worthy and having that faith in myself has been very powerful and has given me the confidence and the tools that I need to make really smart strategic business choices.
That being said, I know that I’m worthy, if I made Thrivers Society a $2,000 product, I also know it wouldn’t sell. No matter how great I think it is, how worthy I think I am, how much I know my worth, if I price what I offer above the market, I will still be a failure. Can you see the difference there? If I charge $2,000, $5,000, $10,000 for Thrivers Society, would it be better for my family? Would I be able to live a more comfortable lifestyle? In our minds, obviously, but to me, no, because I know it wouldn’t sell. So even though I might say—and I’m using myself as an example, I’m not in this position, I’m not doing anything funky with our pricing, so don’t get nervous. But even if I was to say, “Listen, I need to be making whatever, $10,000 a day in order to live my lifestyle,” the market doesn’t care. The market doesn’t care about my lifestyle, the market doesn’t care about my bills, the market doesn’t care what I think my time is worth. The market cares about the perception of what I’m offering.
I’m watching a lot of people position themselves at 15 to 20% above market value and then they wonder why interest in seeing them slows. If I look and your prices are more expensive than others in the area who are comparable, no matter what it includes, no matter what your price includes, if I can get something comparable 10 doors down for 20% less, why wouldn’t I do that? We say things like, like for those of you who have included gratuity in your price and you’re like, “No, no, no, no, no, I’m not 20% above market. Gratuity is included.” Gratuity is subjective cost, not guaranteed revenue.
When you lump subjective cost into the price of your service. When we go into a time of economic uncertainty—let me ask this, I know y’all can’t hear this feedback, but if you talk to stylists who were working in 2008, 2009, 2010, they’ll tell you the portion of their clients who said things like, “I’m going to continue to see you and I’m going to continue to support you, but I can’t tip you today.” I mean, that conversation was happening daily because people were wanting to hang on to normalcy but also trying to survive. When that survival mindset kicks in, people start to make hard choices. And I think it’s just important to price yourself properly.
Now, if you think you’re priced above your market, that doesn’t mean you should give yourself a pay cut at all or cut your prices. At no point in this podcast episode am I going to start saying words like “discounts,” “coupons.” I’m not going to say anything like that ‘cause I don’t think that’s how we’re going to get through these shifts and changes. But I am going to have some advice to what you do need to shift and change.
I think, and this is point number three, perceived value is what matters most as we head into this next season of the business. If right now I was to evaluate you and I was to look at your pricing and I’m like, you know what? The way you’ve priced yourself, even if it’s your worth, even if you’re charging your worth, if I look and I’m like you’re 10%, 30%, 20%, 40% above market, what that doesn’t mean is, “So let’s cut your pricing.” I can count on one hand the number of times I’ve told a stylist to reduce their prices. Honestly one hand.
What it means is you need to dramatically increase your perceived value dramatically. Not a little bit, a lot bit because you need to become 40% better than your market, 20% better than your market. That’s not a small feat. It can be done. I watch people do it all the time, but that becomes what counts.
Now, if you’re not priced above market, if you are perfectly priced, you still need to increase perceived value because like I said, consumer behavior is mid-shift. We’re already watching consumers pull back on spending. You have to be the one who it’s worth it to spend on.
People are going to get particular. If you look average, if you look like same old, same old, it will be difficult. You’ll watch some of your loyal clients who you were like, “What the heck, Sadie was my ride or die.” Yeah, but Sadie found somebody comparable where the perceived value was higher and she’s either paying the same or maybe even a little bit less. Maybe she’s even paying a little bit more, but the value she gets is higher.
Perceived value starts before somebody walks in the door to see you. So if you’re like, “But my clients know me, they love it when they get here,” yeah, but we’re living in a market where consumers are saying, “What have you done for me lately?” And the external way you brand your salon, the way you brand working with you, the messaging that you deliver to your clients between visits, right?
That’s why in Thriving Stylist Method, we talk about nurturing between the visits. All of that really matters and so getting that dialed in right now is going to be critical.
Next, number four, I want to get into the emerging pricing structure that I hate, but it’s here so we have to talk about it. I’m calling it Ninja Turtle for, well, it’s not for lack of a better word, it’s actually because we, my husband and I showed our son who’s now eight, the old Ninja Turtle movies from the late eighties, early nineties, and he loved them.
So as I was talking about this new pricing structure, we had just watched these Ninja Turtle movies and I was like, “Oh my gosh, it’s like the ninjas,” where what we’re going to see happening is an underground subculture is going to emerge in our industry. Wait for it. I promise you this one’s going to come true.
And what some people are going to decide to do is they’re going to see this consumer shift happening, they’re going to panic and they’re going to default to what we did 15 years ago in 2008, and they’re going to start undercutting.
I’m calling it the Ninja Turtles because what’s going to happen is it’s this underground subculture who’s got that sewer mentality, unfortunately. They’re going to say, “What makes me different is I do the same thing as all the other stylists and salons in my area, but I do it for 30% less.” How fast do you think that stylist’s books are going to fill? Real fast because why wouldn’t they? If I can go see somebody down the street, pay 30% less, and still get a great result, I’m stupid to not do that. The bummer is they are going to kill their future.
Now you’ve become the bargain stylist. Good luck getting out of that ‘cause the economy will recover. Your business will not because now you have attracted a clientele who was just looking for a deal and this Ninja Turtle subculture is going to be so disappointing because of all of the headway we’ve made as an industry in the last seven years, we have really started to get clients valuing us and understanding our time and seeing us more than just a hair stylist and stopping offering to pay us in a bottle of wine and offering to pay our rate instead.
It’s like we’ve made all these huge leaps and bounds and watch it, this ninja turtle subculture is going to come up and what they’re going to see is their defining or their X factor, which I’m going to get into a second, they’re going to brand themselves on the value leader and you know what they’re going to do okay with it. That is competition that you need to be scared of.
The only way you’re going to beat out those undercutting stylists who are going to take a voluntary pay decrease is by increasing your perceived value and showing that you are so much worth it. It is way worth it to come in and pay a little more to see you even because the value you deliver is so much more powerful. That’s not a small feat.
Great consultation’s not going to do it. Neck and shoulder massage, not going to do it. Great listener not going to do it. Clean salon, not going to do it more. It’s going to need to be more and it’s going to need to be bigger.
Next, I want you to remember, price is what you pay, value is what you get. That leans right into this.
There will be people who all they care about is the price that they pay. The majority of people are going to be values based in this consumer market shift. We’re already seeing it happen. People are being called out for their values. People are being asked to speak on their values. Brands that show their values and brands that deliver deep value to their market will win. Those who don’t will struggle.
What I want you to remember is that you don’t need to sell your clients on the price, you need to sell them on the result, right? People are willing to pay for an exceptional result and an exceptional experience. Double down on that.
Leads into point number five, what’s going to be your thing? Like I talked about these ninja turtles, their thing is going to be, “But I’m 30% cheaper. I’m 20% cheaper. Come on down, I’m the bargain deal of the century.” People will choose that to be their thing. It’s already happening, so wait for it. It’s going to become widespread.
What is going to be your thing? If you don’t want to take a 20% paycut in an effort to have peace of mind based on full books? What is your thing?
One of the things I talk about in Thriving Stylist and Scaling Stylist Method is the idea of developing a methodology, a signature methodology. That is unstoppable. When you look at today’s top industry—I know some people in the industry, when people use the word influencer, it really gives me a poor taste in my mouth because there’s so many people, not just in our industry, in all industries who have hundreds of thousands of followers and are really struggling financially. Popular, not profitable. When I look at today’s really successful stylists in our industry, big name, small name, whatever, they’ve all got a thing. I like to call it a signature methodology, but all of them have a special way of doing what they do. It is the core of success, there’s no doubt.
So what is your thing? What is it that you do that’s not duplicatable? What is it that you do that’s so incredibly exceptional and special? Something going to think about.
Next point, small offerings will win. There’s a lot of mixed feelings about is the extension market going to crash only because that’s one of the more costly services we offer as an industry today. I don’t think it’s going to crash. I think people are going to start to make different choices. They might do less rows or they might take a break or I’ve heard from several extension artists that clients are starting to ask about temporary extensions and clip-ins or saying, “You know, I’ll get rid of extensions for length and I’ll just do for density and I’ll do a little bit less hair.” Or they’re maintaining the extensions, but simplifying the color services.
People are looking for ways to simplify and I want you to think to yourself, “What are the small offerings that I can offer?” Using the extension artist for an example, have you mostly been doubling down on “Let’s do a single row,” “Let’s do a double row,” “I-tips all throughout the hair.” That’s a buffet. That’s a lot to chew on.
What if you considered showcasing, like “Have you ever wondered what it looks like to do just a handful of extensions in the temple area to make your hair a little more full?” Like for me, if I was at the crossroads of no longer wearing extensions, my most insecure area is at my temple. As a woman with extremely fine hair, you’d be speaking to what scares me the most and especially if I’m somebody who’s worried about being cost-conscious and I find a stylist who’s speaking to that, you’d win me over and then some.
So would you rather have a $1,000 client? Of course, but would you do cool with ten $100 clients? Yeah, that wouldn’t suck. Now you’re building a really big pool to grow on for the future.
Think big and futuristic, not just small and in the moment.
Lastly, the point I want to close on is that clear messaging is going to win as we see these consumer shifts come through. I’ve mentioned this in many, many recent podcasts. Values-based brands are going to win. Authentic-based brands are going to win. Brands that show up as just pretty hair, pretty hair, pretty hair are going to deeply struggle. If you don’t find your what’s-your-thing, it will be a little bit challenging to market yourself. If you’re priced above market, it’s going to be very challenging to grow. If you don’t offer something that is exceptional as it relates to perceived value, it’s going to be a challenging season in the industry.
The other thing I think we need to be aware of is the industry is growing and it’s growing really fast. I talk about this a lot. I know people are sick of hearing about this. Too bad. It’s the reality of our industry. We are taking on a lot of incoming stylists.
As I say that, people always comment and say, “Eh, I’m not worried about it. This industry churns hard.” Well, it churns hard, but like with anything else, if you’re used to seeing, when you use simple math, 10 new people enter the industry at a time and only three make it. Let’s say that that’s the statistic. I’m making this up, that’s not the statistic, but let’s say 10 people enter the industry at a time and only three make it. Well, if you increase the number of people entering the industry to be 30 people entering the industry, well, now nine are going to make it. So even though the industry churns hard, and even though it’s not one that’s easy to survive in, you’re still going to get stiffer competition no matter how you slice it.
That’s what’s important to understand and to remember.
Having clear messaging is really, really critical if you want to stand out in an industry that is going to get more and more evercrowded.
I love to hear your feedback on this one. You know you can find me in the DMs. You can also leave me a rating or review on iTunes. Let me know what you think, what questions you have. As I always say, so much love, happy business building, and I’ll see you on the next one.
