Expert Advice: Does cutting salon prices attract loyal clients?
Marie-Louise Coster believes discounting your treatments creates an unsustainable business model.
I feel like I have been saying this for years, but we are living in very difficult times. All of life's essentials have become increasingly expensive, but people's wages aren't going up to the same degree. If life's essentials like food and energy, the things we actually need, have become more expensive, what happens to the non-essential items like beauty products and services?
I have seen lots of salons, therapists and nail technicians responding to this current crisis by reducing prices, doing flash offers or offering huge discounts just to get people through the door, but is that the best response?
Can you afford to discount your services?
I completely understand why people are taking this approach. Everyone loves a bargain, the opportunity to save money on our purchases is desired by all, I am sure. Let's be honest, we all feel a certain sense of achievement when we believe we have done well by paying less for something or getting a deal. But what kind of message does this send out to your audience? What does it do for your business financially? And what does it do to your brand?
Let's take a gel manicure as an example. Every man and his dog seem to be offering these at a discount so let's look at the nuts and bolts of it. If you are offering a gel manicure with polish you are looking at around an hour's treatment time, with removal. Most places don't charge for removal if re-applying and the service seems to cost anything from €25 - €45 depending on where you are in the country, so let's just take €30 as our average price. Assuming you are working an eight-hour day, with a lunch break, you could potentially carry out seven gel manicures. This equates to €210; not bad?
Out of this you have product costs which, including removal, is going to be around the €8 mark, so that is €56 of costs straight away. Then there's the cost of rent, cleaning, laundry, towels, heating, lighting, insurance, electricity and so on, so you can easily add €35 to that, probably more in most cases. So our costs so far are €91. If you employ staff to carry out these services you can add at least €77 to that, so we are now on €176 of our original €210. If you don't employ staff, you will still need to pay yourself a minimum wage which means you'll be looking at the same amount of outgoings. Your profit is going to be around €34.
This is all before you have discounted your service to get people through the door. If you reduce the cost of the service by €5 you will now be -€1 for your day's work and if you discount it even further the deficit will be even greater.
Is it worth getting out of bed for? You become, what I call, a busy fool.
Creating an unsustainable business
This cycle continues with the losses becoming greater because the client is now in the routine of waiting for the discount, looking for the bargain, because the more you do it the more, they come to expect it and that is not a successful, or sustainable, business model.
This behaviour attracts a certain type of client who just floats from deal to deal and doesn't have any loyalty to any one salon. This is the type of client that isn't investing in themselves monthly and doesn't have the kind of disposable income you need your client to have. If you wrote out what your perfect client looked like (and I urge you to do that so as you know who you are trying to attract to enable you work out a model of how to attract them), this would not be it.
Discounts also send a message to clients that your services and skills aren't worth paying any more for, that you can't sell your services at the price you have listed and can only get people through the door if you reduce your prices. This does you a total disservice and devalues your years of study, experience, skill, the quality of your product and the service you provide. It also sends a strong message that you are desperate and struggling (even if you are, don't let on that this is the case), and this is not the message you want to be sending out.
Concentrate on quality not quantity!
Your columns don't need to be full all day every day; you're looking for quality over quantity. Concentrate on attracting the right type of client, offer them an upgrade of their usual service rather than a discount. Give them more for their money so that you are still charging the full price and not devaluing your products and services. Include a head massage or hand and arm massage in a facial, which will cost you pennies but gives the client more value for money. Include an exfoliation and mask in a manicure or pedicure, again adding value, but always work your costs out and always try to avoid slashing prices.
It is hard work owning and running a business. I know first-hand of the trials and tribulations that lay in wait for those just starting out and those who are more established. We all want to be busy and we all want to be successful but true success does not come from devaluing our skills, knowledge and service.
Marie-Louise Coster is a Beauty Therapist, Session Nail Tech, Trainer, Business Consultant and owner of All About Mi Skin & Wellness Clinic and is celebrating 30 years in the beauty industry.
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