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How to Raise Beauty Prices Without Losing Clients

Introduction

As a hair and beauty professional, the thought of increasing your prices can feel intimidating. Not only do you have to consider your own financial stability, but you also worry about how your clients will react. Will they stay with you, or will they take their business elsewhere?

The reality is, increasing your prices is a necessary step to keep up with the rising costs in our industry, but it’s important to handle it with finesse. Read on to discover why increasing your prices is essential and how to approach it without losing the trust of your clients.

The Impact of Inflation on Your Business

In October 2022, inflation in the UK reached its highest point in 40 years, driven by the combination of the COVID-19 pandemic and the surge in energy prices following Russia’s invasion of Ukraine. These external factors caused a ripple effect, raising the prices of everyday goods, from food to fuel, creating what we now refer to as the "cost of living crisis."

As inflation continues to soar, businesses, including salons and beauty professionals, must adapt. The UK government tracks inflation by analysing hundreds of products and services, and one way it attempts to manage inflation is by adjusting interest rates. The impact on everyday costs including hair and beauty services is clear, and as inflation continues, a price increase might be your best option.

Traditionally, it’s been recommended that businesses increase prices by 10% annually, but some industries may need to raise rates even higher. As Lorenzo Colangelo, owner of The Gallery in Tunbridge Wells, suggests, there are several factors to consider when increasing prices financial goals for the year ahead being one of them.

“You have to ask yourself what do you want at the end of it? It’s important to look at your costs just as much, if not more, than focusing on income.”

Your Financial Goals Matter

Lorenzo explains that breaking even isn’t enough; you need to make a profit. A key part of this involves evaluating your expenses and aligning your pricing strategy with your financial goals.

“I have net profit goals that I know align with my values,” he says. It’s essential to consider these goals, especially when business expenses are rising at a rapid pace and taxes are on the rise.

Phil Smith, owner of Smith England, also emphasises that price increases should be based on the needs of your business, not what others are doing.

“Look at your costs, work out what you need to turn over, and then think about how you can improve the services you offer,” he advises.

Phil Smith quoteThe Issue of VAT

Another important consideration for salons and freelancers is VAT. If your business is VAT registered, you’ll face quarterly taxes that have been causing concern across many sectors. Diane Marsh, UK Director of Operations for Sassoon, highlights the strain this has put on businesses:

“The hair industry is facing an unprecedented crisis due to an unbalanced tax system,” she warns.”

Marsh advocates for a reduction in VAT to help alleviate the pressure on businesses. She warns that if changes aren’t made, there could be a devastating impact on the industry by 2030, including a dramatic drop in employment and new apprenticeships. A 10% reduction in VAT could make a significant difference in ensuring the long-term sustainability of the sector.

Diane Marsh quoteHow to Communicate a Price Increase to Clients

Once you’ve decided to increase your prices, communicating this to your clients is the next challenge. It doesn’t need to be awkward, as long as you approach it with transparency and confidence. Almond Bennett, owner of Hair by Almond in Bodmin, Cornwall, shares her approach:

“I announce a price increase on my social media page and send out a blast text or email if there is a significant rise, but after that, it’s business as usual.”

Bennett adds that price increases don’t have to feel uncomfortable. “It’s how we feel that makes things awkward. Clients are more accepting of price increases when they understand why they are happening,” she says. For Almond, doing a pricing course helped her become unapologetic about price increases, giving her the confidence to communicate the change clearly and professionally.

Almond Bennett quotePhil Smith echoes this sentiment: “Always connect with your clients. They are more ‘accepting’ of price increases than ever before. Just be sure to give them as much notice as possible, displaying the message on both your reception desk and social media channels.”

Remember, every business is feeling the impact of rising costs, from the products you use to the services you offer. Clients understand this, and when you explain your reasoning clearly, they will likely be more understanding and supportive.

Final Thoughts

Price increases can feel daunting, but they are often necessary for the health of your business. With inflation driving up costs, it’s important to reassess your pricing regularly to ensure you are covering your expenses and making a profit. By being transparent, confident, and empathetic when communicating these changes, you can maintain a positive relationship with your clients while still running a sustainable business.

Whether it’s considering inflation, VAT concerns, or your financial goals, take the time to evaluate what’s best for your business and don’t be afraid to make the changes that are necessary. Your clients are more understanding than you think it's all about how you handle the conversation.

Get In Touch

Have you recently increased your prices? How did you communicate the changes with your clients? Share your experiences and tips by tagging us @capitalhairuk & @capitalhairireland