Pricing With Purpose PT 1: Mastering the Art: Strategic Pricing in the Grooming Salon

Pricing in the Grooming Salon

In business, salon owners and groomers often face challenges or “pain points”. One such struggle is pricing, an intricate and crucial aspect of any company. Building an effective price list requires many considerations and an understanding of the crucial role it plays in reaching success. Appropriately pricing your services is key to alleviate stress and anxiety for both salon owners and groomers. 

Let’s dive into some of the intricacies of pricing. Determining the best pricing for your company involves numerous factors, and this will be a broad and high-level guide to help assist you in the process. If you are just starting out or are facing significant challenges in business, we advise you seek further professional guidance.

Factors Influencing Pricing

There are multiple factors that need to be considered when discussing pricing: 

• Breed
• Size
• Time
• Supplies
• Value of service
• Equipment
• Payroll
• Overhead
• Market value - Defined location

Know What Makes Your Business Unique

It is important to remember that you are an individual. Your pricing should not be solely based on what others around you are charging. What works for one business does not mean it will work for every business. First, consider what type of service you are providing to your customers. Is it an exclusive, one-on-one experience? Do you offer a mobile service that travels to clients’ homes? Perhaps you operate in a high-volume salon with numerous dogs, equipped with top-of-the-line tools. Consider these factors and ask yourself questions to determine what makes your business unique. 

Perform Market Research

There is not a one-size-fits-all answer to what the right pricing is for your service. It’s about finding what works for both you and your clients. The market allows room for all different types of services regardless of whether you opt for quick and economical services or aim to provide an exclusive, one-on-one VIP experience.

Once you’ve decided on your service approach, go out and assess the local market. Avoid seeking pricing advice from online Facebook grooming groups, as the responses will be from a broad audience situated in varied markets across the country, each one significantly different from the next. Instead, focus on understanding the demographics in your own area. This is the key to knowing what your potential clients can and are likely willing to afford. 

Create a Budget for Your Grooming Business

Once you have a handle on your timing and preferred supplies, you need to put a budget in place. The budget is every business’ bible! Without it, a business is doomed to fail. While the process of building a budget may seem time-consuming and scary, it is a very necessary step in properly managing your business. Your budget should include everything from your operating expenses, supplies, marketing costs, etc. 

Develop Your Baseline Pricing

Once you have your budget fully established, you can determine your baseline pricing which reveals the minimum charge per dog. 

Take your operating expenses/budget and divide that by the number of dogs you can groom in a year. This gives you a baseline of what to charge per pet. But it doesn't stop there. Remember that some pets take more time and resources to groom than others due to their size, coat type and other factors. Start with your baseline price and then devise a strategic price list that charges more for certain pets and less for others.

How to Find Your Average Revenue Per Groom

Let's walk you through the math behind finding your average profit per dog groomed. We'll use easy figure samples for our example with a hypothetical team of four staff members (three groomers and one customer service employee).

Take the total grooming sales for a month ($25,000) divided by total number of groomed dogs (300) in a month (account for no-shows, part-time groomers, etc.). Full-time groomers can do roughly 120 grooms a month on average. For this exercise, use the number of grooms that actually happen, not the amount that could happen. Budgeting for Smoochie Pooch is based on 85% capacity, never 100%. Customers will cancel, no show, etc. The total grooming sales divided by total number of grooms is $25000/300=$83.33. This gives you the average revenue per groom.

This number allows you to now assess your market. For example, if your budget is telling you to charge $60 dollars for a Shih Tzu but market research shows that no one charges less than $75, you may want to reconsider your prices to not lose out on any increased profitability. On the other hand, if your budget suggests you charge $110 for a Shih Tzu and competitors are around $75, then it’s a sign to rework your budget. This pricing approach works for both mobile and in-home services, with the understanding that you may need to factor in the additional costs for a mobile business. 

Finding Your Gross Profit

Let's start with payroll. Groomers typically get 40-50% of the grooming revenue, but you also need to add taxes, workman's comp and unemployment. So after that it becomes roughly 50-60%. Let’s figure $12,500 payroll for groomers and $2,500 a month for a front desk person ($20/hour). So payroll is $12,500+$2500=$15,000. Now figure in taxes. We'll use 10% for this exercise for ease of numbers. $15,000x1.10=$16,500. So, $16,500 is your payroll.

Divide payroll by the number of grooms in a month. $16,500/300=$55. This gives you the total payroll per groom.

Subtract your average groom price ($83.33) by the average payroll per groom ($55). $83.33-$55=$28.33 is now your gross profit number. This means after payroll you have 34% left in your budget for operating expenses.

For the final high level, look at this. Take the remaining expenses for the business on a monthly basis and add them up. For example, let's use $10,000. Rent, utilities etc. So $10,000 divided by 300 grooms is $33.33 per groom in expenses. Now gross profit is $28.33 (left over after payroll). Subtract your overhead expenses of $33.33. $28.33-$33.33=$-5. In this scenario, you are losing money.  

Let’s try this again with different hypothetical figures. Take the remaining operating expenses for the business on a monthly basis and add them up. Let's use $5,000 this time. So $5,000 divided by 300 grooms is $16.67 per groom in expenses. Now gross profit is $28.33 (left over after payroll). Subtract your overhead of $16.67. You are now profiting $11.66 per dog groomed.

Phew! That was a lot of math!! This is a very high level to get thinking about pricing and only a starting point.

Factor in Room for Growth

Regardless of what other salons are charging, it is important to remember that you must set prices high enough to make a profit. Ensure your pricing doesn’t just cover the costs, but instead yields enough to earn a living and also allows you to reinvest in your company. If you do not make profit, you cannot expand and invest in your company.

Consider Your Expertise & Continued Education as Perceived Worth

Although our industry is not regulated, there is a recognized value placed on professionals who actively invest in their own growth. If you consistently get new certifications and embrace opportunities to learn, you can use that to your advantage. Incorporate it into your marketing strategy. Even if clients may not fully understand, they will appreciate your commitment to going the extra mile in order to best take care of their pets. Your level of education and the quality of products you use can absolutely enhance the perceived worth of your services to your customers. Expertise in your craft not only justifies higher prices to clients but also earns respect from fellow professionals in the grooming industry. 

All-Inclusive Grooming Pricing

“We have all-inclusive pricing” is becoming an increasingly common thing to hear. To shed light on the concept, it essentially means that the business looks at each dog individually and decides which services are needed. This resembles more of an hourly charge than a true all-inclusive pricing. True all-inclusive pricing means every single dog gets the exact same treatment. For instance, let’s say one dog requires an anal gland expression and the second one does not. This results in the second customer paying the exact same price as the first client, without their dog receiving the exact same grooming experience. This example illustrates the potential disparities in what is considered “all-inclusive”.  

This cost structure works for some salons, but I don’t recommend it, and this is why: Say you have four groomers in the salon, and each operates under the term "all-inclusive". Susie charged $60 for a golden retriever and she did a bath, nails, ears, and trimmed up the feet and butt. She charged her customer the all-inclusive price and completed the groom.

Next month Carolyn groomed the golden, but felt she needed a deshed service as well. If she charges the all-inclusive pricing of $60 instead of $90, the company is losing money. If she charges extra for the deshed package, the customer is confused why they're being charged when the groom is all-inclusive. It's important to utilize a model for service and pricing that allows you to do the basic grooming for a pet and allows you to charge for extra additional services when needed. Ensure you communicate your pricing to your customers in a way that makes it easy to understand.

Pricing Tips and Business Boost for Your Pet Salon 

Strategizing pricing for your salon can be extremely stressful and scary, but it can also be fun! Begin by developing a budget. Next, build your ideal price per dog or per hour. Finally, put your market research into play. Remember, the biggest mistake you can make is setting your prices too low because you fear the unknown. Once the precedent for low prices is established, it becomes a challenge to raise them later. 

Elli Bultemeier NCMG, CPAe, PTI 2592