Navigating Pricing Changes in Your Grooming Salon
Welcome back to our grooming salon journey, where we've delved into the art and science of pricing, dissecting its intricacies and unveiling the significance of transparency. Now, as we continue our exploration, we find ourselves at a crucial juncture—navigating the terrain of pricing changes in the grooming industry.
Fearing price increases is a common feeling. After consulting with a business expert for our large grooming business, we received advice to increase our prices by 25%. Historically, we had only implemented increases of 5%, and sometimes as low as 3%. Consequently, despite our efforts, we were barely adding 1% to our bottom line after accounting for payroll. Raising our prices by 10% initially filled us with dread about potential backlash from customers. However, to our surprise, we received minimal pushback and only lost a handful of clients we didn't mind losing anyway. More on this story later, but the moral is clear: don’t let fear dictate your decisions!
Pricing adjustments demand careful navigation to ensure the profitability of your business and the satisfaction of your valued customers. In this blog, we will decipher the complexities of implementing pricing changes, training staff on these adjustments, putting your customers at ease, and evaluating the outcomes.
Assessing the Need for Change
Various reasons may necessitate a price change. Factors such as low profit margins, inflation, customer feedback, and local market analysis are crucial considerations. As discussed in part one of this series, evaluating your business needs based on a budget is essential. Once you grasp your budget, you can structure your price list to achieve your desired profit margin.
Understanding Market Value
Comprehending the local market value is vital when setting prices. For instance, if your prices are significantly higher than the average market rate, attracting sufficient business may become challenging. Conduct thorough research to ensure your prices remain competitive. While being the most expensive is acceptable, ensure that quality and service justify the cost to maintain customer satisfaction.
Customer Feedback
Customer feedback is invaluable. While it's rare for customers to suggest raising prices, their silence can also speak volumes. If customers consistently book appointments without hesitation or if your schedule fills up weeks in advance, it's likely time to consider a price increase. Conversely, if clients frequently express concerns about pricing, investigate what might be causing their apprehension. Perhaps your service offerings aren't adequately showcased, leading to perceived value discrepancies.
Inflation
Inflation affects every aspect of business, including the cost of supplies and tools. Therefore, it's reasonable to adjust service prices accordingly. Many mobile groomers, for example, neglect to raise their prices for years despite rising costs. Just like gas prices, the cost of grooming services should reflect economic realities. Keeping up with inflation is crucial to maintaining a sustainable business model and ensuring continued quality service for customers.
Setting Goals
Always keep your goals in mind. Simply turning a profit isn't enough; you must earn sufficient profit to cover expenses and work towards achieving your aspirations. Set ambitious goals and strive towards them daily. This necessitates generating enough profit to reinvest in your business and provide benefits for your staff. Engage your team in the process by demonstrating the financial implications of pricing changes without revealing sensitive financial details.
Communicating with Your Team
Effective communication with your team is paramount during a price increase. Ensure your staff is equipped to communicate these changes professionally and empathetically to customers. Despite efforts to inform customers through various channels, some may still be unaware of the price adjustments. Starting with the initial contact, ensure your team communicates the changes transparently and confidently, avoiding any language that may come across as confrontational or unprofessional.
Provide a script to guide your team through customer interactions, enabling them to convey the changes clearly and confidently. Here's an example script:
Phone Conversation:
Staff: Good [morning/afternoon], thank you for calling [Salon Name]. This is [Staff Name], how can I assist you today?
Customer: Hi, I'd like to schedule an appointment for my pet.
Staff: Of course, I'd be happy to assist you with that. Before we proceed, I wanted to inform you that we've recently made some adjustments to our pricing structure to better align with the quality of service we provide. Would you like me to go over the new pricing with you?
Customer: Sure, I'd appreciate that.
Staff: Great. Just to give you an idea, our basic grooming package now includes [list of services included]. I can provide you with an estimate based on your pet's needs if you'd like.
Customer: Sounds good, please go ahead.
Staff: Based on your pet's breed and size, as well as the specific services required, your grooming appointment would be approximately [insert estimated price]. Does that work for you?
Customer: Yes, that sounds reasonable.
Staff: Perfect. Let me go ahead and schedule that for you. Is there a specific date and time you prefer?
Check-In (In-Person):
Staff: Hello! Welcome to [Salon Name]. How can I assist you today?
Customer: Hi, I'm here for my appointment with [pet's name].
Staff: Wonderful, we're excited to pamper [pet's name] today. Just a quick heads-up, we've recently updated our pricing to reflect the quality of service we provide. I'll go over the details with you shortly.
Check-Out (In-Person): (This step should not be needed unless check in was missed)
Staff: Thank you for bringing [pet's name] in today. I hope you're satisfied with the grooming service.
Customer: Yes, everything looks great. How much do I owe?
Staff: Before I provide you with the total, I want to mention that we've recently adjusted our pricing to better reflect the value of our services. Your total today is [insert total price]. I'll also provide you with a breakdown of the services included.
Customer: Okay, sounds good.
Staff: Here's the breakdown of the services provided and their respective costs. Please let me know if you have any questions.
The key is to be confident, transparent, and empathetic during these interactions, ensuring that customers understand the reasons behind the pricing changes and feel valued throughout the process.
Calculating Your New Pricing Structure
When adjusting prices, basing them on your budget and goals is essential, but there are alternative approaches to avoid imposing drastic changes on all clients. Implementing tiered pricing structures or adding new services can distribute the impact more evenly. Additionally, opt for percentage value increases over fixed dollar amounts to maintain balance across service categories.
Expanding service offerings with new options, whether it's a deluxe spa treatment or upgraded product quality, can justify price increases while offering customers enhanced value. Whatever changes you make, ensure clear communication with your customers to demonstrate the added benefits.
Navigating Pricing Changes
In conclusion, navigating pricing changes in a grooming salon demands careful consideration of various factors, from assessing the need for change to effectively communicating with both your team and customers. Remember our story from earlier? Don't be afraid to raise your prices. By understanding market value, soliciting customer feedback, and aligning pricing adjustments with inflation and business goals, salon owners can ensure a fair and sustainable pricing structure. Implementing transparent communication strategies, such as providing scripts for customer interactions, fosters trust and understanding among staff and clientele. Ultimately, by calculating a new pricing structure that reflects the value of services offered and potentially expanding service offerings, grooming salons can thrive while maintaining profitability and customer satisfaction. Embracing these strategies empowers salon owners to navigate pricing changes confidently.
Elli Bultemeier NCMG, CPAe, PTI 2592