“The Real MVP”! Tiered Pricing for the Hair Salon Owner.

By Caitlyn Muir

Why ‘MVP’? Because you, the owner, really are the Most Valuable Player in your salon, and that comes at a price. Next in line, the second-place peeps, are your busiest and most highly requested staff, not necessarily the longest standing… hear me out.

So, how do we fix this? Discount ourselves?

Eeek, no. Offer ‘deals’ to get new clients or the long gone to return? F NO! There are a few different strategies to help this, but this is my all-time fave, introducing TIERED PRICING STRUCTURES.

The WHAT?

What exactly is tiered pricing? It’s a scaled pricing system for your services and treatments based on experience, technical ability, and how in-demand you and your team are.

The baseline, or “average” price would be worked out on your salon costs, broken down into a per-minute labour cost, plus specific product costs required for that service. Confused? DW I can help you with that! *insert winky face here*

The highest price point, usually a percentage above the baseline price, would reflect the owner, director, even salon manager and the stylists who are the heaviest in requests and bookings. The lowest price point is your apprentices, juniors, trainees, and the assistant level staff that are in the earliest stages of training.

Dependent on the size of your salon and your team, I have worked with salons that have 6-7 tiers of pricing because they have large salons with lots of moving parts, or some that just have two tiers because they have 3 chairs with boutique appointments. In my hairdressing salon (22 people on the floor) we had 6 levels, and in my barbershop (6 barbers on the floor) we had 3 levels, and they both worked perfectly.

The WHY?

Tiered pricing is f*cking ground-breaking for any service-based business, especially in hair world. It really does provide your clients with financial options, meaning they can still attend their favourite salon without breaking the bank.

As well as that, it is the number one way to start the process of cutting back your time on the floor, or step back completely for more lifestyle freedom. It is also the best way to free up your busier stylists to make way for more higher-paying clients, and to busy up your quieter, or newer, or less experienced staff.

At the end of the day, it’s not that you’re necessarily the best hairdresser in your team, nor are you necessarily the most experienced, but as the owner your time is the most valuable. Tiered pricing isn’t about belittling your people or creating a toxic hierarchy, but you, the owner, have invested everything into your business, you’ve taken the risk, you wear all the hats and bear all the responsibilities and you also have things in your business that only YOU can do. Therefore, you’re the MVP and you need to be charging a higher rate than your staff.

Most importantly, by implementing tiers, your time on the floor will be more monetary, meaning you are maximising your takings and enabling yourself to spend more time on the business.

Clients who are happy to pay the higher $$$ for your more experienced people will stay with them, meaning your busier staff are earning you more money for the same time worked, and the rest of the clients who need to find more budget options will filter down to your lower tier staff meaning they’re busier too, YAY!

I always find it funny how your clients “won’t see anyone else because you’re the best”, but when you put your prices up, all of a sudden, they’re cool seeing your more-than-capable employees, like they evidently just stuck around because you’re cheap (sorry, not sorry, I said it!)

Would you ever go to a law firm an pay the same for the Partner as you do for the lawyer fresh out of uni? No. Does that mean the freshie doesn’t know what they’re doing? Also no. But the partner has more to do, more to oversee, a hellova lot more responsibility, and that is why they are more expensive. Get it now? Love that for you!

The WHEN?

When do you implement a tiered pricing structure?

• In short, if there is more than one of you, and you’re all running the same pricing, it’s time! It’s also time to create this in your business if you, or even some of your staff are so busy and over booked and others are quiet… tiering is the number one way to help the busy stylists cut down and the quiet stylists book up.

• If you are experiencing push back on pricing, cutting your pricing down is NOT the answer, tiering is! How many apologetic plumbers do you know that cut down their labour costs because you questioned them about their $200 for replacing a washer that took them ten minutes? ZERO. So, don’t buy into that bullsh*t, babe! This is the best way to offer budget options while retaining your clients.

• If you’re wanting to earn more money and work less hours on the floor of your salon, the time is now.

• If you want to filter out some of the services you offer (removing the cheaper ones for higher paying, more technical services), or to generally start moving clients around (the long-term, never want to pay more, boring ones – not rude, we have all had them!), or even change your demographic completely, it’s time.

• When you want to get your juniors BUSY and BOOKED UP and your up-and-comers THRIVING, hell yeah!!

The HOW?

So, how exactly do we bring this all together? How do we roll it out to our clients?

First, nail your pricing. Hot tip: this is NOT BASING YOUR PRICES ON THE SALON DOWN THE ROAD, or the goal salon, or anyone else full stop. Pricing is created by:

1. Understanding your salon’s bottom line; every cost, product, person, sundry, expense, running cost, EVERYTHING that contributes to the salon operating and opening its doors.

2. Deciding how much profit you want/need from your business.

3. Breaking that cost into a per [income generating] employee hour, block and/or minute.

4. Multiplying that out by the time required for EVERY service offered.

5. Adding in the cost of goods/product required to complete each individual service.

6. Then, adding a % surcharge for the top tier people in your business, and,

7. Deducting a % surcharge to the lower tiers in your business.

Let me give you an example of a five-tiered system:

Principal Hairstylist/Director: Should always be 25%-50% higher than the base price. This would be your owner, boss, CEO, whatever you call yourself. More often than not, the people in this tier work at a slightly faster pace, same as the “Masters”.

Master Hairstylist: Should always be 10% 25% higher than the base price. This tier should include your busiest, most in-demand, top earning hairstylists.

Senior Hairstylist: Should be the base price. This should be your fully qualified hairstylists.

Emerging Hairstylist: Should always be 10% 20% less than base price, because they are still finessing their skills. This tier is for your 3rd and 4th Year Apprentices, graduate hairstylists and those who need a little more work. The staff in the “emerging” tier often need slightly more time to complete their services.

Rising Hairstylist/Junior: Should be anywhere from 50%-20% under your base price, because they are still training, growing, and need supervision when working on clients. These little beauties are often a lot slower and need more time with and on the clients.

Obviously, tiering, the same as pricing, works on a case-by-case basis and we need to design what works specifically for your salon structure, your team and you. But some points to consider are, how many services does your salon offer and can everything be done by everyone? How many staff do you have? Are some slower, faster, not quite up to standard? Are some of your people running full columns? And last but not least, are you paying some of your staff more than others?

I think the biggest question by now is “how do I roll this out without pissing off my clients?” and the direct response to this is, choose a date, stick to it, and prepare your clients for it.

“Hey [NAME], effective 1st July 2023 [SALON NAME] will be implementing a pricing adjustment on all services. If you wish to obtain a quote or have a chat to us, contact us on (INSERT PHONE NUMBER)”

From there, all clients get charged the new prices effective from that date. If your clients are not happy with your new prices, this is a perfect opportunity to segue them into changing stylists or dropping down a tier to meet their pricing needs, change up their services, or sell them into a membership if that’s something you offer.

This is not, I repeat, this is NOT a time to accept their frustration over pricing and discount yourself… other people’s financial situation is not your responsibility! You run a business, not a charity after all, and I am certain that your clients don’t bargain at Woollies!

And to finish this off, I will leave you with this… I bet you went into business to make people look hot AF, to be that creative person that you are and to let those juices flow every day, but most of all you put everything on the line to provide yourself and your loved ones an amazing life, that happens when you take your business seriously and you value yourself and your profession!

X Cait Muir Instagram.com/caitmuircoaching Facebook.com/caitmuircoaching caitlynmenzel.com