WHY YOUR PRICE ISN’T ALWAYS RIGHT!

Business coach Carl Hinder has never worked with a barbershop that didn’t need to raise its prices. Shocked? Read this.

In my opinion there’s two main reasons why our industry doesn’t price itself correctly. Firstly, a lot of barbers don’t have business training. Their passion is their creativity They move up the career ladder and one day they’ve got a barbershop but don’t always have the business know-how to run it. The second reason pricing is often incorrect is because of their own personal money beliefs. I don’t think a lot of barbers believe what they do is worth the money. Because they wouldn’t pay £30 for a haircut, they don’t want to charge their clients that. This is so wrong! selling an experience. Pricing shouldn’t be business. Pricing is a mathematical calculation.  It’s about adding up the TRUE costs of running  the shop. Rent, overhead, bounce back loans,  deferred taxes, staff holidays that haven’t been utilised yet – all of these things (and more!) need to be taken into account when calculating your prices. And don’t forget your personal reward – profitability. I don’t expect the average barbershop owner to be able to work it out now. You can go get yourself a good accountant or you can use my Salon Help Pricing App (www.salon-help.co.uk/pricing-app/) – it’s really easy to use.

Shockingly, industry figures suggest that 7 out of 10 barbers and salons are operating at break even or at a loss. So if you’re thinking about price matching, or even undercutting, your competitor down the road – well, you have a 70% chance of starting your business at a loss! The race to the bottom doesn’t work. There are barbers out there that are not even paying themselves! I have never met a barber that doesn’t need to increase their prices.

I know you might be nervous to raise prices in the current climate but you need to. People always ask me ‘When is the best time to raise your prices?’ And I tell them: ‘It was months ago!’ But don’t worry, the next best time is today. You need to be reviewing your pricing twice a year (maybe January and April) or in September before the Christmas period.

That doesn’t mean I’d change two or three times a year, but I would always revaluate. In addition, if you’ve hired more staff or moved premises you always need to look at your prices after (or ideally before!). At a bare minimum you should raise prices once a year and raise it enough so that it exceeds inflation. Provided your prices were correct in the first place!

How you price your services now pays for the future of your barbershop. Don’t set prices based on what happened last year, look at the year ahead. Take into account if you need new furniture. You don’t want to be paying off something in arrears, much better to have already accounted for it.

If you’re worried about raising prices now remember this: clients know you’ve been through hell and back as a business during COVID-19. In reality, much of society is cash rich at the moment. People haven’t been able to go on holiday or to a restaurant so for many disposable income is higher than usual. And one good thing to come out of the pandemic – people are a lot more respectful and appreciative of the service that barbers deliver.