Introducing new price structures in a salon can be met with resistance from the team and guests, but careful planning saw Laura Watkins transition her salon to time-based charging without any drama.

One decision Laura Watkins regretted from almost day one of opening Pure Salon Spa in Louisville, KY, in 2008 was how she charged. Opting for the traditional all-inclusive model, she quickly realisedrealized that her salon was not achieving the profitability levels possible within the industry.

No stranger to numbers, Laura is a business graduate who has always loved hair. So much so that she went back to school in her early 30s to get her cosmetology license and opened Pure two short years later. Despite her well-rounded finance and business skills, profitability was still an everyday battle.

“There are just too many variables, which makes it difficult to forecast what your costs will be and how much profit you’ll be left with,” says Laura.

Step one: Identify small and big opportunities for growth

An early adopter of Vish, Laura recognisedrecognized the power of a system that could reduce costs and manage colourcolor inventory. However, pricing was still one piece of the puzzle she was trying to master. It wasn’t until a couple of years later that she learned more about time-based charging structures through her Strategies consultancy coach. At the beginning of 2022, she restructured hair-cutting, allocating one-hour appointments with the option of additional 15-minute slots when required. This simple step boosted sales by about 20%.

“It’s a pretty simple formula for how we decided what to charge,” Laura explains. “We took six months of revenue history and figured out all the hours available for sale during the same time period in our business to get a cost of sales per hour to operate. Then we looked at what our expenses were to get a per-hour cost. This included a charge to cover operational expenses to give a set level of profitability, and now that’s what we are charging.”

After a successful, calm transition, she decided the time-based model was ready to be implemented into colourcolor charges. With more than three years of data from Vish Laura could see what her prices needed to be to embed an 8-10% profit guarantee. Guests would still be allocated a time-based appointment that included a colourcolor allowance. But if the stylist used more colourcolor or added in toners, additional charges would be incurred.

Step two: Get leadership on board

She began rolling out this organisationalorganizational change first by getting her leadership team on board. Laura’s business model had always promoted transparency, and this shift was surely no exception. She gave her leaders all the data and her carefully calculated projections. They instantly recognisedrecognized the benefits, and together they and Laura prepared a strategy for how it would be announced to the team and guests.

Step three: Roll out the strategy with the team

“We decided to go live on October 1. Ninety days before the go-live date we brought up the idea at our regular staff meeting, scheduling sufficient time to take questions and work through any fears,” she said. “Our next move was to work with the team on guest conversations. We scripted out scenarios and ran role-play sessions. The most concerned people were the younger, less experienced stylists in their first job. They worried the guest would abandon them or get upset with pricing changes and that they wouldn’t know how to react.” The next few weeks would serve as a trial period to gauge receptiveness and improve confidence around the topic.

Step four: Continued coaching and support

Despite this effort, six weeks later, when management checked up with stylists after each service on whether they’d told the client, it became clear many were still avoiding the conversation. Leadership doubled down on coaching the team, honing in on the importance of discussing the ‘why’ and how to introduce it into the conversation, while holding them accountable. This level of accountability offered stylists the opportunity to have transparent exchanges with their clients.

Step five: Implement price increases

By the time October 1 came around almost every guest knew they might see prices rise.

“One benefit of COVID has been the increased value guests place on their stylist. They recogniserecognize how skilled they are and the care they take. With that level of value and transparency, they’re much more willing to pay for it now. We only had a slight pushback as a result of the increases, and if a client couldn’t afford it, we moved them to another, more affordable stylist on the team,” says Laura. “Also, we honored the previous prices for 30 days if it was obvious the guest had not been told of the changes by their stylist.”

Impactful implementation

Since implementation, the salon has seen an immediate and sustained uplift in sales of 25%. Added to the 20% increase brought by the earlier transition to time-based cutting, Laura has finally reached a stable, secure level of profitability.

“Transitioning in two phases made the jump seem less extreme, but communication was the real key to success,” she concludes. “Transparency is everything.”

Are you looking to reevaluate your pricing? Connect with Vish today.