We’re Talking Time: Crafting the Perfect Pricing Structure
Where happy hair happens
Learn how a salon in the heart of New Jersey managed to implement time-based pricing to ensure profitability on every service.
Getting into salon pricing
In recent years there’s been a surge in the number of salons making the switch to time-based pricing, stating it offers a simple, easy to manage, and more inclusive experience for the guest. The model includes charging your guests an inclusive hourly rate that increases or decreases based on the experience level of the stylist.
Owner and hairdresser Mallory Zenner opened Craft House Salon in April 2018, with a large focus on sustainability and inclusivity. Craft House Salon not only partners with Green Circle Salon’s sustainable program and B-certified 100% sustainable company Davines, but also transitioned to a gender-neutral, time-based pricing structure.
“Since we opened, we have been operating our back-end pricing structure on an hourly model. We are currently transitioning to an hourly pricing model for clients now, too, as part of our 5-year plan,” says Mallory. “I find that using time-based pricing along with Vish gives me a more stable read on my business. I know what to expect and forecast, and I have a more consistent income,” she adds.
Is time-based pricing for you?
Have a look at your time-based elements. How many appointments are you booking daily, what’s the average length of your services, and what are your stylists’ rates? Next comes the numbers. Assess your books and review monthly averages including operating costs and more. Once you know your salon’s cost for an hour of service you can establish your price. Next, determine your price increments for services that are shorter or longer than one hour based on your one-hour service pricing benchmark. Many salons have opted to calculate it based on 15-minute increments.
Overall, we have seen significant revenue growth with time-based pricing.
Building stylist buy-in
When it came to implementing the change in the salon, the team at Craft House Salon bought in as soon as they saw the data.
“Once we walked them through the plan, they compared their personal numbers and saw how this system actually made things easier for them by taking out the guesswork and discrepancy. Then they embraced it. It keeps us all on the same page and accountable while benefiting them,” said Mallory.
The Vish Dashboard compiles all of the data captured while dispensing color and creates intelligent reports to guide leadership. Key reports like average cost per service and wasted product help to retain profits and coach the team. “Using Vish for color management helps us organize the numbers and manage operations in a way that is simple, strategic, and consistent,” she adds. Vish’s seamless integration with her SalonBiz software helps contribute to consistent operations with all appointment details and client formulas being pushed back to the front desk.
Priced for profit
With an average 20-25% profit margin achieved with every service, after factoring in all fixed costs, Mallory has been able to reinvest in her team in an impactful way. “We are investing in profit-sharing for our salon team. The more money we save and earn, the more we have to share. A full 20% of annual salon profit gets divided among the entire team as a bonus. It’s a huge incentive to be profitable and reinforce the importance of measuring KPIs consistently.”
Many salon owners have invested post-Vish profits into healthcare options for stylists or upgrading salon equipment.
Is it time to flip the switch?
“Look at your costs. A box of foils used to be $9 and is now $14. You must understand what your costs of services are and be able to adjust your pricing as needed, quickly. This system makes sure those costs are passed along appropriately to the consumer,” she says.
And when it comes to time vs. money? “Time is our most valuable currency. This pricing structure paired with Vish not only lets us charge for time, but it helps me gain time back, which is priceless,” says Mallory.