When & why you should increase your treatment prices
By Katie Barnes | 27 December 2019 | Expert Advice, Feature
Many of you may be considering January as the time to increase your prices but I believe that it is the worst time to implement a price increase.
In January, everyone is recovering from Christmas spending. The bills are starting to come in, pay day seems like it will never arrive and people therefore need to make necessary cuts. While many clients believe that nails and other beauty treatments are a necessity, when push comes to shove, this will be one of the first things they consider cutting. Add a price increase at this financially tight time and this may strengthen their decision.
Let’s consider when people tend to have more money or there is the most call for nail appointments. Along with many employees receiving an annual pay rise in April, business outgoings often increase at this same time. This makes a great time to implement a price increase. Another prime time to raise your prices is just when that client needs you more than ever – their festive nails. October and November can be renowned for being quieter months where cashflow is lower for nail and beauty businesses so this increase can raise profitability without trying to attract new business.
Do I need to increase my prices?
The cost of goods and services will increase year on year, this increase is called inflation. This means that the goods and services you pay for are getting more expensive. If you don’t raise your rates, then any profit margin you had will be eaten up by these costs, ultimately leading to negative cash flow. A well-known example of inflation is a Freddo Bar which launched at 10p in 2000 and is now 30p. This had an annual increase of 4.36% per year. In line with product inflation, wages rise, so any increases actually cancel themselves out, so your price rise does not generally affect your client.
It is also good practice to get into the routine of increasing your prices each year at the same time so your clients become used to it and expect it.
When you leave it several years between increases, it will make it actually make it much harder for clients to accept.
How much should you increase your prices by?
When increasing your prices, each business will have different financial requirements. The considerations when implementing a price increase are:
- Supplier and product increases
- Overheads (such as rent, rates, energy)
- Insurance
- Annual wage increase
- Increases in Minimum Wage
- Pension Requirements
If you find it difficult to increase all services, do so for the most popular services.
If you increase a £30 nail enhancement service by just £1, carrying out 5 of these services on clients per day, 5 days a week – that is an increase of £100 per month and £1200 per year. This would be a 3% increase which follows the usual rate of inflation.
Raising your prices is what it costs for you to run a sustainable business at that standard of quality. When you don’t increase your prices something has to give – your profit margin; quality of work or products; insurance; safe practices and you will therefore be required to offer your clients a substandard service.
A small annual price increase is perfectly reasonable for any business. There will always be customers who will complain, as with all walks of life but would your supplier, landlord or energy companies not continue to raise their prices because you didn’t like it? No.
Value your skills, your business and your industry by keeping up with inflation so in turn you can continue to offer your clients the best service whilst maintaining a profitable business. Work smarter, not harder.
Love Katie B x