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Is It Time to Raise Your Prices?

Lauren Gartland September 2012 issue of Skin Inc. magazine

Learning to set boundaries and not being afraid to make tough decisions, such as raising your service prices, are necessary steps for the growth of your career and skin care facility. With the state of the economy causing skin care professionals to struggle in recent years, you most likely have been reluctant to raise your prices. The reality is that adjusting prices is absolutely necessary for your success. Raising your service prices, setting boundaries and saying “no” are absolute musts for the advancement of your professional career, as well as your life.

First, review the regular appointments in your skin care facility. The time to raise your prices is when the demand is greater than the supply. The cost of living goes up every year, your operating costs go up and so should your salary. When you are consistently booked 85% or more of the time over a two-to-three month period or, if you have not raised prices in 12–18 months, it is time.

To identify the average time you really spend working, figure out your potential hours of productivity (PHP). If you work nine hours a day, five days a week, with a one-hour lunch break, that would equal 40 hours. Once you figure your PHP, then figure your real hours of productivity (RHP). These are the hours you actually worked. Keep track of your daily PHP and RHP. To find your daily average, simply divide your RHP by your PHP.

After calculating your average each day, do it again at the end of the week. Keep track of your numbers consistently over a period of two months. If your average is 85% or higher, then it is time to raise your prices, because your demand has exceeded your supply. For skin care professionals who are already booked solid, consider not accepting any new clients who only want basic skin care services or book sporadically. Start to think about forming your business around the ideal client; one who is committed to a regular skin care program or who wants more advanced skin care services. This will ultimately allow you to increase your profits while working fewer hours.

If you’ve found that it’s indeed time to raise your prices, do not drastically raise them all at once. Start with a 10% adjustment. This will instantly increase your profits, and it won’t affect your clients’ service tickets too severely. If you again reach an 85% booking rate in two-to-three months, then raise prices again. You can raise them a few times in a year if your client demand continues to exceed your supply.

You may lose about 10% of your clients; yet, consider that you will actually be earning more while working less. You also want to replace those clients with your ideal clients. It is also important to have someone to refer clients to if you reach your peak capacity; ideally, to a new or junior skin care professional at your facility.

Always tell clients about an increase ahead of time, so it won’t be an unwelcome surprise. If you see clients every six weeks, then post an announcement six weeks before you raise prices. It’s important that your clients see it at least once before the increase is effective. You could place signs in your treatment room, send an e-mail to your client list or mail out an announcement letter. Word your announcement professionally and positively. Always open with a “thank you” for their business and acknowledgment of your appreciation. State the exact date and details of the price increase.

You probably assume that people are going to ask the reason for the increase; however, typically, they do not say anything. They actually expect prices to be raised. Remember that you do not need to go into detail when explaining your price increase; don’t talk about your personal expenses. Eliminate the drama. Do not be attached to what your clients choose to do. It is not personal; it is business and you are treating your career as a business and not as a hobby.

Remember that money is simply an exchange of value. People will pay more as long as they feel they are receiving more than they are paying. Let clients know the value and benefits of your services with your educational and promotional materials. Give them extra value and results by offering add-on services, while also increasing your treatment and retail tickets. Take action now by making the decision to grow your skin care business to ultimately create the life and career of your dreams.

Lauren Gartland is the founder, president and CEO of Inspiring Champions, and has worked in the spa industry as a sales consultant, a distributor sales team manager and a distributorship owner since 1983.

 

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