Management Practices

Setting prices in a recession

Stacey Soble | July 10, 2011 | 3:10 PM

With consumers skittish about the economy in 2008 and 2009, many salon and spa owners held back on price increases even as their own costs increased. With economic optimism slowly returning, many owners are looking for creative suggestions for positioning a price increase that makes it more palatable to clients. 

 Setting prices in a recession
Mike Van Den Abbeel and Kiri Willheim, owners of Mosaic Hair Studio.
Husband and wife team Mike Van Den Abbeel and Kiri Wollheim own Mosaic Hair Studio in Orlando, Florida, and Ven Den Abbeel recently shared the following letter about his well-planned process for increasing prices:

"We have had the same price for about two years. Although we did not feel much drop in business during this great recession, we did not want to raise prices in 2009. We waited for the New Year. 

Communicate in a personal, non-boring way.

At Mosaic, we have always believed that every communication with your client—whether it be print, online or otherwise—should reflect the salon's personality. In our newsletters and Facebook posting we like to be funny and a bit sarcastic. So we develop a quote and frame it with our price increase notice and place it on the front desk next to the candy jar where everyone will see it. Good quotes are thought-provoking and a classy way to do something. This time we wrote, 'It is beauty that captures your attention; personality that captures the heart. On Feb. 1, the price of attention will slightly increase.' 

Plan price increase to coincide with decor updates.

We get bored with the same look and feel of the salon, and so do our clients. We always coincide our price increases with a change in the salon decor, but a decor change doesn't have to be a huge expense. It can be as simple as changing the paint or swapping out a product display. We've had our current look for about three years, so it's time for something fresh. For this year, we are investing in some new furniture, a new front desk, cabinets and shelves.

The experience must be in line with the price.

We like to look at our salon through the client's eyes. Their experience has to be line with the price that you charge, so we are always looking at what we can do to enhance that experience.

 Setting prices in a recession
 Mosaic Hair Studio in Orlando, Florida.
Offer complimentary add-ons that build value.

We routinely thank clients for their loyalty by offering complimentary items, such as conditioning treatments, product samples, glosses, and music CDs. We even have a flat iton that will work in Europe that clients can borrow when they travel overseas.

Look for win-win solutions when clients complain.

Our perspective on a price increase is that as long as we still provide value to our clients, we will not lose them. In our five years in business this will be our third price increase, and if past increases are any indicators, we will transition our clients smoothly and with minimal client attrition. If a client does complain, which has only happened twice, our policy is to come up with a solution that would result in a win-win. For example, we will add fewer highlights, make a change in the base color, or not do the blowout. We never discount the price, but come up with techniques that solve the issue for the client."

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