Research published this month shows salons are increasingly abandoning traditional charging in favor of new pricing structures made possible using technology. The report, published as a White Paper by Vish, identifies three pricing strategies in the industry that reduce and even remove the profit variance of color that so often works against it.
“The introduction of technology offers next-level transparency with consistent and simple price management,” said Tim Howard, former salon owner, now Chief Innovation Officer at Vish. “It is possible to approach charging in a way that guarantees profit while creating an equitable pricing structure for clients.”
The study found the traditional all-inclusive method of charging, where every client is billed the same even though they may have very different hair needs, opens salons to unpredictable margins that erode salon profitability. The alternatives of parts and labor or time-based pricing were revealed to offer much greater stability, while the built-in product allowance was found to help salons reduce color costs and retain profit.
Craft House Salon, in Atlantic Highlands, New Jersey, a Vish salon using the time-based pricing model, reports a 20-25% profit margin with every service.
“After the pandemic, I explained to our team how our pricing and profitability worked on the back-end to let them know we all needed to make sure our salon was sustainable long term,” explained Craft House Owner Mallory Zenner. “We set product allowances based on what we wanted to bring in at an hourly rate per service. Now we’re charging the guest for all services based on the amount of time needed.”
To back up its findings, Vish has published the White Paper – Does Time-Based Pricing Make Sense For Your Salon? In it, the color management pioneer has drilled into the benefits and drawbacks of the three historical charging strategies to help salons understand what best suits their unique goals. Salons can even opt for hybrid versions using technology to ensure profits don’t dip below a set average level.
The Vish White Paper Why It’s Important to Have the Right Pricing Structure is available to download at getvish.com
For reprint and licensing requests for this article, Click here.