Money TalksFebruary 1, 2006 By: Mary Novitsky American Salon
For a long time, I used to get my hair cut at a pleasant, low-key salon in midtown Manhattan. It wasn't particularly convenient to where I lived or worked, but I had followed my stylist there from her previous place. I liked Liz a lot, she did great hair, and the $40 price tag was a pretty good deal for New York, birthplace of the three-figure haircut. Then one day Liz told me she was leaving and enrolling in school to become a medical technician. She wanted a job that would give her benefits and a salary she could actually live on. No wonder: Over the 15 years I went to her salon, her $40 fee had crept up to $47—barely one percent a year.
I thought about Liz when I read Andrew Finkelstein's article, "Four Myths About Making Money," page 78, especially his comments on pricing. Like many consumers, quality of service is higher on my priority list than price; that's what has prompted me to switch dentists, cellphone providers and auto mechanics (all of whom have raised their rates considerably more than one percent a year) much more often than changing stylists. What makes salon pricing such a complicated issue?
"Hair designers are still afraid to charge a value equal to what they are truly worth as talented, creative artists," says Larry Oskin, president of Marketing Solutions, a consulting agency for the professional beauty industry. "Many salons still charge what they did in the '70s; that's why so many salons go out of business, and stylists switch to other industries. Collectively, we need to start immediately to raise the bar with higher prices for our services that better reflect today's economic standards."
Easier said than done? Maybe. "With a record number of salons open nationally, the competition for every single client is intense from salon to salon," says Gordon Miller, executive director of the NCA. "The easy out is to think, 'I don't raise my prices, and I keep my clients.' At the minimum, salons should be adjusting prices to keep up with inflation, regardless of what the competition is doing. But too many of them are looking at it differently: It's not about business; it's about taking care of clients. Part of it is a lack of training and education to give them the business tools they need for success. So they're making emotional decisions, not pragmatic ones based on market forces."
If pricing has you in a quandary, you're not alone. But there's a wealth of expert advice available at your fingertips, so you might want to check out some of these Web sites. And I'd love to hear your own thoughts and experiences.