When did the price you charge become determined by how many followers you have on Instagram and not by your years of industry experience?
I watched a very interesting video on socials yesterday which involved a young mother showing her audience how she blondes her own hair at home. The reason? She had enough of spending big dollars getting her hair coloured in salons, only to be disappointed by the results. Is she correct in her assessment? I believe she has a valid point and our industry has tolerated the mixed bag that has become pricing of hair colouring.
We now have newly qualified Hairdressers who look good on camera, open $500k aesthetically pleasing salons and know how to post the perfect beach wave photos charging more than industry veterans. But were the industry veterans charging enough in the first place?
The one aspect they fail to teach Hairdressers in their college training is the one thing that determines not only longevity in the industry but future happiness and continued passion. That facet is how to run a profitable salon business and pay yourself correctly. Most Hairdressers are sweeping away their profits along with the hair
What is it about numbers and money that makes hairdressers want to put a cape over their heads and hide? The greatest threat to our industry at the moment is unprofitable salons and Hairdressers, especially veteran Hairdressers, failing to put a money value on their experience. Hair Salons are closing their doors en masse and it’s stunting the growth of our industry.
Back in the ‘olden days’ when I first started my career, a whole 30 years ago, pricing was not something we thought about too much. How I was taught, as with many others, was to price yourself within the local market. Meaning, call all the local salons and see what they were charging and price yourself within that range. Pricing was determined, however, on salon service and your cutting skill level. Being able to cut hair well was a commodity and was sought out by clients. If you wanted to charge a higher price for your services, you had to work on increasing your skill levels.
But now times have changed dramatically and the focus of our industry is on colour, in particular lightening hair. The skill level of the Colourist is still favoured but this is now determined by a Social Media following. Post a few gorgeous photos of a pretty blonde girl with a few highlights and some token waves and the masses think you are better than what you are. To make a pretty girl look good, isn’t a challenge, but the visual does stir up the age old desire of wanting to look like the attractive people. This is the essence of Social Media addiction.
So clients like, follow and then book an appointment. Suddenly these naive Colourists are inundated with more bookings then they can handle. They haven’t worked their skill levels and earned their stripes. But they were told that a fully booked schedule meant that you could charge more. Plus the other ‘influencer’ Hairdressers were charging excessively so why couldn’t they?
This level of thinking has now become the norm in our industry. Not only due to unrealistic promises but also because those more experienced in our industry have never really stepped up and charged correctly. Every other industry seems to have a formula, a benchmark and a hierarchy. For some reason the Hair and Beauty industry has just missed the mark in this area.
Then the world changed and suddenly our expenses went up and this in turn dropped our already small profit margins due to undercharging. Add to the equation cost of living increases, product price increases and the demand for aesthetically pleasing salon fit outs and most Hair Salons are now struggling financially.
A study conducted on small and medium business enterprise by the ANZ/University of Melbourne shows that in the Hair and Beauty business sector about 10% of salons are losing money, 25% are making 2% profit, 50% are making 8% profit and the top 35% are making between 16% to 27% profits. Compare that to industries with the same qualifications as us, the building sector (electricians, plumbers etc) and most are sitting in the 13-24% profit range. Revenue (the money your salon brings in) does not mean you are making a profit and a booked out schedule can still have you sitting in the 2% profit margin group if you don’t know your numbers.
Considering in our industry 50% of a salon’s earnings go on wages if you have staff. This leaves the person taking the highest risk, and in some cases working the hardest, the Salon Owner, paying themselves less than they pay their staff. Why are we working ourselves into the ground yet celebrating an 8% profit margin.
With so many Hairdressers leaving the industry due to health issues such as carpal tunnel and back problems, created by an overbooked schedule, there is now a major shortage of talented Hairdressers. Adding to that, we now have the lowest Apprentice completion rate in history. According to the National Centre for Vocational Education Research (NCVER), the Hairdressing industry has an Apprentice completion rate of only 46.7%. Less than half of our Apprentices are completing their qualification.
So going back to one of my initial paragraphs about clients doing their own hair at home. Does this young mother on Social Media have a point? I believe she does. We are no longer competing with other Hair Salons, we are now competing with at home hair colouring from Social Media Influences. Why? Because instead of connecting and growing our industry over the last 4 decades, we have competed, degraded and allowed the Government to deregulate us. Our main priority has now become followers and not repeat customers.
When a Colourist cannot perform to the level they, firstly advertise at, and secondly, they charge for, then this will push clients away from our industry due to distrust. If the public is not getting the value that they are paying for, it brands our industry as a ‘rip off’ industry and this taints all of us. Money is an energy and an exchange of service. When the energy isn’t balanced, the trust collapses.
It is time to take back our industry, value our worth and step up as leaders. For too long we have allowed the Big Brands to dominate our marketing, our self esteem and our pricing.
So what are you going to do about it? Profit isn't what you hope to have left at the end. It's something you should plan for from the beginning.
If you are looking for change, still love this industry and want your wage to reflect the passion you put into your clients, then sign up for my Pricing for Profits Programme.
I have laid out a super easy, and long overdue, system that used only 3 of your main expenses to work out a profitable Price List. It’s super easy and all the calculations have been done for you. And the best part is you can complete the course in your own time but it is also future proof. Every Financial year, when you have an increase in expenses, you just input the new expenses and the system delivers a new Price List. No more guessing or asking the question of Hairdressing forums.
So let’s get this industry back to the top of it’s game. We were once seen as Rockstars and an asset to clients lives and I wish to get us back there again.