Because of many contributing factors, the price of everything is going up, and at an expedited pace. As esthetic practitioners, we have seen an increase in the cost of everything from cotton rounds to back bar products. This means our cost per service has and continues to increase, but how about the price of our services? We know periodic price increases are normal, but how should we adjust to rapid increases in the cost of living and doing business? Have you, are you, will you be raising your prices this year?
From 2010 to 2019, the average inflation rate was 1.77 percent. Today the inflation rate is 8.5 percent and climbing. This is a 40-year high and does not show any signs of slowing down! The skin care industry along with production and manufacturing across all other industry sectors is experiencing supply chain and labor shortages leading to the perfect storm for price increases. Between 2020 and 2022 the US. and the world has experienced a pandemic, American worker shortage, Russian invasion of Ukraine, raising rent, shortage in the housing inventory, and the list goes on.
An unofficial Facebook poll of 600 estheticians was conducted, asking the following questions:
- What do you charge for a 60-minute facial?
- 52 percent: $76-$100
- 36 percent: $100-$125
- 9 percent: Under $75
- What are the reasons for not raising prices?
- 48 percent: Not sure how to raise them
- 48 percent: Afraid to upset my clients
- 3 percent: Haven’t gotten to it yet!
- 1 percent: Because of my demographic
The results of the poll were startling and suggest that raising prices is one of the biggest challenges estheticians may face today. First and foremost, you should raise your prices because you are worth it! You should invest back into your business. Raising your prices boosts your perceived value and reputation, and it weeds out difficult clients.
Below are 4 questions to help you determine how to raise your prices.
Source: Gloss Genius
QUESTION #1: WHAT IS MY BASE PRICE?
Look at ALL your business’s monthly expenses (rent, electricity bill, products, tools, and anything else you pay for to keep the lights on and doors open).
Look at the average number of clients per month to calculate your base. (You can choose to calculate your base price annually, monthly, or even hourly!)
QUESTION #2: WHAT ARE OTHER PROFESSIONALS CHARGING IN MY AREA?
Understand your area’s average household income so you don’t undervalue yourself (your area can pay a bit more for your beauty services). Research other independent pros around you and know what they charge.
QUESTION #3: DOES MY PRICING REFLECT WHERE I AM IN MY CAREER?
Whether you’re just starting out or have been in the game for years, think about how your pricing reflects all the experience and training you’ve had up until now. If you’ve invested in further training, charge for it! Your craft is only getting better and better, which means your services are worth more.
QUESTION #4: HOW WILL I SHARE MY PRICE INCREASES WITH CLIENTS?
The right approach = “sharing the news” vs. “breaking the news”
Take a positive approach to inform your clients of a price increase
You’re reaching a new milestone and as your clients, they’re with you for the ride.
They’ll share in your excitement for what this new chapter means for them too, e.g. higher quality of products, safer protocols in your workspace, and continued improvement of your own skills with time and education.
It’s no secret that the price of doing business is going up. With inflation climbing at a record pace in a time of consumer understanding and begrudging acceptance, many contributing factors have created the perfect storm in which raising your prices may be met with the least resistance. In this episode of ASCP Esty Talk, join Ella, Maggie, and Tracy as they discuss the “why” of raising prices and most importantly how to set and implement marketable price increases.