Issue link: https://www.ahpindiestylist.com/i/1467303
74 indie stylist Volume 3 Issue 1 While many businesses raise prices in January, there really is no best time. Our economy is a fluid factor in your business reality. HOW MUCH IS ENOUGH? While the easiest approach is to simply institute a flat rate increase across all services, there are other factors to consider. Price increases in the beauty industry generally do not run more than 10 percent at a time. While a flat rate is the easiest to implement, you might want to be more strategic. Calculate what the impact of a flat rate increase will be to your business profitability. An important step is to calculate what each service really costs you to provide. The numbers will tell the story and will help you increase prices with confidence. Another popular approach is to raise prices on a portion of your menu or on the most popular services you offer. You need to do your homework first. According to the "80/20 principle," you can expect to make 80 percent of your income from 20 percent of your menu. 1 You need to identify those "hero" services and figure out what your true cost is. Subtract that from what you charge for the service, then divide it by the average time it takes to finish that service. That's your hourly wage. Is that number enough for your time, expertise, and products used? By identifying those popular services, you may find that you can streamline your menu. Focus your time, energy, and resources on the services that get the best return. Raising prices on your most popular services will provide you with an immediate boost to the bottom line. Using this approach leaves you the option of leaving prices alone on other parts of your menu—which may feel more comfortable for you and incur less resistance from your guests. 2 HOW DO I ACTUALLY DO THIS? Once you've decided to raise your prices, make a plan to prepare your guests in advance. A month is adequate time to announce a price increase. Pick the day the new pricing will go into effect and work backward to develop your plan and timeline. If you outsource printing, social media, or website services, allow yourself enough time for the updates and changes. Communicate, communicate, communicate! It's just good business practice to tell your guests when and why you are raising prices. 3 Share the upcoming price increase in an email, then post friendly reminders at the welcome desk, in guest bathrooms, and in your Communicate, communicate, communicate! It's just good business practice to tell your guests when and why you are raising prices.