13 Powerful Strategies to Kick-Start Your Spa in the New Year

13 Powerful Strategies to Kick-Start Your Spa in the New Year

At the beginning of each year, most of us make a mighty dollop of personal New Year’s resolutions; get thinner, get fitter, stop smoking, drink less, or maybe it’s all of these and a few more for good measure.

However, when you own a business, you often need to extend those resolutions to include new and better strategies to help you to achieve a happier, more profitable and less stressful beauty business also.

At first, the thought of making loads of changes may seem a little daunting but I have a great kick-start list to help you get underway.

List-making is one of the best ways to get those thoughts and ideas that have been simmering away for some time out of your head and onto paper.   Once it’s written down, you’re halfway to getting it done.

 Out with the old strategies that don’t work and in with fresh ideas to help your business grow.

Start with a list.

To get your list underway and actioned, here’s what I suggest you do.

1. Grab a big sheet of paper and your favourite coloured pens or textas (colours make it so much more fun and motivating).

2. Write down all those things that you’ve been dilly-dallying over for ages but never got around to doing. Keep going until it’s all down on paper. It doesn’t matter what order your list is in at this point.

3. Next, go down your list and decide on the importance of each item and place a number beside it. The most *important job is #1 of course. Keep going until everything on your list is numbered.  Now you have an action list.

TipThe most *important job should be the one that is going to have the biggest positive impact on your salon’s profitability.  Don’t be tempted to start with the easy stuff unless it’s also the most important.

  1. Give the 3 most important items on your list a completion date. This will hold you accountable to get things done in a reasonable amount of time. Make sure you’re realistic about this so you don’t lose motivation if it’s not completed by the due date.

Once you’ve done your first 3 jobs, come back to your list and repeat the process.

  1. Find people to help you get the jobs on your list done. You don’t have to do everything by yourself. Write their names down beside the jobs they can help complete.


And there you have it.  A realistic and actionable list of important strategies to drive your business to the next level of productivity and profits.

Now, let’s look at those 13 tried and tested strategies I’m putting forward that might need to be included on your list also.


Strategies to Increase Spa Revenue

Strategy #1.  Commit to setting some realistic business goals.

Goal setting is easy to do and delivers great results when you know how to do it, but don’t set yourself or your team members up for failure by creating goals that are impossible to achieve.

Unrealistic goals come about when we expect to achieve too much, too quickly, and when that doesn’t work out we give up and nothing changes.

Instead, try looking for the small improvements you can make in your salon or spa.

Just a tiny 5% increase in all of the following could produce a massive result –

  • New clients.
  • Client retention.
  • Service pricing.
  • Up-selling.
  • Re-booking.
  • Reduction of no-shows.
  • Expense reduction

…among other things.

Remember to record your achievements so you can measure your successes and tweak the things that aren’t working as well as you want.

Suppliers will often provide an estimate of how much a service should cost you to deliver, but employees are notorious for using double (or more) the product quantity recommended and flushing the leftovers down the drain.  This can double your product costs and therefore reduce your profits. 

Strategy #2.  Stop guessing your cost price and start calculating it instead.

When calculating your service costs, take into account:

  1. the true cost of products used, as well as
  2. consumables, and
  3. labour costs

Armed with this information, you’ll know which services are generating good profits (and which ones aren’t).

For those services that aren’t making you enough profit, it might be time to consider either replacing them with ones less costly to deliver or increasing their price.


Strategy #3.  Promote the services that make you money.

This seems like a no-brainer and yet many salons and spas still promote their slowest selling, low-profit services in the hope of selling more. Why?  This strategy simply doesn’t work, so if you’ve been doing this, stop right now.

Instead, look for the services you offer that generate the highest profits.  Don’t guess what these are.  Make sure you’ve done the calculations to back up your choices (see Strategy #2).


Strategy #4.  Increase service prices

If you haven’t had a price increase for your services in 12 months or more, you’re due to have one …right now!

Costs are going up all around you and every time you absorb these costs without passing them on, you’re depleting your profits.

The best way to increase your prices is gradually throughout the year.  Segment your menu items and put up one segment at a time.  This way clients who enjoy multiple services from various segments are less likely to feel a huge impact when it comes time to pay for her treatments.


Strategy for Better Time Management in the Spa

If ‘time is money’ then the more your delegate, the more money you can make.

Strategy #5.  Delegate as much as you can, as often as you can.

Why is it that most business owners are guilty of believing that they’re the only ones who can do a job well?

If this sounds like you, it might be time to discover the art of effective delegation, and then find ways to use it in your business to free up your extremely valuable time.

To begin the delegation process, look for the strengths that each individual team member brings to your business and delegate work to those people who are capable of doing the job well.

You may have a computer savvy team member who could be handling your newsletters or social media for you or someone who could be presenting at your local networking events.

And what about training new team members?  Do you have a super salesperson who could deliver sales training or a fantastic therapist who could undertake some of the skills training required?

Most people have more than a single talent, so why not tap into those additional talents that your team members have and get them working for you.

Now, I’m not suggesting you just throw someone into a new role without any training; that would be a recipe for disaster.

Instead, match the person to the role carefully, train them well and explain clearly what you want the outcome to be.

Follow up with them until you’re sure that they understand what is required and know how to achieve it, but don’t stifle their creative instincts along the way.  They may actually be better at certain jobs than you are, so let them use their own creativity to achieve the desired results.

Once you’ve made this initial investment of your time to train someone, you’ll not only free up your valuable time for the more important role of business planning, but you’ll also give your team members the opportunity to grow professionally and personally as well.


Strategies for Client Attraction in the Spa

Strategy #6.  Develop more low-cost client attraction strategies.

New clients don’t just magically appear on your doorstep (bet you knew that already), so consider having a brainstorming session with your team about how you’re going to gain new, more profitable clients.

Your team can be invaluable in bringing new ideas to the table, especially if they’ve worked in other salons who’ve excelled in this area of their business.

Many client attraction strategies don’t cost you an arm and a leg.  Why not try an active referral program where your existing clients are encouraged (and rewarded) to introduce their friends to your salon or a cross promotion with another business who has the kind of clients you’d like to attract?

Put on your thinking cap and come up with inexpensive and innovative ways to get new people through your door.


Strategy #7.  Start networking in your local area.

Is it time for you to leave the nest and meet new people?  The majority of your core clients will live within a 5-km radius of your salon or spa, so local networking is a valuable marketing strategy.

Every community has groups and associations that are looking for guest speakers, so tap into this opportunity by offer free educational talk and demonstrations about the services you offer.

To impress your attendees, remember to:

  • Keep your actual presentation free of any sales pitch.
  • Deliver worthwhile and relevant information to your audience.
  • Include a demonstration.
  • Provide a special offer for your audience at the end of your talk, and make sure you take along lots of business cards to give out also.

This is a fantastic opportunity to start a relationship with potential clients.  Once people meet you and trust you, you’ll have overcome the fear of the unknown that may have been keeping them away from your salon.

If you’re not sure where to start, ask your clients what local groups they belong to and take the necessary steps to put yourself in front of your local community.  These people are the ones who are most likely to become your loyal clients.


Strategy for Client Retention in the Spa

Strategy #8.  Introduce a loyalty program.

What are you currently doing to ensure that once you have a new client you keep them?

Long gone are the days of client loyalty when you simply expected your clients to return to you without even considering other service providers.

Today, there is a multitude of other salons or spas all trying to lure your clients away, and so it’s your job to ensure that they’re happy and don’t want to explore other options.

Naturally, everything begins with a first-class treatment coupled with outstanding customer service and great value.  But once you’re sure you have all that in place, a loyalty program is a great way to reward clients for returning to you instead of going elsewhere.

Don’t be too stingy with your rewards either.  A good loyal and repeat client is a valuable asset to your business, so treat them as such.


Strategy to Stay Current in the Spa

Strategy #9.  Update, repair and replace.

If it’s broken, inferior or tatty, get rid of it!  If you have team members that also fall into any of these categories, the advice remains the same.

You simply can’t deliver first class services if you’re working with terrible staff, run down equipment, inferior product or outdated procedures.

Take time out to do a full salon audit and make a list of the changes you need to implement that will get your salon back on track and on equal footing with your competitors.  As well as reviewing your services, also assess the physical appearance of your salon by looking at it through the eyes of your prospective clients.

Is it time for a freshen-up, some new signage, a fresh coat of paint, replacement linen or even some new cushions in your reception area? These are all low-cost ways to enhance your salon and make it more appealing to both existing clients and passers-by.


Strategy for a Better Work-Life Balance

If you are the business and you fall apart, what happens then?

Strategy #10.  Plan a holiday and save your sanity.

Yes, that’s right; I’m recommending that you plan your next holiday and then plan the one after that as well.

Too often, major burnout of salon owners occurs because they fail to look after themselves, fearing the total collapse of their business if they were to take a few days off.

If your business really can’t manage without you for more than a few days at a time, then open your diary and plan a minimum of four small breaks with your family over the next twelve months.

Try and get away for at least four or five days at a time when you can.  You’ll be amazed at how much clearer you can think when you have had a rest and time away from your salon.

If you don’t think this is possible, revisit the section of this article that talks about delegation.


Strategies for Better Business Results in the Spa

Strategy #11.  Spend more time working on, rather than in, your business.

This is often the biggest mistake many salon owners make in their business.

Start by blocking out four continuous hours per week so you can fully review your business performance.  You can use this time to find innovative ways to attract more clients, keep existing clients, develop profitable promotions, review salon services, undertake marketing activities and much more.

You might even want to spend part of this time brainstorming ideas with your team about ways to increase sales and reduce expenses.  The greater the time invested, the better the results you can expect.  But use your time wisely and don’t get sidetracked by unimportant time-wasting tasks.

Throw away the excuse “I don’t have enough time” (remember the delegation strategy?).  It’s important to your ongoing financial success that you find the time needed to invest in business planning.


Strategy #12.  Create new and innovative services for your salon.

What do your clients want from you that they’re going to your competitors to get?

Perform a client survey, research your local competitors, ask your team what the clients are requesting and then take action.

Don’t lose your clients to your competitors because you’re not staying up to date with what your market wants from your business.

Once you have the new services in place, make sure to let your clients know that they’re available because you can’t sell a secret.


Strategy #13.  Invest in professional help.

The right help in your business is an investment, not an expense.

No-one can be an expert in all things.  If you try to do it all, your business will suffer and so will you.

Take advantage of the myriad of service providers who can help you keep your business on track.  If you have a great accountant, see them regularly to monitor the performance of your business and keep it on course.

If you hate doing your books, consider a barter deal with a good bookkeeper to help you out.

Another option is to bring in an experienced and knowledgeable business coach who will work beside you to help you achieve the goals that you have set for yourself.

Getting the right help in your business is an investment and not an expense.  It’s far better to avoid the pitfalls of business up front than to try and climb out of the debt pit later.

And finally, keep in mind this famous quote by Henry Ford –

If you always do what you’ve always done, you’ll always get what you’ve always got.”



Are You Losing Valuable Spa Retail Sales To The Web?

Are You Losing Valuable Spa Retail Sales To The Web?

More than ever, salon and spa owners have to compete with the internet for retail sales. What makes this even worse is that sometimes your competitors are the very businesses that you’re buying your professional products from.  And when this happens, it means that your clients, whom you’ve spent valuable time educating about these products, can purchase directly from your supplier. This leads to you being bypassed and can result in a substantial loss of revenue.

Your beauty business is not a hobby.

While it’s important to enjoy what you do, it’s actually more important that you make a decent living, and this can only happen if you are making sales – service and retail. Recently, a salon owner commented to me that she always thought of her retail sales as being the cream on her income cake. But the truth is that retail sales are not your cream on the cake, they are actually the cake itself – your revenue-fueled, deliciously profitable cake. Income from retail sales is hugely profitable – don’t doubt it. And if you’re not clear on just how important they are to you, then you’re probably leaving a truck-load of money on the table in your business. Given that many professional retail products now return a 50% margin (that’s 100% mark-up), and most services return nowhere near that %, you need to take retailing seriously in your salon or spa.

Here’s an example of what I’m talking about.

Let’s say you provide a 1 hr basic facial service for the price of $85 (excl. GST). Once you deduct the product cost (conservatively $8.50) and the wages, super and bonus expenses ($37.50), you’re left with a $39 gross profit. Sounds pretty good so far, doesn’t it? Now, let’s look at a retail sale that takes ¼ hr. The product selling price is also $85 (excl. GST). The cost of the product is $42.50 (50% margin) and labour is $7.56 (1/4 hr), and bonus commission is $8.50. This makes your gross profit $26.44 for 15 mins of time invested. Now, when you consider that $26.44 was earned in 15 mins, that makes the gross profit for 1 hour $105.76. What do you think about those 2 figures? Service profit of $39 per hour or retail profit of $105.76 per hour? I think it’s fairly obvious that retail profits are easy profits with a powerful impact on your bottom line. With the same amount of time invested, that makes retailing nearly 3 times more profitable to your business than providing a basic facial that has minimal product cost. So, do you still think that retailing is the cream on your business cake, or perhaps now you’re thinking it’s the other way around? Okay. Now we’ve established how important retail sales are to your financial health, what can you do to protect them?

Do your research.

The first thing, of course, is to choose your product suppliers with great care. Become a Sherlock Holmes and do your research. Google the product range that you’re considering stocking to see where else your clients can purchase it, and for how much. Keep in mind, even if the price works out about the same as what you sell it for, people tend to opt for the ‘easy solution’, which is a quick online purchase with the products delivered to their door. Don’t rely on client loyalty to protect your retail sales, because for 99% of clients it doesn’t exist when it comes to price or ease of purchase. So, if your products are readily available online, and you want to protect your retail revenue, then you’ll need to look for an alternative range that caters strictly to professional salons and spas. Let’s face it – the internet is here to stay and no amount of wishing or hoping is going to remove these product competitors from your universe, so it all comes down to the actions you take to protect your business income.

Online purchases by your spa clients.

Another problem that salons regularly face is one where the client comes into your salon with a bag full of online purchases, and expects you to spend your time providing advice on how to use these products. This is happening regularly, and I’ve spoken to many frustrated salon and spa owners who’ve been put into this awkward position by un-thoughtful clients. Here’s my solution to this problem. Create a new service in your salon called Professional Product Consultation and charge for it – not a pittance, but as if you were supplying a service in this time-slot – because you are. This way when a client wants you to spend your time explaining how to use products that they’ve purchased elsewhere, you can simply book them in for a paid Professional Product Consultation to provide them with the full benefit of your knowledge. This isn’t going to prevent the client from purchasing products online again, however, you’ll at least be paid for the time invested in teaching her how to use them; and this, in turn, will help to compensate you for lost sales revenue.

Motivate your spa clients to purchase from you.

To encourage your clients to purchase retail from you, rather than online, consider including your retail product sales into your Rewards Program. Once your client realises that she is missing out on valuable rewards points which she could have redeemed for salon services, she may reconsider whether or not buying online is such a great idea. But at the end of the day, the real issue lies with the fact that your clients can purchase their professional skincare products online in the first place. To my mind, every supplier to the professional skincare industry should be bending over backwards to ensure their products are not being sold by anyone other than salons or spas to ensure the end-user is using the right products on her skin, and therefore, achieving the best possible outcome. And that’s why, as a salon or spa owner, it’s up to you to ensure you choose the right range of professional only products to protect your valuable salon revenue.
22 Ways to Catapult Your Salon Profits Immediately

22 Ways to Catapult Your Salon Profits Immediately

Another year is underway, resolutions were made, and hope for a more financially successful year is in the air. While it’s great to be optimistic about what lies ahead, we all know that what actually gets you from a resolution to a result are the actions you take to make things happen. So let’s take a look at the 3 major areas you will need to work on in your salon to improve your performance and profits over the next 12 months.

New Client Generation

There are lots of things you can do to get new clients into your salon. Consider some of the following ideas and tick off the ones that you think might work well for you.
  1. Join forces with another business in your area that shares a similar target market and do a joint letter box drop. Be sure to make a special offer to pique the reader’s interest and have your brochures printed professionally on both sides (one side for each business).
  2. Enter into a joint venture with another business with similar clients to your own. Ask them to refer clients to you and you do the same for them. Each business needs to supply vouchers from the other business to gift to their clients.
  3. Start a client referral program and reward your clients for sending friends and family members to you.
  4. Build your male clientele by giving each of your female clients a gift certificate that can only be used by the man in her life.
  5. Find out what groups and associations operate in your area and offer to do free presentations for them. Make sure each person who attends receives a gift bag with a small salon voucher inside.
  6. Offer to write articles for your local newsletter and establish yourself as an expert in your industry.
  7. Have an open day or special promotional day and ask your clients to bring along a friend. Keep it fun and provide specials on the day. Offer a reward for each friend who comes along.
  8. Revamp your website to make sure it’s the number 1 client attraction tool it should be. If you haven’t done so already, try adding a downloadable ‘New Client Voucher’ to get the visitors to try you out.

Client Retention

Existing clients are truly your VIPs. They provide the repeat business that pays your expenses and keep your doors open. Never fall into the trap of taking your VIP’s for granted because they are not chained to your salon and can move on at any time. Check out the following ideas to improve your client retention.
  1. Communicate regularly with your clients to keep them up to date about what new and on offer in your salon. A monthly newsletter is a must.
  2. Send a birthday card with a salon voucher. Everyone loves to have their birthdays acknowledged.
  3. Treat your existing clients like you would a new client each time they visit. It’s a fact that existing clients will spend about 50% more at each visit than a new client will.
  4. Run an ongoing re-booking promotion so that clients are enticed to re-book before leaving your salon.
  5. Implement a loyalty reward program. Clients love to be rewarded for their loyalty to you.
  6. Consider a membership program that keeps clients coming back all year long.

Revenue and Profit Increases

Just a little bit extra earned every day can make a huge impact on your yearly profits. Just imagine if you could earn just another $50 per day in services. Over 1 year, operating 5 days a week, your salon could take an additional $12500. That sounds like a mighty fine holiday to me. Try implementing a few of these ideas to generate that additional income.
  1. When’s the last time you increased your service prices? If it’s been more than 12 months, then the time has come to bite the bullet and raise your prices. Remember, you are not offering cheap, you’re offering value. Understand and embrace the difference between the two.
  2. Learn how to sell some extra services to each client. Most clients don’t purchase anything extra because it’s not offered to them. During the booking process is the perfect time to offer that ‘little extra’ service that will put extra $$’s into your bank account.
  3. Always keep an impulse purchase display on your front desk. Clients will often purchase a little extra something if the price is right. Change your display to something new every 4-6 weeks so returning clients will have something new to look at (and purchase).
  4. Get your roster under control and don’t pay for staffing hours you don’t need to. Wages are one of the biggest expenses in every business and chances are it’s the same in your business too.
  5. Look for ways to minimise general expenses. While I’m a big believer in outsourcing when necessary, it’s important not to spend money on things you and your team members have time to do yourselves.
  6. Stop discounting and start value adding. The path to business hell is littered with salons who continuously discount their services.
  7. Focus your marketing efforts on services that make you a healthy profit. These are often the ones that offer retail opportunities as well.
  8. Provide direction and accountability for your team members by setting daily goals and providing monthly rewards.
As you can see, there are loads of things you can do to revamp your business and get things moving in the right direction. Just one small improvement implemented each week in your salon could equate to thousands of additional dollars in your pocket each month. So, what are you waiting for? It’s time to get moving. You’re not a rock!

The Importance of Knowing Your Break-Even Point

The Importance of Knowing Your Break-Even Point

In any line of business, knowing your break-even point (BEP) is critical. Contrary to popular belief, it is not just essential knowledge for startups, but for all stages of business.

As a salon owner, this information is essential, as it will assist you in your day-to-day operations, as well as assessing opportunities that may come your way very quickly.

Have you ever wondered what your most profitable service is (It’s not always the most expensive)? Or how many new recurring clients you need to attract to hire another staff member/do those renovations? Knowing your BEP and monitoring it closely helps you keep your finger on the pulse of your business, without having to sit down and wade through reports every time.


What is a Break Even Point?

Google “Break Even Point” and you will find a lot of confusing information about complicated formulas for calculating the BEP, and different margins and ratios for assessing business research. This is because BEP is used by investors a lot, to assess the viability of a business prior to investing money or buying shares.

While fascinating reading for financial types, it can make a quite simple concept appear extremely confusing to small business owners (very common in my industry, and a HUGE bugbear of mine, but we will come back to that another time).

Simply put, your break even point takes into account ALL fixed and variable costs associated with providing your product/service, and calculates how many sales you need to make each day/week/month/year before you make a profit.


How is it calculated?

The formula for calculating your BEP is Sales = Fixed Costs + Variable Costs.

Sales is pretty obvious, the total amount of income received.

Fixed Costs refer to those costs that do not fluctuate depending on how many customers you have, and are therefore fixed.

Eg: Rent, Insurance, Electricity, etc.

Variable Costs include expenses that rise, the more customers you service.

Eg: Products, Consumables, Wages

Steps to calculate your BEP:

In this example, I will assume you are currently in business and have a month’s worth of financial data to look at and use for calculation. If you are in the planning or start-up stages, please feel free to contact me for specific information regarding projecting costs and sales.

You can also, for more accurate numbers, use an entire year’s worth of data, and then break down to the time period of your choice at the end. This is preferable, as the numbers will reflect seasonality, but can be more time-consuming.

If you have a good computerised accounting system, you should be able to find this information fairly quickly, if not, using your Profit & Loss Statement from your previous years’ financials will suffice. It is important to remember when running such calculations, the more up-to-date your data is, the more accurate outcome results.

1. Grab two pieces of paper, and write down all of your Fixed Costs on one, and all of your Variable Costs on another. Include a value for each which is comparable when thinking about time. (For example, if I pay electricity quarterly, but insurances monthly, I would need to break down the electricity costs by dividing it by 3).

2. Now, grab your appointment book, or run a report from your software for the same period, which shows total sales amount, and total customers serviced. If you use a book, simply count up how many appointments you have had over the past month.

Don’t be too concerned over differentiating between retail sales and service sales at this point, we can delve deeper into that area later. Using the steps outlined here will simply apportion the retail sales across your clients, which is usually pretty close to accurate anyway.

3. Divide the total Sales amount by the number of appointments. This will give you your Average Sale per Customer.

4. Total all of your Fixed and Variable costs for the same month, then divide by the Average Sale Per Customer amount.

5. This is the total amount of customers you need to service each month to break even.

Do I include my wages?

I see so many salon owners not including their own pay when completing a financial analysis of their business. More than any other industry, actually!

Remember, any reports or financial analysis of your business should show the realistic position of your business. Imagine you were looking to buy a salon, if the numbers showed a profit, but assumed you would work 40-50 hours for free each week, is it really a profit? Would you want to buy that business?


What now?

The above is a very simplified example of calculating your BEP, and should assist with getting your head around the number portion. Once we have this initial information, we can use it to assist in many ways. Calculating the FC and VC portion of each different service would be beneficial also, as then we can have a look at our most profitable services when deciding on marketing strategies and upselling.

It also helps to have a rough goal. If you know you need 60 appointments per month to break even, and midway through the month, you realise there has only been 20 so far, it can give us that little mental push needed to contact clients, put a facebook post up, or something else to stimulate bookings, rather than getting to the end of the month having done nothing.

Go to www.baspro.com.au/freeconsult to register for your free 30 minute phone consultation with April. As a special offer for SalonSavy friends, we are offering a 50% discount on BEP calculations. Have your calculations completed and receive a report on your salon for just $55.00.


About April

April's Bio Pic April Scott is Principal Director of BasPro, she is a qualified accounting professional, and practices as a BAS Agent, bookkeeper and software consultant.

She is passionate about assisting small business owners to simplify and automate the information flowing through their business to assist with compliance, and providing information to assist in achieving their business goals.

BasPro offers fixed fee affordable Bookkeeping, BAS, Payroll and Software packages. Find out more at www.baspro.com.au

Focusing on Your Salon or Spa Profit

Focusing on Your Salon or Spa Profit

Why is it that making a profit from your salon or spa is so elusive?

Is it because you don’t work long enough or hard enough?

Is it because you don’t have a passion for making others look and feel fantastic?

Or is it because you don’t deserve to be financially successful?

The response to all these questions is, of course, a resounding ‘NO”. As a salon owner, you probably work harder and longer than any of your team and are absolutely dedicated to your profession and clients.

In fact, if these were the only things that determined whether you were going to be profitable, then you’d be planning a fabulous Hawaiian holiday, instead of reading this article.

Making a profit goes beyond hard work, technical skills, passion and even dedication. It needs something more from you, and the great news is that you have what it takes to achieve it.

Basically, there are three things you need to change about the way you’re doing business:
1. First, you must bite the bullet, do the sums, and learn about which services offer your salon a worthwhile profit (and which ones don’t).
2. Second, you need to put all your focus on promoting and delivering these services in your salon.
3. And third, you have to change your mindset around receiving money for what you do.

Many salon owners struggle to determine which services they should specialise in, and so they end up drowning in a sea of zero or low-profit services – being busy but making no money. These services often take the same amount of time and skill to deliver but don’t return a decent profit to your salon.

But before you make the decision about which services your salon should specialise in, some knowledge is required.

Service Pricing

A no-compromise fact for greater profitability is that you must know for certain how much each service costs you to provide. No guesstimates permitted! Without this information, you can’t begin to define which services deserve your undivided attention, and which services are barely worth having on your service menu.

Unfortunately, not many salon owners go to the trouble of doing this, and that’s a big part of why making a profit seems to elude so many.

When asked, most of the salon owners I’ve spoken to tell me that they determine their service prices based on what their competitors are charging (sound familiar?). The problem with doing this is:

They have no idea as to whether or not their competitors are actually making a profit from their services.
• It doesn’t take into account the difference there may be in product costs, specialised skills and equipment required, general expenses or time taken to provide the service.

You can’t price your services this way and expect to know for sure what profit you’re going to have at the end of it. There’s always a good chance that your competitors have used the same pricing methodology, and so in the end, nobody really knows which services are making a profit for their salons and which ones aren’t.

Yet everybody is copying the pricing structure of the salon down the road!

Let me give you a great example of why it’s important to know how much a service is costing you to provide. I was recently working with a very experienced salon owner who was resistant to the idea of calculating the cost of her services. She didn’t think it was really necessary and felt that she had enough experience to determine fairly accurately what a service was going to cost to provide.

She was keen to introduce a new whizz-bang, top-of-the-range facial, had looked at other salons top facial prices around the area, and settled on a selling price of $139. This was a substantially higher price than the other facials she offered in her salon, and so she felt sure that it was going to make her some nice profit.

Before she got too excited about it all, I suggested we do a quick calculation on the basic cost of the proposed facial by looking only at the cost of the product, consumables (throw away items), and labour. It took only a few minutes to realize that the cost of this new facial was going to be around $124 due to the very expensive products it required, plus the ninety minute delivery time.

So, once we took out the GST component of her facial selling price, (because you don’t get to keep that bit), the actual selling price was only $126.36. This means a gross profit of $2.36 cents after we’ve deducted the basic cost of $124. And of course, the remaining $2.36 had to contribute to the cost of all the other expenses to keep the salon running.

Who’d have thought that a $139 facial treatment wasn’t even going to make a profit – and it happens far more often than you might think!

Now you may be saying to yourself, ‘There’s no way that I’m not making a profit on my services’, but how do you know for sure if you’ve never calculated the cost of the services you provide?

I won’t argue with that fact that it’s time-consuming and not much fun to sit down and work out the cost on every single service, but it’s also very necessary if you’re going to grow your profits.

No long-term successful business guesses its selling price based on what its competitors are offering up, and neither should you. First, you must know what it’s going to cost you to provide.

But that’s only one part of the formula, so let’s take a look at how your focus contributes to your success.


How to use focus to get what you want.

A quote from Star Wars, Episode 1, from Qui-Gon to Anakin, “Always remember, your focus determines your reality.

When you fully focus on becoming a more profitable business through increasing the sale of more profitable services, most of your future decisions will be based around achieving that outcome.

You’ll consider things such as:

  • The image of your business. Is your image telling prospective clients that you are a specialist in those profitable services, or are you sending mixed messages? As an example, a salon wishing to be known for its cutting-edge technology-based treatments needs to project a modern image rather than something like shabby chic, or country charm. The right first impression to prospective clients is critical if you want to been seen as a specialist in certain treatments.
  • The qualifications of the staff you employ. You may need team members with specific skills who can deliver your most profitable to the highest possible standard. If you want to build your business around these profitable services, you need team members who are qualified to deliver first-class treatments.
  • The marketing promotions you generate. Once you’re clear on which services you need to promote to make more profit, you will focus on promoting those services more effectively and more often.
  • Your product range. It’s important to align your product range to the most profitable services you intend to specialise in. The right products with the right mark-up equals better profits for your salon.
  • Your equipment purchases. When you’re clear about the services you need to promote, you’ll also be clear about the equipment you need (and don’t need) to deliver those services. Spending money on dust-collecting equipment that you seldom or never use will be a thing of the past.
  • The training you attend. Specialised services delivered at the highest standard will require on-going training to keep you at the top of your field. It pointless undergoing expensive training for services that don’t deliver a worthwhile profit. No more wasted days for training for your or your team members that won’t support your goals of making more profit.

Changing your money-mindset.

To become more profitable, you must first be comfortable with the idea of taking more money from your clients.

Many salon owners and their team members are uncomfortable with asking their clients to try a new product or service if it means asking for more money.

Perhaps they see themselves as being greedy or perhaps they feel that their clients can’t afford it, but in fact, that’s a decision that should be made by the client.

As a professional, it’s your job to recommend the services and products that will help your client achieve her goal, and it’s up to her whether or not she wants to purchase them.

It’s not your job to judge whether a client can afford a treatment or a product. It is your job to be able to deliver positive outcomes and let the client decide if she can afford it.

Making a profit is what allows you to stay in business, continue to deliver first class services to your clients, keep your team members in worthwhile employment, and make enough money for yourself to help your family enjoy a wonderful lifestyle.

You don’t have to be unscrupulous to make a great profit from your salon, you simply have to know your numbers and focus on the things that will return a profit in exchange for your hard work, ongoing education and determination to offer the best to your clients.

Say Goodbye to Service Discounts Forever in Your Salon or Spa

Say Goodbye to Service Discounts Forever in Your Salon or Spa

When business is a little slow, the first strategy many salon owners turn to is discounting their services.  While discounting may seem like a sure-fire way to get people into your salon, it could also be a sure-fire way of going broke.

As a business coach and mentor, I believe discounting is simply a substitute for good marketing.  Instead of helping the salon owner grow her business, it can instead lead a business into a downward spiral, where clients become no longer willing to pay full price for their services.

When you discount your services, the client believes that you can afford to do so and still make a profit.  They simply don’t believe that you would offer a service for less than it costs to deliver.

Also, once a client receives a discounted service, it’s almost impossible to get her to pay full price for that service again.  It no longer has the same value to her, and she’ll hang out until it comes back on special.

This is a lose-lose situation for both of you.

Something that many salon owners don’t realise is that with the high cost of the products and specialised equipment required to provide many of today’s up-to-the-minute treatments, there’s really not that big a profit margin to play around with.

Even a small discount on services may mean you’re providing your services at less than cost.

What’s the solution?

If you can’t discount your services, what do you offer to entice your clients into your salon?  Well, without a doubt you must learn how to effectively value-add.  This means always maintaining the integrity of your prices for your primary services, and offering extra value to your clients using your secondary services.


What are primary and secondary services?

Each salon will be a little different depending on their specialities.  Primary services are those that should be your big revenue earners.  For salons who’ve invested a lot of money in equipment, it would be the services provided using that equipment. 

If your salon is built around providing cutting edge facials, then you must never discount those facials, as these are your primary services.  Perhaps your clinic is all about body treatments, and if so, these treatments are your primary services.

Secondary services need to meet two main criteria.  They must be

  • inexpensive product -wise, and
  • quick to provide

And when it comes to using them for value-adding purposes, they must also meet a third criterion, and that is the client must appreciate their value.

If your salon is a little quiet, and you have more time available than money, this is the only way to offer a special or run a promotion.  It not only maintains the integrity of your important services but also gives your clients a little something extra to enjoy.


How to implement this marketing strategy.

Take a few minutes to identify and list your primary services, and then do the same for your secondary services.  Use the criteria provided earlier.

Once you’ve created your lists, use them when developing your special offer or promotion.  It will be much easier to create a profitable offer, and you’ll be able to provide something worthwhile to your clients while ensuring you won’t make a loss on your most important (primary) services.

Remember, your special offer should never be sold at less than the total value of all the primary services being offered.

Now you can forever say goodbye to discounting your salon services.