$4 Gas, Milk, Eggs, Bread, and Lattes
When I was at MSU back in the fun 70’s, one of the things I looked forward to was Friday Happy Hour. Pitchers were half a buck and manhattans were a buck. Dancing was free and it was a good time for all.
Today, $4 seems to be the magic number and while consumer spending zipped at a healthy rate of .6% in the month of May, consumer confidence sunk to a record low.
Yes, consumers are still spending but prices are getting scary. Dow Chemical just announced another 25% price increase. What this means is that the chemicals used in salons are going up 25% and that means higher prices. In fact, we have seen a record number of increases this year and the increases will only keep on coming.
Starbuck’s has come to grips that its customers who bought Lattes daily are now buying them once a week. Everyone is experiencing sticker shock at the gas pump.
So the question as a salon owner, hairdresser, nail tech or spa professional is how do you respond to higher prices?
One camp says that their clients can’t afford to pay more so they keep the prices the same. Another camp says that their costs are up 5-6%, so they are raising their prices 5-6%. Others say that if they raise their prices, their tips will shrink so they are no further ahead.
Beer is $7 at Comerica Park and people are waiting in line. People wait in line to buy $300 bottles of Grey Goose at the MGM night club. So the final camp says that if my services are the best, then my clients will pay more when I can justify the increase.
UPS just increased their surcharge to us another 1% to 9.5%. We have held our surcharge to $1.00 but it’s only a matter of time that we have to increase it again. My thoughts to you: If you charge $30 for a cut, go to $31-$32. If you charge $15 for a manicure, go to $16. In the days of $4 gas, your clients will understand.
Let me know your thoughts as we are in unprecedented times. Good luck!
June 26th, 2008 at 8:17 am
This relates to your blog on the 24th, build retail sales to help alleviate the pain of slower times. I agree, raising your prices $1, here and there, will help tremendously and should not really have an adverse effect on the clients but building your retail sales will definitely help put your business back on top!
June 26th, 2008 at 8:55 am
People wait in line for $7 beer and $300 Grey Goose because it makes them feel good. Spending money to have a good time is a temporary high that helps to momentarily escape from the reality that some of us spend more than 1/4 of our montly earnings at the gas pump. Sure, it doesn’t make anything better…. it actually makes things worse. But during that baseball game with that $7 beer in your hand, you don’t care. I was once told that even during the great depression, people still went to the salon…. because it made them feel better.
June 26th, 2008 at 10:00 am
The company my husband works for has refused to increase their prices.
This is a delivery company who’s drivers are subcontractors.The company has decided that it will just bid the same and let the drivers suffer the losses. My husband who has to manage these drivers has had a difficult time because the employees are unhappy.Quality of service is suffering because drivers are quitting or cherry picking jobs and not calling in on the lowest paid jobs. Needless to say it has my husband thinking of leaving. He agrees with raising the prices and has spoken his mind at the meetings, but so far it has fallen on deaf ears.
June 26th, 2008 at 10:22 am
Unfortunately these are days of trickle down economics. Large corporations have to increase there prices which is passed on to there customers which in turn pass it on to there customers and so on down to the average consumer like me. I feel sorry for the companies that are not increaseing prices. I can’t see how they would think that prices will drop. History dictates that prices always increase over time. Everything is on the rise. I was told buy my local party store owner that even beer is going up in price this next week due to the high cost of wheat, rice, and other staple crops. So what it comes down to is you keep up with the big boys or you get left on the side of the road. We are in business to make money not lose it. It hurts people like us but all I can say is my belt has just tightened up another notch. Hopefully it has another hole after this one!
June 26th, 2008 at 10:27 am
You have too increase the prices. Clients come to you because your service is the best and almost everyone understands the increases in our living costs. If you dont increase your prices, at the end of the day, every customer that you have given an excellent service to is very happy. I only that is not is YOU, because you making less money, that’s the bottom line.
As far as the $7 beer, have a tailgate before the game with a 12 pack, it will save you $100. The Grey Goose might be a difficult one to turn down.
June 26th, 2008 at 11:32 am
It hurts but you have to increase your prices.
But what really hurts is that customers paychecks are not increasing to cover. They are the same or in some cases there less.
June 26th, 2008 at 2:37 pm
We pay for things that are not mandatory, but make us feel better. No one really NEEDS to get their hair, nails or body made over. We do it because we WANT to. Everyone has a vice…if spending money on color, cut, nails, beer, ect…makes you feel better, then the money is well spent.
June 26th, 2008 at 3:14 pm
I would pay the higer prices as long as the quality of the hair cut is still there and I get the same emotional need filled by paying the higher price.
I however, have cut back on anything that falls short on my emotional connection value. That is what we have learned we purchase by emotion but the increased prices are making me question my emotional purchases, so that is the real question, what is your emotional attachment to what you are willing to pay.
June 27th, 2008 at 10:10 am
Can someone tell me why consumers are hit hard with increases for just about everything?..But yet our salaries remain the same?..
August 1st, 2008 at 6:15 am
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November 12th, 2008 at 11:24 pm
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