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!