Haircut PricingHair

Once people know that I am a salon owner they frequently ask me about pricing and why prices vary so widely. Except for the occasional salon that simply pulls a number out of thin air, most salons base their pricing on a combination of three factors; overhead, market, and supply and demand.
1. Overhead. Overhead is a complex formula that includes such things as the amount of rent the salon pays. Once the overhead is calculated a break-even point is determined and based on that, the prices for that individual salon are determined.
For example, my lease is $1,135. per month, but a salon in Manhattan may pay $10,000. per month for that same amount of space. Obviously the Manhattan salon will need to charge a great deal more per haircut than I do. On the other hand, in my salon we spend a small fortune every year on advanced training. This expense too needs to be recovered, and it is recovered in the price of the haircut.
2. Market. Going back to our Manhattan example, clients who regularly shop in Manhattan will not flinch at paying $175.00 for a haircut, whereas a salon in Kentucky will cause people to pause at a price of $40.00.
Ironically, the Kentucky stylist may have a great deal more talent than the Manhattan stylist, but the market will simply not allow that stylist to charge more and still remain in business.
3. Supply and Demand. Then there is supply and demand. A given salon may well be in a break-even position to offer haircuts at $20.00, but as they are booked solid and need to create openings for new clients, good business sense dictates that this salon needs to raise prices and to continue to do so until they top out in their market.
This is the same principle that dictates why haircut prices vary by stylist, even in a given salon. As the stylist books up, he or she needs to raise their price to make room for new clients, and the most successful stylist in a salon is not always the technically best, just the most popular.
You notice that I continually refer to new clients. This is because new client counts drive and grow the business. Salons that do not track new client counts, and drive new client counts, will eventually go flat and their earnings will then taper off until they can no longer meet their monthly overhead. It is a slow but sure death.
4. What about those discount cutters who only charge $9.95? The same principles apply. It is a matter of how you want to conduct business. These salons usually have far less overhead. The decor is minimal, you probably won't be served Starbucks coffee, and so on.

Gate.com Web Hosting Banner

Consider this, both Motel 6 and the Ritz will offer you a dry, clean, bed, but it will not be at the same price for obvious reasons. It isn't the bed that makes the difference, its the ambiance and service around the bed.
Your better trained staff will also want to be paid more and I am guessing that the paycheck of the night clerk at Motel 6 is substantially less than that of the front desk at the Ritz.
That is not to say that you can't get a terrific haircut at a discounter, or even the best in your market, it just isn't likely. I know some terrific stylists who work for Cost Cutters, and they will remain there for life for different reasons, but that is more the exception than the rule. On the other hand, if you can find one of those jewels it only makes sense to save money.
5.As to those salons that simply grab a price out of thin air? Typically they are owned by a business wanna-be who because they have a cosmetology license, think that all they have to do is hammer up a shingle and business will flock to their door.
This practice is not unique to the salon industry, these businesses are however, the scourge of their individual industry and place an undesirable stigma upon all small businesses. A good indicator that you are heading for such a salon is if they try to have a "cute" name such as, "Curl Up And Dye", or "Chop Shop".
I hope this gave you some insight into salon pricing, and in so doing will enable you to make a fair buying decision.