Is it time to increase your prices?
Money is not the motivator for a majority of estheticians. Our success and fulfillment comes from helping our clients. But we need to put food on the table, make our car payment like everyone else.
As estheticians reopen their practices with renewed sanitation measures causing an increase in operating costs along with the ability to see fewer clients in a day due to the time required to sanitize after each appointment, its time to increase the price of services. Let’s do some work to see your costs versus your income and then review your options to increase your revenue.
We’ve had hits with increased expenses in the cost of PPE. Non-sterile gloves, masks, disinfectant expenses have increased by 20-25%. You may have additional fees due to the need to minimize handling of payment and scheduling. You’ve lost drop-in traffic. Your retail display has been eliminated and client impulse buying is limited.
Let’s do a little math and find out where you’re at and then let’s calculate an increase. Add up your monthly expenses. Include your location rent, your supplies, your insurance, your equipment, estimated taxes and every other expense you have to run your business. Divide that by the number of days you are open in a month. This gives you your daily operating costs.
Break it down even further by dividing it into the number of hours you are open. You now have your hourly cost to keep your doors open. Next add up your revenue from both services and retail. Divide that by the number of days you are open in a month. This number is your daily revenue. You can divide that into the number of hours you are open and get an hourly revenue. Subtract your expenses from your gross revenue.
MONTHLY REVENUE = AVERAGE DAILY REVENUE x DAYS OPEN THIS MONTH
Do you know the revenue rate for every treatment you provide? Take the cost of your service and divide it by the amount of time it takes to perform. Multiply that number by 60. Now you have the profitability of each service. You know which services give you the largest profit.
Where are you? If you are like most of us, those profit numbers need to be higher. These are personal decisions about how much you believe your expertise is worth.
TIME TO INCREASE YOUR PRICES
Many clients budget for our services and it is a kindness to communicate your price increases. Determine your increase, whether it is an increase of a percentage across the board for all services or an increase of a specific amount for only a few services. Communicate on your website and in all of your social media postings that on a specific date your service prices are increasing. Encourage clients to prepurchase some services at your existing prices before the increase. You don’t have to give long explanations.
Many of us struggle with increasing our prices. We offer such intimate services and develop personal relationships with our clients. We fear that we will lose business. There is a risk but the clients you lose because of price are not your long term loyal clients. Your loyal clients will recognize your worth.