Work smarter not harder

[Sassy Hassy]

When I first started as a Nail tech 5 years ago the competition was low and we could charge a fair price for our art. Now it seems that everyone is undercutting each other to the detriment of the industry. There have been many many threads recently on peopke not knowing how much to charge, and it just seems that prices are getting lower and lower.

I'm not sure whether this price cutting is due to a lowering of skills and quality of work, or whether it is down to poor business acumen where people pluck a figure out of the air and think they can get business by being cheap.

Firstly to set your prices you have to cover your overheads. You can only do this if you know what your overheads are - cost of product, lighting, heating, rent, travel costs etc etc. I estimate my costs in my business plan for the following year. The annual total I divide by 48 for the weeks of the year I work (well I actually work 50, but never mind, my boss is a slave driver!), I then divide it again by 35 to give me my hourly total for overheads. I then decide how much I want to earn per hour and add this to the overheads figure. Then I calculate how long each treatment takes and that gives me a realistic figure to start from, I may actually add onto this figure if I feel a service has added value, but I defintely won't reduce it.


What I DON'T do is go round and get everyone elses prices and make sure I'm cheaper than the rest. I value my work too much. I may do special offers from time to time, but my main prices always stay at the top end of the pricing scale.

Secondly, I feel that if I offer a top quality service, using top quality products in top quality surroundings then I can charge a premium. I get clients that are more loyal because they value quality. Think about it, if you charge on the lower end of the scale then you will attract clients that want cheap. They don't take care of your work, they'll jump ship as soon as the next cheap merchant comes along, and they don't buy retail. You have to work three times as hard to earn the same as someone who charges double your rate, you have to pay more for advertising to try and gain new clients to your ever changing client base, which in turn is increasing your overheads further and making you even less profitable.

So, when you are thinking about your pricing structure, think smart because if you don't you'll end up working three times as hard as those of us who do!

 

[Jeni Giles]

Well said!!!! People will pay for quality, and loyalty. Those who bargain shop jump around and around, and will only come in for coupons, specials or discounts.

I'm in a school, and while are prices are a little cheaper, they are comparative to some of the salons in our area, because we have to cover overhead, and my students are worth something too. We charge what the market will bear, and for the value of the knowledge and expertise involved in the service.

Don't sell yourself short to build a clientele, offer other promotions or incentives instead of discounts. Refer 3 get one free works very well for us, if a client hands out cards to their friends and we get 3 of those cards with their name on it back, they get a free service. (usually manicure, cut or style, their choice) the 3 new clients cover the cost of the overhead for the "free" service and we have another opportunity to advertise.

 

[nemotail]

Thank you Sassy, I understand and agree completely with what you are saying. I have found the hard way that people do not value your work if you are not charging for it.

I personally am battling with a business plan at the moment and its driving me nuts! The main problem I have is that because I am new to this how do I work out the cost of product for each service? I havent done enough practice clients to know how many treatments I get per product so how do I work it out? I am struggling with the guess work of estimating how many treatments I will do in the next year.
I would really appreciate words of wisdom or pointers from anyone.
MTIA KxXx

 

[Sassy Hassy]

Your product supplier should be able to tell you what the average cost per service is. The way I calculated it for the year was to try and guess how many clients I would have each week - based on clients coming and going and repeat infill business. I think it was something like a new client each week, but one leaving every 6 weeks. Say £4 a set, and £2 for infills

So week one - 1 new client A£4
week two -1 new client B£4
week 3 - 1 new client C, Infill client A £6
week 4 - I new client D, Client B Infills £6
week 5 - 1 new client E, 2 x infills client A and C £8
week 6 - 1 new client F (client A leaves). 2 infills client B and D £8
week 7 - 1 new client G . 2 infills E and C £8
week 8 - 1 new client H, 3 infills B,D E £10
week 9 - I new client I, 3 infills C, E, G £10
week 10 - 1 new client J, 4 infills, B.D.F, H £10

and so on, so a gradual increase in clients. I did it on a spread sheet so it calculated itself. At busy times like Christmas I would add in a lot more new clients, and at quiet times like November I'd reduce new clients.

If you don't have something to aim for then you don't know if you need to push harder to get your client base going better, or can sit and gloat how over budget you are!

I hope that helps and I hope it amkes sense.

 

[Jeni Giles]

The main problem I have is that because I am new to this how do I work out the cost of product for each service? I havent done enough practice clients to know how many treatments I get per product so how do I work it out? I am struggling with the guess work of estimating how many treatments I will do in the next year.

MTIA KxXx

Your manufacturer usually has an estimate of the number of uses per kit. Example if you bought the CND Raw Earth kit for $79.00 (usa it's on deal for us this month) it tells you you should have about 25 applications per package so rough cost is $3.16 for product, and I have to buy towels, electricity, water, cotton, files and other supplies. (our daily overhead in this building is $400 dollars per day, that is the mortgage) it takes about 1 to 1/2 hours and I like to make a living wage, so for my time I would need about $10.00. Our pedicure price is $25.00.

It takes a while to figure out how much you will do, so keep close count on how much you do. Like Sassy pointed out, figure what your regular monthly bills (gas, electric, water, phone, rent...the things that don't change) are and figure out how much you must make per day to cover those costs. Then add your product cost and salary to that number. That is what you must charge to make a living. If you have a service you really excell at, charge what you are worth!!!

If you are really struggling, call some of the salons in your area that have been around for a while, and are still building their businesses, gather a few prices and compare it to what you came up with. They should be similar. If they are higher, take a look at your numbers again and see where you may have shorted yourself.

The hardest part for most of us is giving things away, we are such nice people we give our talents, products and ideas to anyone with a sob story. Don't judge a pocketbook by the cover, you never know whats really inside!! Make sure you know what you and your skills are worth, the amount of time and money you spend on education and practice and charge accordingly.

Don't mean to sound preachy, and not meaning to offend anyone, but dang it, I know some of us are worth a whole lot more than what we charge, and sometimes we would pay our clients to come in because we love what we do so much, but that just doesn't pay the bills!!! The price of our services has to.

 

[ZOE!]

Sassy you make it look so easy. Thats probably because it is right? I have no idea how to work things out either! I feel totally unorganised and dont know how much i make in a week etc. Is there anyone who can help you on this kind of thing?

 

[Sassy Hassy]

I don't know hun, I'm lucky because my background is business devlopment so I'm used to preparing budgets, business plans, marketing etc. I also worked in a nail salon for a year so I had an idea of the busy and quiet times, and the flow through of traffic from advertising and walk ins and referrals.

I think the Business Link is a good starting point, although I have to say the bloke I saw was crap. There are a lot of good software packages that help you build a business plan etc. Is there a course at your college? Have you tried your Business Advisor at your bank?

It's not easy and I hate February when I have to forecast for the next financial year, and try and set my goals. But if you don't have a budget forecast then how do you know if you are doing well or not?

 

[nemotail]

Fab advice - This thread has helped me loads and I actually feel like I can do this Business Plan now. I have made a wee spreadsheet like you suggested Sassy and its made life so much easier. I just couldnt get my head round it but I can see the light its still quite a long way off but its there!
Thank you
KxXx

 

[ZOE!]

Im going to sit down and get it sorted it too, that way i will know what i am doing and i will feel alot more organised. Cheers sassy!x