Could Demand Based Pricing Work In Hairdressing?
Pricing, in the hairdressing industry, causes a lot of anxiety.
Our recent blog about how to charge your worth addresses this in much greater detail.
At HEIR education there isn’t a day that goes by that we don’t use the phrase ‘make sure you charge profitably’
This is something we are passionate about, and truly believe it’s time to raise and discuss this issue to help create awareness of a big problem in our industry.
When writing the ‘Charge Your Worth’ blog, we got thinking about other industries and their pricing strategies.
One industry in particular that has peaked our interest is the airline industry.
The airline industry price On demand or demand oriented pricing strategy.
This means that, although the business costs are exactly the same, during peak times their prices are raised based on the demand they face.
E.g. A flight from Manchester to Majorca will cost much less in March then it would in August.
In March, it’s likely that there are less flights running, and perhaps the flights aren’t full.
In August, Majorca is a popular holiday destination for families, couples and groups of friends wishing to get away during school holidays or perhaps just when the good weather is guaranteed.
The airlines are likely to run more flights during this time and might even be fully booked on every flight, but, their costs haven’t gone up… there is the same amount of fuel on the plane, the same amount of staff, there are no ‘extras’ or added value if you fly in August.
Simply more demand.
Airlines use a carefully generated algorithm within their technology that determines the price for each flight based on the demand for it.
The first flights sold typically will be the highest in price but to make sure all seats are bought they might use a ‘price skimming’ tactic and reduce the price closer to the date of departure.
The reason this pricing strategy works is simple! Demand!
So, our question is this, could demand based pricing work in hairdressing?
There are certainly times in the year that hairdressers are more ‘in demand’ so why shouldn’t we profit on this like other industries do?
At Christmas time we could “pre sell” our appointments on a first come first serve basis, could we also add an extra cost to these appointments because they are always in demand.
A stylist who is fully booked all the time and has a waiting list of clients could easily charge more because of the demand they are in. So, why don’t we commonly use this pricing strategy in our industry?
In our opinion we are too quick and eager to discount our quieter times rather than profit during our busier times.
We often see discount led pricing strategies during quiet times, but, if you attract a discount led customer into your business how on earth can you convert them to be a long lasting full paying client in the future?
You certainly don’t see airlines doing this!
In fact, what airlines actually do is have a short ‘sale’ but in actual fact, these are not sale or discounted prices, these are skimmed prices based on demand.
These are the flights that haven’t been popular and they are selling them at the standard rate.
Airlines won’t make a loss just to get ‘bums on seats’ but this is a tactic we hairdressers seem to use all the time.
Why don’t we choose to price on demand?
Why do hairdressers struggle with pricing?
We believe this struggle is real! When we learn our craft we are never ever taught how to turn this craft into a profitable business, we pluck our prices out of thin air with no strategy in place and then work ourselves into burnout and happily wear our burnout as a badge of honour.
Because this is never taught to us, when our prices are in place, we then opt to discount them to increase demand during quieter times and quite often this can lead to the business making a loss.
Like the airlines, if our ‘sale’ prices were just our normal profitable prices, then we would never make a loss again.
Implementing such a pricing structure would require a change in mindset, it would require zero anxiety in regards to pricing and with hairdressers being customer facing, we would need to be able to answer the inevitable questions from our clients of ‘why does the price change every time’ and because of this, we don’t price on demand.
If there is one thing that we want you to take away from reading this blog though….
Don’t put your prices on ‘sale’ to increase demand. Discounting your prices is attracting the wrong type of client into your business and will cause you to make a loss. It will also be very difficult to ever charge profitably again!
To find out if you’re prices are causing your business a loss then be sure to check out ‘charge your worth’
Do you have any thoughts on charging on demand in hairdressing? We would love to hear from you, please feel free to comment below!