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Thriving Stylist Podcast
#386 - 7 Pricing Models For Hair Stylists....
00:26:24
Ever feel like you're throwing darts at a pricing board blindfolded? We need to have a bigger conversation about all the pricing models that are out there, because some of these pricing models or methods can deeply affect your business, for better or...
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Do you feel like you were meant to have a kick ass career as a hairstylist? Like you got into this industry to make big things happen? Maybe you're struggling to build a solid base and want some stability. Maybe, you know social media is important, but it feels like a waste of time because you aren't seeing any results. Maybe you've already had some amazing success.
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But are craving more. Maybe you're ready to truly enjoy the.
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Freedom and flexibility this industry has to offer. Cutting and coloring skills will only get you so far, but to build a lifelong career as a wealthy stylist, it takes business skills and a serious marketing strategy. When you're ready to quit just working in your business and start working on it, join us here where we share real success stories from real stylists. I'm Brit Siva, social media and marketing strategist just for hairstylists and this is the Thriving Stylist Podcast.
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What is up? And welcome back to the Thriving Stylist Podcast. I'm your hostess, Brit Siva and today we're talking about the seven pricing models for hairstylists. That number actually blew my mind. So if it blows yours too, we're in good company. I've done, I don't know, there's probably six to eight podcast episodes on this show dedicated to pricing and we talk about how I suggest doing pricing all the pricing models that they're out there. My concerns about pricing and how it relates to the economy, pricing mistakes. If you just go to Google and do a simple Google search of thriving Salus podcast pricing or thriving sales podcast pricing mistakes or thriving sales podcast pricing methods, they'll all come up. So we've talked about pricing a lot. What I noticed is I'm recording this spring of 2025. What I noticed is people are starting to get very creative with pricing and creative pricing is fragile pricing. Our industry is actually fairly data driven when it comes to what actually works and as it comes to pricing and market position. And so a few weeks back I was like, you know what I want to do? I just want to do like an exploratory podcast that really looks at big picture, looking at small business. What are the pricing options? What really blew my mind is there was like 12 to 15 pricing models that exist and I didn't understand how there could be 12 to 15 different ways to price whatever. And then as I was reading the descriptions, I was like, oh my gosh, like I've experienced all, all of these. And it took me weeks to research this episode because what it made Me realize is we as consumers are getting involved in these pricing mechanisms, pricing formats, I think often without even realizing it. But what hit me as I was going through all of the dozen or so different pricing methods is some of them I like and some of them give me a bad taste in my mouth and some of them I like. But I only like in certain scenarios, right? Like when I'm having some kind of experience. Maybe I only like it when I'm buying a physical good, but I think it's really icky when it's service based or vice versa. And of course, all of that is opinion and biased based. What it made me realize is we need to have a bigger conversation about all of the different pricing models out there. So that when you are sitting in a classroom somewhere months from now and and some educator says something about pricing, that there's a little ping in the back of your brain that says, wait a minute, what was that thing? I heard about this pricing method before, and that's my goal of this episode, is to give you almost like a subliminal foundation around how pricing advice and pricing strategy and pricing method can deeply impact your business for better or for worse. And so that you never are in a situation where somebody poses a trendy or innovative pricing concept that sounds really good on paper, so much so that you pull a trigger and that pricing model or that pricing method actually detours your growth. So my hope is we get kind of a foundational skillset going today and I'm going to run through all seven of these different pricing models. There's only one that I have a really strong preference for, and when I get to it, it's going to be obvious why. But the other six I just really want to share informationally and based on what I kind of put out there, my hope is that you'll listen as I speak and think to yourself, okay, based on what Brit's saying, is this a good fit for me or is this not just kind of an opportunity to explore the pricing world and see what works for you? So let's go into pricing model number one, which economists at call results based pricing. I'm actually going to call it session based. So in our industry there's more like three or four very prominent pricing methods and models. And when I say that, I'm pretty much talking about hourly, a la carte, session based and hybrid. I think those four are the most dominant pricing methods and models, although all seven of these are represented and you'll see them as I talk through. But when I looked up the way that economists describe results based pricing, I think it's what we call session based where it's like, okay, Kelly, you want to be as blonde as you can be at the end of this visit, that's going to be $500. And it's kind of like a session. And when you do proper session based, it's whatever needs to be done in the time that's been booked, cost X, that's it. So if the stylist decides they need to do a K18 treatment or an Olaplex treatment or some some other kind of additional, you need to have three different toners. Whatever needs to happen to get to the promised result is a flat fee. That's basically results based pricing. Now when I coach to more of a results based pricing model, for me that's going to be a stylist who's serving more of a luxury market. I understand that it's simple. I think that it's very clean. It's also not something that would work in the majority of markets. It's something that works exceptionally well in a small amount of markets. And for some of you, this could be a game changer. And for some of you, it would be absolutely devastating. But I want to kind of explain how it works and what it looks like. So this is a quote that I picked up when doing my research. Results based pricing, also commonly known as project based pricing, is a method that determines prices based on the scope of complexity and resources required for the project to be finished to completion. Rather than charging a fixed or hourly rate or a piece rate, a company or practitioner would assess the unique needs of each project and provide a specific quote. This way, the business is accounting for factors like resources, expertise, time commitment required to complete the project successfully. This model fails when the practitioner doesn't have a good grip on their cost of doing business or their speed. And this is where people can get into trouble is what I've seen happen before is stylists will be like, well, I'm session based, but if I run long, it's extra. No, if you run long, it's your problem. It's like, has anybody ever done a home renovation? We had a terrible situation that happened in the middle of a pandemic where our upstairs bathroom sprung a leak under the shower and started leaking into our kitchen. It destroyed a bunch of our lighting. It was horrible. And we had to find a contractor to fix this unexpected issue that we didn't want to have. And our contractor underbid himself and had to do a bunch of Work for free. So sometimes you've been in a situation where a contractor will say like, oh yeah, sorry, it's gonna be 10% more or 15% more based on the contract we signed with this guy. He didn't have that option and so he unfortunately screwed himself. But we as the custom did not have to pay more. So in true results based pricing, the result that we had asked for was for the ceiling of our kitchen to be repaired and all of the electric to work again. He said, I can do that for X amount of dollars. That was our agreement. So when things went sideways, not our problem, his problem. That's true results based pricing. Where I see a lot of stylists get themselves into hot water and have nasty tiktoks made about them is they try and do something simple like this, but then they also have like add ons or but what ifs or whatever. In true results based pricing, that's it. Whoever is quoting the price, promising the result, has to have such a good grip on what happens in their business that the price is what the price is. That's why I say that model works great for luxury stylists. Usually when they've gotten to that place where they've built that very specific niche and they know exactly what they're doing and they're all dialed in, they can pull this off. Up until that point, often they can't. Now when I say luxury stylist, that doesn't just mean our salon is fancy. We charge a lot. I talk about four different market positions. I talk about economy, premium, economy premium and luxury. We have a lot of trainings for that too. Luxury is different than our salon is pretty and we charge a lot. Luxury is something else. It has a whole bunch of other factors that determine if you can actually pull that off. If you know the four different market positions as I coach to them, and you know you're in the luxury category, that could be good for you. Then we have bundle pricing. Bundle pricing is something I think a lot of stylists fall into by accident. Have you ever seen those progressive insurance commercials? And they talk about like bundle and save. And by bundle and save they mean if an insurance company insures your car, your house and your renters insurance. I don't know, I don't know. You're insuring multiple things with them, an umbrella policy or whatever. The more policies you have, you get to save 10 or 15% off every single policy. So the more you invest with them, the bigger percentage they'll take off. However, at the end of the day you're still paying them more. Right. Because you're getting more services with them, but they're discounting the cost. So if your car insurance was $100 before, as soon as you add on your home insurance, well, now they're gonna knock your car insurance down to 80 bucks because you're adding on this additional, you know, $200 a month policy over here for your house or whatever it is, that's bundle and save. Some of you have done that by mistake and you don't even realize it. And what's happened is somebody will come in and get, let's say that your haircut, standalone haircut's 50 bucks. Your standalone root touch up is a hundred dollars. Yet when somebody comes in and gets a cut in color, it's 135 bucks. Like somewhere down the line we lose $15 and we kind of don't know why it happened. That's an accident. That's very dangerous. That's one of the places that stylists bleed out unknowingly. So if you have those built in discounts that you didn't intentionally put into place, and by the way, we should never have discounts like that. Bundled pricing is unnecessary and it costs you to lose when you don't need to be. So one of the first things we do when you join Thrivers is we unbundle. It's actually step number one. But bundled pricing is still very prevalent. It's not highly marketable and there's not data to show that stylists who bundle make more or grow faster. So I would get rid of the bundling if you have anything bundled right now. Okay. Another really common model is called the competitive pricing model. In some industries it works. In ours it does not work. And this is so common. Competitive pricing is looking to your left, looking to your right, seeing what the people you see as competitors are pricing themselves at and then putting yourself emotionally somewhere in that mix. Like, well, Sally looks a little bit fancier than I do and I'm definitely fancier than Joe. So I'm going to put myself somewhere in the middle. What if Sally and Joe both have failing businesses and then you've based your pricing based on what the two of them are doing and they don't know what they're doing. So I call competitive pricing blind leading the blind. When I coach you through pricing, I don't care at all about what your competitors are doing. There's no point in the process where I'm like, and then let's do a little research, like that doesn't happen. It's not necessary in our specific industry. Now, when if we were releasing a smartphone together, like, we're in the tech space. Yeah, of course we have to look around at what other tech phones are going for and look at what our feature are have that theirs don't. But that's a totally different market. So I don't like competitive pricing in our industry either. I would scrap it. If your prices are based on what the salon down the street is up to now of all times, is a chance to get a grip on that. Then there's hourly pricing. And hourly pricing is common. Like in the automotive industry. Right. Parts and labor. We are very familiar with the idea of parts and labor. Parts and labor is kind of the same as, like, hourly pricing. It's like if you were to use a system like a salon scale and then do an hourly rate, it's like a parts and labor thing. I think that there are some stylists in some salons who can pull off hourly pricing. Personally, when I track the success of the model, at least with those I work with, it's the minority, not a majority. And again, it's something that would be earned over time. For a stylist who has already developed a specialty and has really dialed in what they do and how they do it, and their marketing is exceptional. It's not for somebody who doesn't already have a grip on their demand, it can be very detrimental. I want you to think about how you feel when you go to the mechanic and they say, well, okay, so you need a new transmission. The transmission's $4,000, but with labor, we're actually looking at more like $9,000. Often it's the labor that makes us pretty bitter. If you've ever done. I'm using mechanics because I think it's the most tangible and common. We're all gonna work with a mechanic at some point in our lives. And then you go on and you start googling like, okay, what would it cost to replace the transmission? On my Subaru, we had to replace my daughter's transmission. Oh, my gosh. We cried. We cried. It was so hard and expensive. So you look at how much the transmission costs, and it's one thing. And then you layer in the labor, and you're like, man, I should learn how to do this myself. Because the labor is so expensive. Generally speaking, the bitterness is around the labor. And if you look at when people complain about hourly pricing, they say things like, well, my stylist puts the color on, and then she Walks away and does somebody else, but I'm paying for her time. What happens?
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There's.
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There becomes this very big emotional attachment to your time. How you spend your time. If you're spending your time away from the client or on your phone texting, or you. You step outside or you're eating a lunch or you run too long or. Or you better hurry up because this is the cost of my time. It starts to become. Your time is seen as this asset in the eyes of a client that starts to become a little bit dangerous. Your efficiency is really, really important. So if you're somebody who doesn't have a strong grip on your time, suddenly, if in the eyes of the client, the appointment is taking too long now you're ripping them off. Not only are you slow, you are draining their pocketbook. I actually have a little personal story about hourly pricing. So a friend of mine reached out to me a couple months back and was like, hey, is there any way that Emily, my daughter, could start doing my hair? I don't do hair, but all of my friends know that my daughter does, right? So is there any way she could do my hair? And I said, I don't know, I can ask her, but what's going on? And she was like, well, I've been seeing a stylist for a while and she's just too slow. And I was like, oh, I know that's frustrating that this is a mom and she has two young boys and she just. She can't spend the time. And I'm like, oh, man, how long does it take? She's like, it takes like three and a half, four hours to get my color done. And part of me was like, well, it probably just takes that long, but whatever, I totally get it. And I was like, yeah, yeah, no worries. So my daughter Emily agreed to do her hair, and she sat in Emily's chair. Emily did a great job. It took three and a half hours. Like, that's just. She's a complex blonde, and that's just how long it takes to get her to the desired result. Do I think Emily maybe over time could get it down to more like three? Maybe. But it's not going to be a 90 minute service. Like, that doesn't exist. So this friend of mine is sitting and Emily's doing her hair, and we're talking more. I'm like, what the heck happened with your stylist? She's like, I don't know, but it's like I'm paying her by the hour and she's taking Four hours. And it was very interesting to me that the very first thing she said, it was not about the results, it was not about get the guest experience. The very first complaint she had when I sat down with her in person and said, what's going on with your stylist? She said she charges by the hour. It takes a long time. The it takes a long time thing seems to be a more recent challenge that clients are having. I do think we're living in a time where speed and how we spend our time does carry a lot more value. That's definitely one of the things that came out of the pandemic is I think for a lot of us, we're like, where am I spending my time? Am I happy with how I'm spending my time? Time carries such a value and I think that there can be a bit of an emotional attachment when you do the hourly pricing that can just work against you. Now, there's also a simplic to it and I think that a lot of stylists really enjoy that simplicity. And heck, there's some clients who enjoy that simplicity. In thriving Stylist, we have an option for hourly pricing. Again, it's something that's earned. The communication around it is exceptionally clear. It's not for everybody. It's for stylists who do a very limited book of services and have a very dialed in structured set of timing. So while it does work, I don't think it's a catch all. I think a lot of times we love it because of the simplicity, but sometimes the simplicity can work against you. And the whole parts and labor thing has a context that we can't ignore. So it's just something to give a little bit more thought to. Now. There's an emerging pricing trend that I'm seeing in our industry right now and I think it's happening right now because we've been in a recession for a couple of years that nobody was really talking about. Inflation has gone up, we're worried about tariffs. It just feels like we're in this crunch. We've been doing this financial marathon for a while. Demand for salons is going down because the economy is waning and clients are looking for stylists to be more worth it. And there's this shift in marketing and often when there's a shift in marketing, the first thing we do is we go to the pricing. For some reason we're like off. My prices were better, which I strongly disagree with. I don't think that for stylists who are seeing a Decrease in demand. Right now, I think less than 5% of you need to focus on price. I think some people do. I think very few. I think most are kind of looking in the wrong direction. But often when we're starting to feel panicked about our growth, we do look to pricing. And this cost based model is really sexy right now because it goes something like this. You look at the expenses associated with running your business, producing, delivering, executing. So for a lot of you, it's cost of color, rent that you're paying on your space combs, education, cost of yourself. Like, you're looking at your overhead to run your business, okay? And then you're looking at the cost to live your life. And you're like, okay, this business cost me, you know, $2,000 a month to run. And then my family and my personal life, I need another four grand. So somehow I gotta cover that 2000 plus this four grand over here and I bring them together and it's $6,000. And so now I need to create a pricing model that produces $6,000 a month. No, no, unfortunately that's not how it works. And here's the reason why. What if you decide you want to rent the fanciest suite that you can find? And so the cost of running your business is now $4,000 a month because you liked this fancy suite, okay? You just loved it. There was no other reason. It was great. It had windows, it was big. You could do great photos in there. So you have chosen to inflate your cost of running business. And in this cost based model, well, too bad for your clients, you made a choice, they pay the price. I don't know of a business coach today who would be like, yeah, clients should just have to pay the price for your business decisions. Yikes. Imagine if that's how other businesses ran. Like, you as a consumer would hate that. And we've watched this happen. I'm not saying it doesn't happen. It happens all the time. I remember it was a couple years back now. I saw this series of videos. I can't remember if it was Instagram or TikTok. It was talking about the cost of fast food. Specifically. I remember when I was a kid, this is probably dating myself, but we could go through the drive thru and I could get a Happy Meal for 199 so my parents could buy me a dinner for $2. I mean, dinner is relative, right? But that's what we could do. 199 would get me the Happy Meal. Well, now a family goes to McDonald's and they're spending like 45 bucks, 50 bucks, something like that. It's even fast food is starting to get more expensive. And just a couple of years back, the cost of, of fast food meals, the average is somewhere over $10, which was a huge deal because for so long it was more of an affordable way to feed a family. And now that affordability is gone. And the reason why those prices went up is because businesses like that run on a cost based model. So what happened at scale though? When the cost of fast food went up, a lot of people stopped going as frequently. And that's my concern. If you decide to run a cost based model as a stylist or a salon is you can do it. People might decrease their frequency. And frequency is something that is way too critical in our industry to f around with. I don't like to mess with frequency. Frequency is very important for us. So cost based pricing, generally speaking, the first thing that you see, Wayne, is the frequency. And in a business like ours, we just need it so much. I understand the idea of what if you could make, make sure we were holding onto your profit margin and always your costs were covered and you could still feed your family. I get it. And for stylists who have a very strong demand. Totally. Like maybe this would work for them. For the average stylist, I really, really scares me. I know this is a very commonly coached to ideology right now. It makes me nervous. So just really think through. Do you logically think it should be the responsibility of your clients and to pay for your business decisions, come what may? Because that's what that model is based on. Ooh. The other thing too, on that one, and I almost forgot is that let's say you decide to run business like that and you're like, you know what? Yep, I do. I do think that clients should respect me enough to appreciate the way I run my business and appreciate my experience in the industry and my education. This is just how it goes. Okay. But then you have to understand they may choose to go to somebody who is instead running their business within budget and it allows them to keep their cost to the client lower. And the desired result is kind of the same. And the only difference being another service provider might have better budget control. You're literally leveraging budget control when you're running cost space and it's just a bit fragile. Then there's economy pricing, which is what I call Ninja Turtle pricing. It's the low price leader. And this is very emerging right now too. It's that, that I'm going to deliver an amazing result at the lowest possible price. The problem with economy pricing is that the margin is generally much, much lower. It does work. Economy pricing does work. If you're the low cost leader, you will see increased demand. I talked about how with cost based pricing you could see decreased frequency. Usually the low price leader, the economic stylist, sees an increase in frequency, especially if their result is amazing. The problem is burnout is right on the horizon. It's not sustainable. And in the long haul, when you try to raise your prices, you've attracted an economy clientele and so they can be very resistant to price increases because the whole reason they came to you is that you did better and you did more and you charged less. So you just have to be careful around that. There's a fine line between economy pricing and being worth it. And you have to kind of do that dance. My favorite is dynamic pricing. It's what I've always coached to. I have a great podcast on it. If you do a Google search for thriving stylist method, seven factors that will come up when we do pricing, we take a look at most of these things. Honestly, except for the things I don't agree with, we look at most of them and we look at how they relate to each other. So the reason I call it dynamic is we brought in a professional engineer to design this calculator for us where it takes a look at how all of these seven factors relate to each other. So the factors are cost of doing business, what a client can afford in the area that you live in, your capacity, your existing demand, your desired demand, your cost of goods, your timing. We take a look at all of the realities of your business. And using the mathematical calculations that for our members have proved themselves to work and proved themselves to create consistent growth for 12 years now, we have a proven method. It just works. We look at how all these things fit together and what happens is the tool spits out a price and says, hey, whether you like it or not, this is the price point you should be working at if you want to grow rapidly. And it works 100% of the time, every single time. Because it's not looking at one cool idea as it relates to pricing. It's looking at one factor. It's not saying, well, I just want simplicity, so I'll do this. Well, I just want a nice profit margin, so I'll do that. Well, I want to be competitive in my market, so I'm going to do this instead of looking at just those things. As individuals, we pull them all together and we say how can we have all of that and have it make sense? That's what we call dynamic. That's my preference is instead of looking at pricing in a silo, we look at all of the facets of what pricing would be like for you and make sure that it not just serves you, but it really serves your market and your client. So I think I did a fair job of not weighing in too heavily on one pricing method or another. Some of them I just, I really don't like and it's hard for me to share just open, unbiased advice on pricing when in my mind it feels irresponsible for me to not be fully honest about concerns I have for certain methods. If you have any questions, as per usual, you can leave me a rating or review on itunes for the Thriving Stylist podcast and I will do my best to include it in a future episode. So much love happy business building and I'll see you on the next one.