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Thriving Stylist Podcast
#407 - The Parts and Labor Pricing Model
00:21:43
Why are so many salon owners adopting the parts and labor pricing model right now, and is it truly the best strategy to future-proof your business? Today, we're tackling this buzzy industry debate - head-on! This episode was inspired by a...
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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.
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Base and want some stability.
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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 but are craving more.
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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, list 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.
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The Thriving Stylist Podcast. What is up? And welcome back to the Thriving Stylist Podcast. I'm your host Brit Siva and today we're talking about the parts and labor pricing model. Now, wherever you sit in the industry, whether you have considered parts and labor pricing, you have no idea what it is or you currently have it in place. This episode is for you. This is a really buzzy topic right now and I just want to share. This is definitely gonna be a biased episode, I won't lie. I I have a strong opinion about it, but I'm going to share the foundation of why I think what I think so that you can agree with me or disagree with me or whatever. But at least it's clear why I've chosen the stance that I've chosen my concerns. Some considerations you might want to think of if you're putting this into place in your business or if you already have. So this is a very inspired episode based on a review that was left by somebody named Mel on September 23, 2025. The subject of a review is pricing strategy and Mel says, how do you price in 2026? You have to have your fixed cost and parts and labor is the model, even if it's not stated that way. When we take out product costs before paying commission, that's the parts, the client pays that. How do we price then? If we can't call it what it is, how do we sell extra color so we aren't eating it? There are about 16 questions here in this one rating and review, so I want to dissect it a little bit before I dive in. So first of all, the subject of this is pricing strategy. But I could be wrong. I tend to think Mel is an a salon owner because there's questions about how do we price if we can't call it what it is, is the quote. And then there's a question of how do we sell extra color so we aren't eating that cost. Fair question. But then there's also the question of when we take out product costs before paying commission. That's the parts. So this is kind of dissecting a totally different issue, which is where I've talked about my concerns. Distaste for compensation models where the salon owner is taking a product fee off the top of any service ticket before a commission split is made. I'm not debating the legality of it. I understand that in most states it's legal and it's fine. My issue is the positioning. When I spoke to that specific topic previously talking about product charges taken off the cost of service tickets, it sparked a huge debate, specifically on my own Instagram feed. And it was very clear what the conversation and the two points of view were. Salon owners, there's a handful of salon owners who were like, I stand by it. It's how I control my costs, which I feel like you can control costs a completely different way. But I know that 15, 20 years ago, this was touted as the model. And so people think like, oh, that's the way it's done. There's other ways to do it. There's not just one way to control costs. But I understand that that was a very popular model that was floated. And then you look at the comments from stylists who were like, whether it's legal or not, my owner wasn't clear on it. And or stylist saying, I knew that was the policy. I knew what I was signing into it is misleading. Why don't you just pay me a smaller commission? Because that's what's happening. It's just. It's a complex form of compensation. It doesn't have to be that way. It's like an additional argument point that doesn't have to exist. And I've yet to see a salon where the owner has put into place a product cost ahead of the split, where the stylists are like, we love it, we get it. Like, it's always a point of contention. So why not just remove the point of contention and set other structures in place to make sure the cost is covered? I'm not saying the owner has to eat the cost. I'm saying the way that it's being Positioned is such that it feels like the owner is taking money out of a stylist's pocket, which is never going to go well. The cost of running the business is what the owner is responsible for managing. We do have to manage it, but not in a piece rate way based on what every stylist is doing. And they're buying their own color. Because the subliminal messaging in that is if I'm paying for the color off the top of every ticket I'm I'm getting commissioned on already, what's the difference in me doing this and booth renting? It comes back to that same narrative of if I'm buying every box of color anyway, which we all know, it's what's happening. It's how the cost of the service getting done is happening. But when it's showing up on my paycheck every single time in a structure like that, it just delivers the wrong message. It's not packaged in a way that makes sense or feels good. And there's a better way to do it. So that's one thing. But this specific question and the subject line was pricing strategy. So I'm going to attack this from the pricing strategy angle. If you want to do a whole other podcast where we talk about service ticket charges, we can do that. Let me know in the ratings or reviews. But I don't want to get too, too hung up there. I really want to focus on the pricing strategy part which is the core of this question. So going back to the middle of the question, Mel says you have to have your fixed costs, which of course every business has fixed costs and parts and labor is the model and is is like in bold, as if saying like that is the way it has to be done, even if it's not stated that way. So Mel, the even if it's not stated that way is the critical part. So in any industry, I talk about perceived value. The way that you package your offerings is everything. The way that you sell to your market is the most important thing. So let's dig into why the packaging or the perceived value or the positioning of parts and labor to me, I don't think is well suited for our industry. And I want to just dissect why I've chosen the standpoint that I have. So when I talk about this subject, parts and labor pricing, there's going to be two things that come up for people. Vish and salon scale. These are amazing industry tools. I have nothing against either of them. I actually think that they're incredible. And I'm not talking poorly about either tool. The the functions of both that I like are the ability to weigh and track cost of product. I think that's revolutionary and brilliant to have a mathematical way to track what gets used as far as color usage and chemical usage. That's one of the biggest expenses in a salon. So if there is a truly detailed way to track all of that, what a gift. Like what a genius way to have that data point and to be able to use that data to order smarter price services better, all that kind of stuff. I agree with that 110%. I know that there's some new integrations I think just rolling out where some of these systems might be able to auto order for you. Like there's some really cool technology there. I love all of that. I have no issue with it. The piece that for me is like a But do we really want to do that? Is where you take those costs and you add them to the cost of the ticket and pass them along to your client. And that's what changes it from a tool that's used for business operations and product management into a parts and labor pricing tool. There's a shift that happens when you pass that cost along to a client and some salons do it and some salons don't. And both of these products, to the best of my knowledge, say you don't have to do that part. You can just use our tools for the inventory and operations management. I think that that's great. So let's talk about what other industries use parts and labor pricing because for some of you, you don't understand what parts and labor pricing is and that's totally fair. So I googled what is the definition of parts and labor pricing. Parts and labor pricing involves a shop adding a markup to the wholesale cost of parts, typically 25 to 50% and charging a labor rate multiplied by book time, which is the average time a job should take for the service performed. Shops use various strategies including parts and labor metrics to ensure profitability by adjusting markups and labor rates based on the part cost and job complexity. Okay, so if you didn't know what parts and labor was before, it's quite literally charging an end use consumer, which for us is our clients for the overall operational cost of running our business to. So back to what Mel said. Mel was like the model is parts and labor. Like we are the service industry. We charge for parts and labor. I understand that our model is we have to buy products to do a person's hair and then charge for the cost of our time. Fully agreed. My issue is the way it's being packaged to the consumer when a salon adopts parts and labor pricing. So what does it look like when a salon adopts parts and labor pricing? It looks like I would go to your website and it would say the cost of a root touch up starts at $60. And it would probably like say 60 bucks plus or something like that. And then the rate I'd actually pay is 60 bucks, which is the part, the cost of the labor. And then the charge for the parts would be the charge for the hair color that gets put on my head. So if I have a ton of hair, I might have, you know, twice as much to cover my roots as somebody with ultra thin hair. So based on my density or my desired end result or whatever the factors are, for any given client, it's the base rate, which would be the rate for the labor, essentially, and then it's additional parts rate. So essentially every single client in the salon could walk out paying a different charge even if they got the same service because somebody might use half an ounce more of color or 3 ounces less or whatever and that's going to impact the final rate and result. That's parts and labor in an ultra simplified nutshell. Okay, so I looked up what other industries use parts and labor models. You ready for it? Listen, as I go through this list, automotive, meaning repair shops, manufacturing, appliances and electronics, plumbing and H vac, industrial machinery, aerospace, trucking, construction, home remodeling, IT consulting. Those are the other industries. I want you to think for a second about those other industries. Because yes, most of them, if not all of them, I think all of them are trades. We're a trade too. I completely get it. I think when we put ourselves in the same category as trucking and mechanics, plumbing, even, even something like it, and construction and home remodeling. Think about those services. If you have ever had to employ any of those services, whether it be a plumber, a mechanic, somebody to remodel your kitchen for you. Generally speaking, the belief is you're going to pay more than you expected to. It often takes longer than you want it to. There's a bit of an irritation factor when we have to call the plumber. We call the plumber because something has gone wrong. We go to the mechanic because something has gone wrong. We call the contractor because our kitchen is wrong. We call the IT guy because something is wrong. It's like these are emergency services industries and even like to be so blessed to build a home. From the ground up. To be so lucky to be able to remodel your bedroom or your bathroom or your kitchen. Like, what a blessing. Anybody who's ever lived through that, it is stressful. It's extremely expensive. You always end up having to pay more than you thought you were going to. And sometimes the result isn't even what you wanted. And then you end up with a bad taste in your mouth. The other thing about all of the other industries I mentioned isn't they're often one offs or services that you only use once a year. Once every couple of years. Like I hope to not have to go to my auto mechanic three times a year. I sincerely hope your clients are seeing you three times a year. We're emulating a model that is being used by industries that don't look like ours at all and industries that in a lot of ways carry friction. The beauty industry is one that is supposed to be of relationship trust. Regular repeat business. Like multiple times a year the same person is coming in and you're building this relationship and this connection is growing over time. That is unlike any of the other industries I just mentioned. Now the other thing that I think is interesting about all of the other industries I just mentioned is that none of the ones that I could find and I searched, I only searched for about 10 minutes. I could not find a construction company that listed their rates on their website or a home remodeler, even a plumber or a mechanic, they would list their services. I didn't even find hourly rates on the websites I was looking at. Now maybe you do have a local plumber who lists their rates. You might, but generally speaking, there's not like an estimate of how much the job is going to cost. It might even say 80 bucks an hour. And here's all the different things that we can do. You have no idea how much it's going to cost you. Is my plumbing issue going to take one hour or three days? I don't know until the guy gets here. But I know that my sink is leaking. It's a completely different type of work where when my sink is leaking, I am at your mercy. Like, yep, whatever it's going to take to not flood my kitchen is what I'm going to pay. In our industry, clients have a myriad of options to choose from. If they don't like your model, they don't understand your model. Your model seems to be too expensive, your model seems to be too confusing. They start to feel like they're being nickel and dimed. They will go Elsewhere, and particularly I talked about this in a previous episode, which I think is why it came up. In a season where the economy is more fragile and clients are price shopping more, it's not that they're not spending money because they are, but they're price shopping more. If they're price shopping more. And now I know that there's a chance that I'm going to have to pay some kind of fee. I don't really know what it is, but I know it's not just the base rate. On your website, there's going to be an add on, but it's kind of like subjective. Like we'll see what it's going to be. The more it feels like a roll of the dice, the less likely I'm to pull the trigger versus if I can just see. Okay, a rude touch up is 80 bucks. It just is what it is. I trust you more. The consistency's there, the transparency is there. It's just more simple. The other thing too is I don't know about you. So most of you know this. I'm licensed. I haven't worked behind the chair in, oh my gosh, 16 years. Like a really long time. A super long time. That doesn't mean that people don't ask me to do their hair all the time. Like, I'm just a girl and my friends, when I do somebody's hair, I essentially just charge parts. I don't charge labor because like, who am I to do anybody's hair? To be quite honest, like, if you're going to roll the dice and let me do your hair, we're both taking a gamble. So if somebody comes over and they're like, can you do my roots? Can you do my highlights? I just charge them for like the 15 bucks I spent on the color or whatever that is. So kitchen cosmetology, to me, it's so like, here's your chicken sandwich, that'll be nine bucks. It doesn't feel like service industry. We're in the frickin service industry and we're not in the emergency services industry. We're in the relationship business. And here's the rub too is like we as an industry are kind of in a place where we're trying to rebuild our relationship and rebuild trust and have clients respect us and respect our time and see us as professionals. And I feel like we're almost taking a step backwards in the pricing model where it's like, well, here's the cost for my time. And then you're also going to have to pay $27 for the cost of your color. So now the total charge is 127. Because it's my time plus your color equals this amount. It feels just a little bit like a step backwards, like a little bit less luxurious. I think that we're positioning ourselves wrong, like upside down and sideways. I just don't think that the market is ready for it. I don't think the industry is ready for it. And when we look at the other industries where parts and labor is popular, I don't see how we fit there. Now the other thing too, and I could be totally wrong, like let the auto mechanics of the world like jump out of the woodworks and tell me I'm wrong. I don't think auto body shops are like making it rain. I don't think that's a model where it's like. And at those margins I, I just, I don't think so. I know quite a few general contractors and man, if it isn't like feast and famine and like they're chasing cash too. And maybe aerospace, maybe that's where like the margins are huge. But I'm looking across the board of these other companies that use it and I'm like, I just don't know that like that's the North Star, that that's the model that we should be adapting towards. I'm not sure that it logically makes sense. Versus when you look at like really great businesses, really great industries where like, like cost is controlled and you're always ensuring a profit margin. You just price the services properly so that the margin is always there, period. And there's no draw off the top before the commission is made. There's no pass the fee on to the client. It's just like price your stuff properly and everything is all good. So when you look at our, our pricing calculator that we use that we've used for 10 plus years, there is a place where you enter in the cost of every service you do. So we, if you're doing a root touch up, what is the average amount of color you use and you enter that in, that gets baked into all of your service costs. Whether you charge by service or a la carte or you charge session based or hourly, those costs are accounted for. The business is not eating it. That is on top of the time and the service rate and all of those things. So it's what Mel said, like, well, you're charging parts and labor either way. I got it. But it's the way that it's positioned to the end consumer that I think makes it an easy pill to swallow or a messy system and model. So then the question came up like okay, but what if you have somebody who does have a 4 inch root? Like that is not a typical touch up. Or you have somebody who does have triple the density of the average client. For us, even way back when, before I, before I was a business coach, when I was a brand new rookie stylist like learning the ropes in the early 2000s. I can remember stylists going to clients in the consultation and being like, so we both know you have more hair density than the average client that sits in my chair. And often the client would laugh and be like I know it. And the stylist would say so what we're going to do is we're going to use about double the amount of product to cover your root. Today there is going to be a product surcharge for that. It's going to be $12. So it's just our standard base rate. And then for you, just because you do have that extra density, it's 12 bucks. Great, sounds good. Goodbye. That was the whole conversation. We never had a client balk about it. It was just like we know, you know, everybody knows this is different, here's how it works. But there was no overly complex system change the way there's pricing done deduction here, blah blah blah. It's like we lost the art of just talking to clients like humans and letting them know what was up. That I think is very appropriate if you do have somebody who is, has more hair than 90% of the other clients you serve. Of course that's a situation where a product charge completely makes sense. I just don't believe we reinvent the entire pricing model to fit the 10% that are outside of the standard versus having very transparent, easy to understand pricing on our website, predictable rates at the register. I just think it's cleaner, simpler, easier for the end consumer to digest. The other thing when it comes to pricing is at the end of the day, I do believe that the way that we position ourselves well is that the client is paying for a result, not the cost of a process. And when we look at a model like parts and labor, it's very much paying for the process. It's like do you want extra cheese on your sandwich? That's an extra $25 versus oh you want the meat lovers all you can eat sub. Okay, the cost of that is just 18 bucks. I think it's more professional, I think it's more elevated. It doesn't have to be more expensive. It's not like, oh, well, this is just for the luxury salons. I think if we as an industry are really saying respect us, support us, we want predictability in our income and in our revenue. I think we need to really start looking at how smart businesses manage operation costs, how pricing is really well done for rapid growth, for predictability, for profit margins. And instead of creating like band aid solutions and strategies, really get to know our numbers, understand why we're losing out on cost of color or other things and start there. I just think there's a better way than passing these costs on to clients or baking them in as cost off the top of the tickets to our stylists. I want salon owners to have margins. I want stylists to have margins too. I simply think there's a better positioning. Okay, I'm ready for it. Let's keep the conversation going. Any further questions, you can leave me a rating or review on itunes. And as I always like to say, so much love happy business, this building. And I'll see you on the next one.