Pricing is one of the hardest things to get right as a solo operator. Charge too little and you’re busy but broke. Charge too much and you worry about losing clients. Most solo operators end up somewhere in the middle, which often means they’re still undercharging.
Here’s how to think about it properly.
Start with your costs, not your competitors
The most common mistake is looking at what other salons charge and pricing from there. The problem is you don’t know their costs, their overheads, or how busy they actually are. Their price might be wrong too.
Start with your own numbers. What does it cost you to deliver each service? Product, time, rent or room hire, software, insurance, ACC. Add all of it up. Then work out what you need to earn per hour to pay yourself a proper wage. Your prices need to cover both.
Work out your real hourly rate
If you want to earn $60,000 a year and you work 40 client hours a week for 48 weeks, that’s 1,920 billable hours. Divide your target income by your billable hours and you get your minimum hourly rate. Factor in your costs on top of that.
Most solo operators are shocked when they do this calculation. Their current prices don’t come close to covering what they need to earn.
Don’t forget the unbillable hours
For every hour you spend with a client, you’re probably spending 20 to 30 minutes on admin, cleaning, ordering stock, and everything else that keeps the business running. Those hours aren’t billable but they’re still your time. Your prices need to account for that.
Good software reduces those unbillable hours significantly. Baxus automates reminders, manages bookings, and handles reporting so you spend less time on the stuff that doesn’t earn you money.
Review your prices at least once a year
Product costs go up. Rent goes up. Your skill level increases. Your prices should reflect all of that. A lot of solo operators set their prices when they start and never revisit them, which means they’re effectively earning less every year.
Pick a date — end of financial year works well — and review your pricing annually. Small increases applied consistently are far less disruptive than a large jump after years of not changing anything.
What about losing clients when you put prices up?
Some clients will leave when you raise your prices. That’s okay. The clients who value your work and can afford your new rate will stay. In many cases, a price increase actually increases perceived value and you end up busier with better clients.
You don’t need to apologise for charging what your work is worth.
The bottom line
Price from your costs up, not from your competitors down. Review annually. And use Baxus’s reporting tools to track which services are actually making you money so your pricing decisions are based on real data.