First, Understand Your Pricing Viability

Pricing viability refers to whether your services and pricing are appropriate for the needs of your local market. This involves a combination of market research and analysis to ensure your services align with what your customers want and can afford.

To determine pricing viability, consider the following:


1. Service Offering: Are clients in your area interested in the services you provide?

They must desire what you're offering and be willing and able to pay for it. Consider the average income in your area, local trends, and where your ideal clients spend their money. What are consumers in your area willing to spend money on and in what capacity?


2. Availability: Does your schedule match when your clients want or need these services?

If your availability doesn’t align with their needs, you may lose potential business. For instance, if you offer services from 10 AM - 1 PM so you can be home for your children after school, but your ideal clients are working until 5 PM, your schedule would not align with when your clients could come in.

A quick tip to help you determine what general traffic in your area looks like is to review similar businesses/popular businesses in your area on Google. Google offers a foot traffic feature for businesses that can be extremely helpful when you're trying to get a rough understanding of foot-traffic trends in your area.


3. Efficiency: Are you able to offer enough services to meet your income goals?

Consider how many clients you can realistically serve in a given time frame to support your desired lifestyle. As service providers we hear "time is money" often, which ties back directly to our efficiency. It can be helpful to backtrack using your income goal. Think about how much money you need or want to make, and see what you would need to make per hour to reach that goal. 


Second, Understand Your Profitability

Once you know your pricing is viable, it's time to assess profitability. This is where you determine if your pricing is generating a healthy profit margin. The profit margin on your services tells you how much money you make after everything has been paid for - products used in the service, rent for time it takes to complete service, etc.

To review profitability, examine the following:

1. Menu Price: Are clients in your area willing and able to pay the price you've set?

Consider the average household income in your area, market trends within the industry, and any recent changes in your local economy.


2. Product Costs: How much does it cost you to perform each service, including all products used?

Product cost includes anything and everything it takes to complete a service - from a pair of gloves, to actual color, to shampoo, to a color remover pad. It may seem inconsequential to tally up every little thing, but not including these small cost in your service price can end up putting you at a financial deficit in the long run.


3. Operating Costs: What are the overhead costs involved in providing the service, such as rent, utilities, or equipment maintenance?

When you think of overhead, think of how much it cost you to rent the space and have your business open for the service. For example, if you book a 30 minute bang trim, how much does it cost you to have the lights on, to rent the space you need to rent the chair you’re in for 30 minutes?

Service Pricing Calculator: Calculating profit margin on each service can be overwhelming because it involves a ton of detailed math. I created the Service Pricing Calculator specifically for stylists and service providers. It does all the math for you automatically and offers visual results so it's easy to see and understand how much you actually make from each service after cost. Download the Service Pricing Calculator here
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Additionally, if you have questions about your pricing or pricing strategy, you can always reach out to me and I'm happy to offer you guidance or point you in the right direction, email me at kelsey@thesilkstone.com
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If your pricing isn’t viable for your market, even if you’re the best at what you do, you may struggle to attract clients. The key is finding the balance where your services are both desired and profitable in your specific location. By addressing both pricing viability and profitability, you can create a strategy that supports your business growth while meeting your needs, and the needs of your local market.