Salon Discounting – the right way

It is fair to say we are all feeling the pinch of COVID-19 at present. Your salon is closed. The salon down the road is closed. Every. Single. Salon. Is. Closed. The only difference between you and them is what you make of the lockdown period. Are you using the next month to plan for your return? Or are you leaving it all to chance? Perhaps you are thinking of having a sale?

The current situation is unique. Once the salon industry begins re-opening there is going to be an interesting “clawback” period. Many salons will go into sale mode, trying to gain back as many clients as possible.

We are going to see a lot of discounting (eg: Grab One) with bargain-basement pricing; After no revenue for a month, anything at any price is better than nothing!

This means: this is exactly what you shouldn’t do.

By all means, offer promotions to your current/loyal client base. On the other hand, attempting to claw in “bargain hunting” customers with agressive discounting does not gain you a long term customer willing to pay full price. Let’s take a look, shall we?

Scenario 1: You serve an upscale market.

Wrong way: Offering a discount of any kind to this group is surprisingly dangerous. To your wealthy customers, the salon’s premium experience — and premium price — might be something to be proud of, not negotiated. Offering discounts can even cause some of them to flee for more pricey pastures.

Right way: Your salon already offers a premium experience at a premium price. Instead of a sale or a discount, why not offer bonus features, like a complimentary treatment if a customer fills a chair after a late cancellation. It’s a savvy way to say thank you, and you’re still charging full price for your work.

Remember – you aren’t your client’s accountant. It isn’t up to you to decide what they can afford. If they are booking in with you, they are willing to pay.

Scenario 2: You’re offering a 10% off discount.

Wrong way: You spring the savings on your client at the last minute by saying “Normally, this cut is $100, but today it’s only $90.” This is an unnecessary time to spring a discount on a customer. You’re already well on your way to closing the sale, and offering a discount that late in the game cuts into your credibility and makes you appear a little pushy.

Right way: You’re upfront with your customer on the initial phone call and say “Just so you know, we’re offering a 10% discount on all products until the end of the week.” Your customer will appreciate this inside info, and she may even pop in to snag a favorite item or three even if she doesn’t have an appointment until later on.

Scenario 3: You’re discounting the *wrong* services.

Wrong way: You charge $20 for a brow shape and tint which is your most frequently booked service. You then decide to slash this to $10. That should lure in more customers, right? (Despite the bulk of your clientele booking this service anyway) Taking approximately 15-minutes to perform – say you are paying your beauty therapist $20 an hour. Forking out $5 on labor, $1 on back bar, another $0.50 for overheads (power, laundry, credit card fees)… soon we have arrived a measly profit of $3.50! You could be making $13.50 instead with clients who would happily pay full price anyway.

Right way: Know your profit margins and look to services that cost little to offer. Discount those! That $5 of back bar and $20 of labor for a $105 one-hour facial (not to mention the chance to upsell skincare products) is calling. A hefty 50% discount will still net you $37.50 profit. Not bad! (Or you could stick to your $10 brow shape and tint and net $14 in the same hour)

Business is a simple formula: Price – Cost & Overheads = Profit. Too often salon owners forget to look at the cold, hard numbers. If you know your service costs & profit margins, you can then make calculated decisions.

Discount Smarter. Not Harder.

If you feel the need to discount – be wise. Take the time to consider your treatment arsenal. What treatments can you afford to discount? Or better yet, don’t discount at all.