Just got back from a selling trip in another city; and it looks like the same issues exist in every city! We came up against one of our major complaints at least SIX times over the last week – service providers that are DISCOUNTING their services!
The unfortunate truth: stylists only do it, because the salon owner allowed it to happen.
We cannot understand how a service provider can charge their clients a lower price than the one offered on the menu! As a salon owner/business person, you establish your pricing based on what you need to bring in to the salon to meet your rent, salaries/commissions, and expenses. It’s actually stealing from the salon owner to charge less than the prices stated by the owner! Yet, salon owners complain about this happening over and over again.
Because we actually touch people, service providers often feel close to the client and think of them as friends and therefore want to offer them gifts like lower prices. This also happens when the service provider themselves feel they are not worth the price being charged or make unnecessary assumptions that their clients can’t afford their services. The most upsetting thing for these Two Blondes is the complaining that salon/spa owners do when this happens. If you have discounting happening in your business, go and look in the mirror for the real culprit!
Imagine this scenario: you need $30,000 per month to break even with your expenses. You set your prices accordingly, market your business, book your employees and BANG! Johnny Angel decides that $60 haircut is too much for his clients to pay and only charges them $45. He still gets his 50% commission of $22.50 but the business has been screwed out of the necessary amount they need to cover the cost of the service. If you are like the majority of business owners, you are probably not making much profit and that discount Johnny just offered just cost you 8% of the sale!!
PUT IT IN YOUR POLICY MANUAL!
If a stylist is discounting due to lack of faith in their abilities, consider putting the stylist back to a level where they feel more comfortable. The solution is really quite simple. When you hire a new employee, make sure that they understand all of the policies in your manual. Go over this particular one until you are sure they understand the implications.
Let the stylist eat the discount.
If you discover that a service provider is discounting, take the discount from the service provider’s portion of the service. In other words, if a service is $50 and the client is only charged $40, the lost $10 should come out of the service provider’s portion. For example, if you are paying a 50% commission, then the salon still receives its $25 and the service provider receives $15. Johnny Angel, for example would only receive $15 for the service he performed instead of the $30 he should have earned if charged correctly or the $22.50 he would have received for discounting.
Number One lesson here? As the owner, you have the right to determine the policies and procedures you want in place to operate your business efficiently. Do it!
Policies are the foundation that every business, that’s EVERY business, from the largest corporation to a small enterprise, must have to determine how they want their business managed and developed.