You might be considering making changes to your prices in light of the rising cost of living – plus the increase in cost of running a business. Luckily Carl Hinder has developed a clever equation for setting the right prices for your barbershop.
The increase in energy bills will affect your business in the coming months (if not already) and your pricing needs to take this into account.
Carl is a consultant that helps barbers optimise their businesses. He focuses on ‘correct’ pricing rather than ‘low/high’ pricing and has a clear method of establishing just what that correct price might be.
Carl says: “Over the past months many businesses will have received mortgage holidays or rent holidays, grants and other types of financial support that will ultimately add up to accrued debt that will catch up with them. Lots of shops already run at break even and so now is the most important time to review pricing to ensure that what they are charging for their services is correct.”
Here are Carl’s steps to set the right prices for your barbershop
- Make a list of every single overhead for your business for the year. Everything! Right down to the Barbicide and tea bags.
- Add them all up for an annual total.
- Add the amount of profit that you need to achieve. This is a reward for you that you justifiably deserve for taking the risk of building the business.
- Divide by 12 for a monthly breakdown. Divide four for a weekly breakdown. Divide five (or number of working days per week) for a daily breakdown. Divide by 60 for a by minute breakdown.
- You now have the gross cost per minute for the business.
- Multiple the amount by the average time it takes for you to deliver a service. So for example a 50p per minute cost for a 30 minute service equals £15.00.
Carl says: “Many barbers worry about putting up their prices. They worry about losing customers. If you used the competition as your guide to price your services, then there is a 70% chance that you don’t have the accurate price for your business right now.
“When recalculating and adjusting prices to the CORRECT price you might initially lose a few clients but you will increase your profit. I also advise my consulting clients not to justify their price increase or apologise for any price increase.”
Apologising to customers over pricing any service just does not happen in any other industry, so why should it happen in the barber industry?
Carl believes that correct pricing is the core of every business strategy as without pricing based on fact, none of the other ways to grow a good business will work efficiently.