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Determining your prices for your clients is one of the most important decisions you can make as a grooming salon owner. It can make the difference between breaking even, turning a modest profit, and achieving success.
When opening a dog grooming business, you have a number of important decisions to make. What will your hours be? What is the environment you want to project to your clientele? And, of course, what will your pricing look like? Determining your prices for your clients is one of the most important decisions you can make as a grooming salon owner. It can make the difference between breaking even, turning a modest profit, and achieving success. Unfortunately, there is no fixed formula of how to set your prices. However, there are several considerations that can help you arrive at the best prices for your grooming business.
1. CALCULATE ALL YOUR EXPENSES
Getting a comprehensive calculation of all of your expenses will provide you with the baseline number from which to work. We spoke with Tammy Severino, consultant to new and small businesses and business plan writer, who noted that every new business should have a Business Plan. “Having a plan does more than just provide you with the needed documentation for a loan or investors.” She went on to say, “Having a plan means you made sure to go through the process of calculating all of your expenses in order to set your pricing menu. You took a look at prospective competitors, assessed the type of marketing and advertising you would need to employ, calculated all of the expenses you need to figure in – just to open the doors – then determined pricing to allow you to yield a profit. It ensured you took stock of everything and, therefore, gave you both a global look at how to achieve success as well as looking at each and every aspect of the business.” Severino suggested that those with an established business review their business plan every six months to make sure the business is hitting milestones and achieving the success originally planned. For those that never wrote a plan, she notes that it is not too late. It is a great exercise for any business that can help uncover a treasure-trove of information that can enhance any business’ margin for success.
2. CATEGORIZE YOUR LIKELY EXPENSES INTO GROUPS
How do you figure out costs? Severino suggests categorizing them into groups. Start with overhead – rent/mortgage, electricity, water, phone, pet grooming software, etc. Next consider the expenses associated with each grooming – equipment (and the maintenance thereof), shampoo, conditioner, tools and implements needed by the groomers, bows, bandanas and anything else that gets used per grooming. Add in labor costs if there are others working for you in the salon. If you have a retail area in the salon, add in the wholesale costs of the items. Last, add in peripherals to the business. These include expenses for marketing, advertising, printing of collateral materials, and so on. Once you have a total, calculate the number of groomings each person on staff can get done in a day. Multiply the staff total by the average number of days open for business in a month.
Divide your expense total by this number (i.e. $20,000 divided by (26 days per month x 24 groomings per day (3 groomers) – 624 services per month yields a cost of $32.05 per service). You now have a number to hit your breakeven point. From here, you need to calculate how much to add to determine your pricing.
3. SET A PRICING MENU
Your pricing menu can be calculated a few ways. Some groomers charge by time; that is per hour. To be successful in doing this, you must be sure your staff all operate at roughly the same pace. The collie owner with the expert groomer should not pay less than the dachshund owner whose fur-baby is being tended to by a relative newbie. An alternate – and popular method – is to charge by the breed. In this way, you set the pricing based on cost and average time needed to provide the service to the average pooch in this breed. Add-on costs, such as treating matted fur, will ensure proper pricing for an animal that requires additional time and TLC. Don’t forget to predetermine exactly what is included in your full service or basic grooming experience. Everything else is an add-on. You may also want to add optional services for the pet owners that truly wish to lavish their pets with a real spa experience. I brought my dog for a grooming where an array of spa services were available. I got to pick and choose the scent for his bath, along with several other spa treatments. It was quite lovely and he seemed to enjoy his pampering.
4. KNOW YOUR CLIENTS
Know your clients. If you are in an area where simple is best, your services and their accompanying prices should reflect that. If you operate in an area where pet owners are lavishing their pets with every detail, then you can offer services to align with the customers’ needs. Understanding the psyche of the urban versus suburban versus rural client will give you good insight about what to offer and how much to charge for it. There is no need to offer a service that includes expensive product (for which you laid out a good sum of money), when no one will call and ask for that service.
5. PRICE ACCORDING TO COMPETITORS
Many groomers think the way to establish pricing is by keeping in time with the prices of the competition. This is both true and false. You don’t want to be the most expensive salon in town unless you are offering something special and unique in your service AND are situated where there are sufficient clients to support the business at this price point. You also want to avoid being the cheapest game in town. In this situation, people tend to be less about quality and strictly about price. Customers like this tend to be by far less loyal, which is a poor business model on which to develop. They are the customers who look for online promotional pricing and hop from salon to salon. This is true for salons and spas for people, along with several other industries, and it is true for grooming businesses. If you have calculated costs and allowed for the profit needed for the business to be ‘healthy’, you have the prices you need to charge. So, be aware of what the others are charging, but don’t make it your key consideration.
6. CONSIDER RETAIL
Retail is, perhaps the easiest part of your pricing. Most retail businesses work with a concept called ‘keystone’. What this means is doubling the wholesale cost to get to the retail price. So, that puppy sweater with the pompoms that you bought from the wholesaler for $10 is marked to $20 as the retail cost. Even when you need to mark down the item by 25% for a sale, you still yield a gain over what you spent to bring it into the business. When it is clearance time, mark it down by 50% to pull out your capital and take no loss.
Here’s an important consideration: be flexible. If something isn’t working, change it. If something was working, but is not any longer, update it. If something is going well, promote it to yield even greater success. How will you know? You need to track inventory and what customers are requesting. That’s where a strong, yet easy to use operations software program will beat even the best handwritten book behind the counter. Run reports weekly, monthly or quarterly, as well as year over year to see how you are growing. You can determine if clients regularly add onto their pets’ services and much more. You can even offer discounts to entice customers back to the salon based on their purchasing history. GroomPro POS offers you an array of canned reports and the ability to customize the output to learn all you need to know about your clients.
Pricing isn’t an exact science. It requires knowledge about your customers and an understanding of the total cost to do what you do. Find the sweet spot and move on to focus on caring for your customers.
Remember, stay ahead of the competition. Be prepared for all contingencies. Take steps toward success. ….And live a life you can enjoy. Fro more information visit GroomPro POS, Contact Us or request your GroomPro POS demo today.
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