Select a service.

Discuss the related factors considered and how would you

determine the price of the service to your customer

Service

Hair Salon

Growing a loyal customer base is one of the key factors of running a successful and
profitable salon. Industry - tailored marketing techniques can help hair salon use
satisfied customers to recruit future clients, move high - end non-service merchandise
like shampoos and conditioners and allow hair salon to personally connect with hair
salon customers to maximize profits and stifle hair saloon competition.

Factors considered and how would you determine the price of the service to your
customer

a) Cover all costs

The price of each service should cover the cost associated with it, its contribution to
overhands and profit. A successful strategy is one that results in the most pounds after
all the costs have been met. Be careful of setting the price too low while it may attract a
large sales volume, may not be making enough revenue to cover the costs of selling the
service. If set the price too high, sales volume may be so low and cant cover operating
costs. Its important to take into account the competitive advantage of salon target
customer base.

b) Use discounts with care

Offering discount is a good strategy for encouraging repeat sales, bundling sales and
early payment from clients. Hair salon can use discounts to stimulate demand for
products and services during the down time. Discounts are great to clear out stock that
has become outdated. Just make sure hair salon don’t give out the wrong signal or give
the impression that business is in difficulty. Hair salon can plan for discount or sale
times in salon pricing strategy ahead of time.

c) Price low but smart

A common salon pricing strategy for small salon owners, particularly new entrants into
the sector is to price low just to get the work. The aim is to penetrate the market and get
as much repeat business by pricing low. However, be aware that pricing low can have
adverse repercussions on business. First, a low price may signal a low quality service.
Second, it may be difficult to raise prices later on once clients are accustomed to low
prices. Third, start-up business is yet to develop economies of scale that makes it hard
to compete on price.

d) Clients are not always looking for the lowest price

Price is not always the topmost concern of clients. There are many clients who do not
mind paying higher prices particularly if they know they are purchasing exclusively or
salon is located in a high - end or convenient location. Many clients are willing to pay
premium prices for quality service, speedy delivery, helpful and friendly customer
service, excellent product knowledge and advice. This is important because to know the
competitive advantage of a salon and meet own customer demands.

In conclusion, Pricing strategy is an important element of how to mange a salon

business. Setting the right pricing list is essential to target the right customer base and to
ensure salon business reach the goals.