110 Should you switch to charging by the hour? Here's how one salon did it.

There is a business trend that I'm seeing more of lately. It was happening anyway, but it has been accelerated by Covid, and social distancing, and people looking for new ways of living and working to avoid burnout. 

The trend that I am talking about is that more salons are looking at 'charging by time' instead of charging for the specific service. 

My guests today on the podcast are two sisters who are also business partners, Vicki and Jane, from the award-winning salon 'Reed hair' in the UK. 

I'm really pleased to have them on the podcast today to get the opportunity to dig in deep about everything to do with charging by the amount of time and not for the specific service. 

Reed hair made that transition a few years back and haven't looked back since, and on this podcast episode, they are totally open about what was involved in making the change. 

 

In today's podcast, we discuss:

• The reasons behind why they changed
• What the challenges are (if any) for owners, staff and clients
• How to work out your hourly rate… and
• The impact it has on profitability.

And lots more!

 

In this Episode:

[0:01:02] A current trend taking place in the salon industry, which was accelerated by the Covid-19 pandemic. 

[0:05:45] What sparked Vicki and Jane’s decision to change their business model from charging for a specific service to charging by time. 

[0:09:08] The vision that Jane and Vicki had for Reed Hair from the beginning. 

[0:12:06] Impact that the change in business model had on costs and revenue for Reed Hair. 

[0:14:13] Client education and marketing that Jane and Vicki did when they changed their business model. 

[0:15:23] Why the daily volume of clients at Reed Hair dropped when they moved to the charge-by-time model. 

[0:17:12] How Jane and Vicki communicated their business model change to their clients over a period of time. 

[0:19:40] Other changes that took place at Reed Hair alongside the change in business model.

[0:21:47] The biggest challenge that Vicki and Jane faced when they made these major changes to their salon, and how they dealt with it. 

[0:23:12] A formula to work out what a stylist should be charging per hour. 

[0:26:51] The drop in assistants that Reed Hair experienced prior to their big reopening, and the reasoning behind the decision to remove assistants altogether. 

[0:30:31] How Reed Hair’s clients handled the transition to a charge-by-time model. 

[0:33:30] Different price levels of the stylists at Reed Hair. 

[0:34:34] Responses from staff to the changes that were put in place at the salon. 

[0:35:39] Ways that the charge-by-time model benefits stylists and clients. 

[0:37:38] What a typical conversation with a new client at Reed Hair will consist of. 

[0:40:48] How the commission system at Reed Hair works. 

[0:43:15] The answer Reed Hair gives their clients when they aren’t sure how long their session is going to take.  

[0:47:01] How the hourly rate at Reed Hair is broken down. 

[0:48:04] Why women’s sessions are usually booked for longer than men’s.

[0:50:41] Transparency that Reed Hair practices with their clients. 

[0:54:52] How Reed Hair’s hourly rate accounts for the cost of products.  

[0:58:21] The lack of hierarchy and a price ceiling at Reed Hair. 

[01:00:30] Criteria that determine the hourly rate that stylists at Reed Hair can charge. 

[01:01:26] Factors that resulted in an increase in Reed Hair’s profitability when they changed their business model. 

[01:02:02] Vicki and Jane’s commitment to looking after their staff.

[01:03:12] Key steps to making a success of the charge-for-time business model. 

 

Links and Resources:

Grow My Salon Business

Website | Facebook | Instagram

Reed Hair

Website | Facebook | Instagram

Episode 098 - Toby Dicker and Amanda Faith - Charging by the service or charging for time?

**Do you know your salon's break-even point right now? Most salon owners don't. Take the free 60-second Reality Check and find out exactly where your business stands. 

👉 Head to https://growmysalonbusiness.com/reality-check/