Overview and Analysis of the Problem
Although there have been numerous challenges to the industry over the past two years, the ongoing challenge that is always worsened in tough times, is the issue of pricing.
Price wars are one of the biggest detrimental factors in the industry. It’s easy to see how they start, because there are many clients who love a special and will be enticed by a lower price. If not forever, at least for a while. So a smaller salon starting out, or an individual on their own, who needs to attract clientele will simply undercut the area’s prices and try to lure them in that way.
It is worth noting upfront that the smaller salon or individual operator does not always have the business knowledge they need. They are not taking their costs into account, but are simply undercutting in order to get feet through the door and money coming in. Their pricing may not be sustainable even with their lower overheads, cheaper products, etc.
Snowballing
What then happens is that often, the original salon starts to panic they are losing business and they then try to entice the client back again using a “special”, and the smaller salon / individual operator then goes lower and undercuts them again.
Mutual Destruction
It is easier for the smaller and less formal salons to slash prices as they can usually ride out the consequences for longer – if it’s just them, and they are doing hair from their garage, they can hang on for a few months, whereas a bigger salon that has a landlord to pay, staff costs, registration costs, power and water directly to the business – will soon feel the lack of money start to bite.
Client Sentiment
Meanwhile as a result of the price war, there can be a sentiment among clients that hairdressing services should be “cheap” and you see this a lot on community groups asking for hairdressers who “don’t cost an arm and a leg”, complaining when they are charged a fair price, and looking for the cheapest possible provider.
This is the problem we will try to address in this series.
We hope you find it helpful!
