Ways to Grow Your Business in 2012: Keep Pricing Competitive While Creating Profit Margins

Pricing is always a major question for the aesthetician. It is always necessary when pricing services to remain competitive, but still profit margins must be created and maintained. After all, while you may be frugal yourself and have a tendency to price low, remember that the services you sell are valuable. They benefit your clients. And, you have your own bills to pay and family to take care of. It is very important that you price services properly.

What price structure is fair?

Much of the answer to that question depends on the area where you live. Each market is different. For instance, Los Angeles and New York City have higher costs of living that cities in the Midwest and the south. People in those areas are used to paying higher prices. Also areas with booming economies and more money flowing tend to have higher pay structures than those areas that might be a bit depressed.

Have you checked out the competition?

One of the best ways to determine your own pricing structure is to find out what other aestheticians in other spas are charging for similar services.

That will enable you to determine an average price for services. Then determine how much time you need to spend with a client to perform a service and figure out what your average hourly rate of pay is. Of course the next step is to figure in your overhead and come up with a figure of fixed expenses that must be paid every month, every week and every day. Know how much it actually costs you to exist each day and how much extra you need to get ahead and you’ll know how much income to strive for. As an example, if it costs you $2,000 per week to cover all of your overhead and you work a five day work week, then you need $100 per day to stay afloat. If your hourly average is $40 then you need to sell at least two and a half hours of services daily to break even. That also means that if you sell five hours of services a day then you are $100 a head after paying all of your expenses. That can either be money in the bank to save for emergencies or a “rainy day” fund, or it can be money you use to pay expenses when you take a day off, or a vacation. Self employed professionals don’t have paid vacations and need to plan for those contingencies.

Check the competition and make sure that your prices are fair. Not too high and not too low, but most of all be fair to yourself in your pricing.