How Do I Price My Services?
I'm Tiffany Nadolny, your host of the Spa Business Building Podcast. I'm a licensed esthetician, massage therapist, and solopreneur in my day spa. With nearly two decades of experience in the beauty and wellness industry, I've learned a few things about building a career and maintaining longevity.
Outside of the treatment room, I'm a wife, mom to the human and fluffy kind, plant enthusiast, and book lover. Join me while I share my experiences and insight on attracting clients, maintaining and building a thriving business while achieving work-life balance. So whether you're a new Solo Spa Boss or seasoned, this podcast is for you.
Welcome back Solo Spa Boss to the Spa Business Building Podcast. Before we start, I have a quick question for you, actually a couple of quick questions. Do you know whether your services are profitable or not?
Are you certain that you are charging enough for your services? This is something to think about if you're a new business owner or even a seasoned business owner. It's something that we should always be considering in our services from the beginning and as we grow.
So I've been hearing this question a lot, mainly from new service providers looking for advice from their peers. They're asking what they should be charging for their services, which is totally fine. The problem with asking the masses is that pricing is so subjective because what one person charges for their services isn't what somebody else should charge for theirs.
Because there are so many factors that you should consider when determining your service pricing. I'm also hearing this from seasoned business owners. It's not just the newbies, it's also the seasoned business owners.
And they aren't sure if they're charging what they should be in their services. So if you've been in business for a while and you are making a profit, that's great. So if you do your taxes and your accountant says, yes, you've made a profit, you owe taxes.
But if you calculate your services and you charge what you need to be charging, you could be making more profits just by increasing the cost if you need to because that's what you need to be making. So when I first started my solo career, I made the same mistake. I had no idea what to charge.
So I just did a little market research. I pretty much just Googled service providers in the area and decided to charge what other service providers in my area were charging, if not just a tad under what they were charging because I wanted to be competitive and I didn't want to drive away clients with too high of prices because I was new. I felt insecure and I was desperate.
But eventually I learned that this wasn't the best way to price my services. I ended up feeling like I was working really hard in not making what I needed to and I was working towards burnout. So does this sound familiar at all?
Because this is a common mistake and a lot of us make it in the beginning. We don't know what we don't know. But I will tell you, it's never too late to fix any of our service pricing.
So today, I'm sharing with you the factors that you should consider when pricing your services. We're going to start with number one. I'm going to go from least to greatest when it comes to what you should be considering.
So number one, you should consider your expertise and your experience. Is this a service that you had to receive extra certification for? Is it a specialized modality that you have studied and trained for?
How many years have you been performing this service? Or have you been a service provider? If you have mastered this training or service, you can charge a little bit more than others in your area.
Now, I've been a massage therapist for 20 years. I charge higher prices because of this factor. So consider that, look into how long you've been doing it.
Should you be charging a little bit more because you have been doing it for some time? Charge what you're worth. The second factor is location.
Location should play a small part in structuring your pricing. Not a lot, a small. The reason I say this is because I see a lot of service providers who are afraid to charge too much because they feel like the area that they are in is one's just saturated with service providers or they're in a small town or a rural area and they don't feel as though anyone will pay for the prices that they need to charge to survive.
Here's how I feel about this. You still need to survive. You need to charge what you should to pay your bills.
And oftentimes, we get into this mindset of you don't want to charge too much because others can't afford it. That's the narrative that you are putting into place. You don't know others' financial situation.
And if they can't afford you, then they will find someone who can. But you need to charge what you need to survive and pay yourself and live the life that you want to live. So a little story.
I have a hairstylist friend who moved her business from the area that I am in, which is like a suburban area next to the city. There's quite a lot of people. She was in a hustling, bustling salon suite.
That's where we met and became fast business besties. And she was busy. She had her books filled and she moved to, she actually lives 45 minutes away from where our businesses were.
And she decided it was time to move her business to her hometown. 45 minutes away. And I will tell you, I mean, she was nervous in the beginning.
She thought, you know, she's going to lose a lot of clients. She doesn't know what to charge, so forth. I think she's been there two or three years now and nothing has changed.
She does charge more than other hairstylists in her area. And I don't think there are a lot of hairstylists there, but she charges what she needs to make to pay her rent, pay her bills, and what she needs to survive, and some, as a hairstylist. And nobody even batted an eye.
I'm sure that she lost some customers, which is normal when you make a move like that. Some people just can't travel that far. Now, I still see her.
I drive 45 minutes one way to see her. She's fantastic. I value her work.
I love our friendship. And I will go and see her. And I think a lot of her clients feel that way.
They value her. They want to continue seeing her. And those in her town who can't afford her will go to a place that they can't afford.
But there were a lot of people who are in her area who are seeking out her services, because they know that she is good. She has a good reputation. They don't care about the pricing, because one, they're probably going to drive to the city anyways to get services.
And those stylists are charging the same prices as her. And she is making it convenient by you not having to travel. So she's been doing hair for 20 years also.
And she charges what she's worth and what she needs to make to survive. So don't limit yourself by charging less because you feel like you're in a small town. If people truly value you, and you can charge what you need for your worth.
So that's number two.
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Make sure you sign up now to receive exclusive offers for founding member status. Number three, you should be factoring in the time and effort that you are putting into that service. If you're putting a lot of time and effort into the service, you need to charge accordingly.
I don't ever advise reducing your prices because the service is longer and you feel bad. I don't know why anybody gets into that. I know that some service providers will charge more or charge less for a longer service, and I don't know what the mindset is behind that.
I don't advise doing that. If you're putting more time and effort in products, if you have a 60-minute service, you're using less product than if you have a 90-minute service. So if you're charging less for that 90-minute, then you are, like, if you calculated out the 60-minute service, you're losing money by not charging for that extra product that you're using.
So that should be a factor also. If you're putting more time and effort, you should charge accordingly. So that's number three.
Number four, your expenses. You should be factoring in your overhead, your monthly expenses, that includes rent, utilities, your scheduling system, any subscription-based service that you need to operate your business should be included in those prices. You should also include your accountant fees, your licensure.
So if you pay your accountant once a year to do your taxes, it's $300. Divide that by $12. What is that monthly that you are spending?
That should be factored in your licensure, any of those things that you need to pay even on a yearly basis, your credit card fees. This is a big one. Nobody ever factors in those credit card fees.
If you're paying around $200 in credit card fees, that should be factored into your service pricing. So do you know what your monthly expenses are? I really hope that you do.
Not a roundabout. What are you spending monthly on your expenses? That should be covered in your pricing.
Knowing these numbers makes for good business practices. These are good numbers to know in your business. What are your overhead expenses?
And number five, this is the most important factor in pricing your service. You should know the cost breakdown of each service that you offer. You need to understand what these are to a T.
And if your service costs change, then your service price should also change. Numbers can be intimidating. I absolutely understand that.
I am not a huge numbers girl. I've learned to be a numbers girl because I run a business. You have to know your numbers if you're going to be a profitable business owner.
How much does each four by four cost for your facial treatments? What does that sheet set, the sheets and towels that you were using in that service, what does that set cost you to wash them? You're doing it at home or you have a service.
What does one set cost you? How much does each pump of lotion or oil, if you're a massage therapist, what do your lashes, what do the nails, every single thing, item, supply that you use in that service, you should know what it costs you. Now, you don't have to know it right off the top of your head.
If you have it written down in a spreadsheet so that you can calculate those costs, perfect. This may seem excessive, but it's essential. So, how to calculate?
If you have a package item, so I'm just going to go back to Aesthetics because they have estheticians, nail techs, lash artists, they have a lot of supplies, costs that go into each service. So as an esthetician, you have a package of four by fours. It costs you $20, I would say probably for that service or for that package.
And you have, I think there's like 200 in each one. That's 0.1 cent per four by four. So you take the cost, you divide it by the quantity and that will give you the cost of each item.
So if you have four of those in a service for four by fours, multiply that by four, then that's 40 cents because 0.1, that's 10 cents. 40 cents for your four by four usage. If you need to calculate, you need to break down each pump of lotion, then you would multiply the amount in the bottle.
Well, it's a gallon. How many pumps can you get from that? So a good way, you can test it and see, pump out what you would use and divide it by that.
You can also contact your skincare or the provider and ask them, how many uses it is per bottle. It's like 64 uses. Each use is one teaspoon and you can calculate that.
Now, if numbers do intimidate you, and you want to know the breakdown for your service costs, I have created a simple profits calculator. I have done it all for you. All you have to do is input it into a spreadsheet, and it pumps out the number for you.
So if you would like this profits calculator, you can go to my website, spabusinessbuilding.com. You can also DM me over on Instagram, that's solo.spa.bosses. Just DM me profits calculator, and I will send you the link.
So that is it for today's episode. I have the five factors that you need to consider when determining your prices. I'll go back over those.
Number one, your expertise and experience. Number two, the location. Number three, your time and effort.
Number four, your expenses, which is your overhead. And number five, the cost per service, the supply breakdown for each service, what that cost you. These are the five factors that you need to determine your pricing structure.
Now, if you have any questions that you would like answered on the podcast, please DM me over on Instagram, solo.spa.bosses. Thank you so much for listening. Until next time, friends, stay inspired, stay fabulous, and happy business building.
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