Cash Flow And Raising Prices At Your Salon Or Spa

Managing cash flow, staff and raising prices all go hand in hand in business and this is no different for the salon and spa business. More recently, this number crunching has been complicated due to the pandemic, less predictable consumer behavior and the resulting inflation that is occurring all over the world. Prices are rising which means the materials for the services you are providing are becoming more expensive.This, in turn necessitates that you increase your prices as well but you need to do so without upsetting or losing clients. Here we will discuss the delicate balance between cash flow, staff management and raising prices so that external factors do not hurt the bottom line of your salon.

Announcing Price Increases At Your Salon

A general rule of thumb business owners are encouraged to follow is to announce price increases 30 days before they will actually take effect. This way, clients can feel like they were prepared and not taken by surprise with regards to the price increases; this is especially important for your regular customers as you do not want to break the trust that you spent so much time building. This 30 days of anticipation is also a good way to plan for your future price increases so that you never do last-minute price increases out of necessity and are proactive instead of reactive. This will help protect client trust, maintain your bottom line and lessen stress related to finances at your business.

Determining How High To Raise Your Prices

Since we already know that, across the board, your expenses will be going up, or maybe some have already gone up, you can plan your price increases now before it is too late and you have lost cash. You should take into account all of your expenses including supplies, staff, electricity, internet, SaaS subscriptions, repairs and advertising when considering what to raise your prices to. As of the end of 2021, overall inflation is estimated at about 6.8% so this is a good place to start when figuring out how much you should increase your prices by but, remember, this is just an overall estimation. Different sectors have different inflation rates. Therefore, you have to consider what percentage of your costs correspond to which sectors and adjust your prices from there.

Manage Expenses On A Weekly Basis

Managing expenses such as business bills and staff wages on a weekly, instead of monthly, basis can make the finances of your spa or salon seem more manageable. Expense numbers look a lot less friendly on a monthly basis and, if you manage expenses on a monthly basis, you will have a harder time knowing how your business is tracking on a weekly basis. Also, some companies provide discounts and incentives if you pay your accounts consistently on a weekly basis so this is yet another way to possibly save money and improve your cash reserves.

Put A Side A Set Percentage Of Sales Revenue For Emergencies

All businesses have busy and slow times which can make budgeting your cash flow less predictable. Therefore, it is recommended to set aside 5% to 10% of your sales revenue for emergencies and slow times. By doing this, you avoid the necessity to take out loans and lose money to interest payments if things ever get tight or you suddenly need to replace equipment. Having this money put aside will not only help your bottom line but also save time and stress since you will not need to look for sources of funding when the time comes.


Creating a happy balance between price increases and satisfied customers has always been a challenge to business owners but the pandemic and the economic fallout such as high inflation has complicated and increased this challenge. Obviously, you can not do nothing and sit back while your business loses money. However, you also cannot raise your prices so high that all of your clients get angry and go to another salon or spa. Raising your prices in a controlled way while advising your clients beforehand is the best way to ensure that you create a happy balance and accomplish your goals.