The “Ugly Truth” About The Hair Industry And Why Haircuts Cost $8.
When I started Hairstylist Tribe there were about 12 things that I wanted to have a positive impact on and change about our industry.
Boy, did those 12 things change completely after these last 10 months.
I quickly realized through trial and error, that you could not possibly change an established and deep rooted belief system about any one topic in any industry including our own.
The only thing you CAN do, that I felt I could easily do using the Internet, was to offer a different perspective, then take my unpopular point of view to the masses online so the masses would have the opportunity to at least look at a common problem described from a different perspective (by me) which naturally would offer a much different solution or at least a different takeaway.
I’m not sure that this blog will offer you a solution in the form of something that you can DO right away, but it will offer you a deeper understanding of the underlying reason why haircuts do cost $7.99, from the angle that explains why EVERY service or product eventually becomes cheaper and cheaper as time passes.
Sure, you might be happy that a lot of salons charge those kind of prices because you may be one of the few talented or fortunate ones to do the color corrections or fix the cuts in the aftermath, but the concept I’m about to describe affects you as well.
To tell you the truth, I quit working in a salon when I was charging $65 a haircut, at the height of my skill game, because I knew that the market is the market and what the market was having me do, I no longer wanted to do — which was to start the process of lowering my prices.
The $8 haircut market wasn’t going to be a pond that I was willing to swim in nor could afford to swim in the future for long given the ever increasing cost of living in my area.
But this isn’t about my area or the cost of living here because the underlying reason as to why haircuts cost $8, affects every single hairstylist on this planet because it has to do with simple global economics: supply and demand.
Enter COMMODITIZATION.
A quick search of the word commoditization will tell you what it does:
Commoditization occurs when consumers can buy the same product or service from different small or large businesses. Price is the only distinguishing factor in commoditized products, because there is no significant difference in quality or in how consumers use these products. Companies usually cannot raise prices because consumers can shop at competitors offering the same or similar products at lower prices. Examples of commoditization can be found in several industry sectors.
(Obviously including the hair industry).
It’s kind of upsetting to think that someone thinks of me and my time to be as important as the plastic TV they got on sale at Costco.
Ever wonder why your “competitors” drop their prices even though the cost of living goes up?
They’re crazy right?
Commoditization.
Ever wonder why the client always asks for discounts or just dissapears never to be seen again?
Commoditization.
They found someone else to do what you used to do for the same amount or less.
That’s how you explain this existing low price war from the standpoint of economics.
It’s not that people don’t value us as service providers, it’s that they value their money more (which is topic for another conversation).
In other words, it’s not about your skill or talent or expertise or how good you are to them, it’s about the client’s perception of you and your services and whether or not it’s worth it for them in the long run to continue to come see you based on how their wallet feels about you.
Prices are dropped by service professionals due to panic, because there’s a common misconception that they have to in order to keep up with the times, which leads to something known as “price incest” (everyone charges relatively the same amount).
However the catch-22 is that there will always be someone willing to charge less so you’ll always be forced to lower yours and if you don’t, you’ll end up in a state of constant wobble and being torn apart feeling as if you don’t know what the right thing to do is when people point the finger and say “I’m sorry your prices are too high for me”.
I recognized that two years ago and decided that I was going to find a different way to make myself useful to this industry I loved very much as opposed to just downright quitting or continuing on until the bubble burst where I HAD TO lower my prices.
It would have been too late.
I’m not suggesting in any way shape or form that you quit your salon job.
Contrary to that, I believe you should continue to keep your prices and even raise them as time goes on and not fear the low ballers.
I believe in the future, the properly priced hairstylists will actually win, we just have to make it through this deep valley.
I simply wanted to introduce you to the root cause of the largest problem this industry currently faces : price incest due to commoditization.
Price incest is caused by commoditization and it isn’t something that owners, stylists nor business coaches talk too much about in this industry (or any other one for that matter).
It’s a problem that’s been plaguing the computer industry for years where computer programmers used to make 6 figures in the mid-90s and now you can get a computer programmer to do whatever you want on fiverr.com for $15 because they’re now “freelancers” and no longer working for the tech companies directly.
I urge you to take a hard look at this concept and understand it and how it affects you because the best solution can come from you and your understanding of what is really happening, not from some blog which might tell you “7 Ways To Increase Your Prices”.
There are only two constants in life : truth and change.
Change is happening on an ongoing basis, that’s just the truth.
We must all adapt.
I hope you can keep up with it and I hope me digging deep to the cause of the low-price wars in this industry with this brief blog has stimulated some ideas in your head for how you could do things differently in order to set yourself apart and not continue or start to devalue yourself at any point from now on.
Value yourself and value your time.
It’s the only asset you have.
Melissa.
P.S. There’s still time to sign up for my FREE digital guide “How To Build Your Online Beauty Tribe” HERE.
Those of you who sign up also get an advanced digital copy of my Amazon book “The Social Hairstylist” to be launched later this year.
Here is a picture, once again, of the results of commoditization of our services and our industry:
