To ensure their businesses stay profitable, grooming salon owners and operators must learn how to figure out a fair approach to pricing their services.
The reason many of us got into pet grooming was for the love of animals. We were looking for a job in which we could work with animals and enjoy what we do. But in reality, we are selling services to pet owners to make a profit. Loving what you do should not mean giving your services away. If you give away your services for less than it costs to run your business—or you are just breaking even—you will fail.
Pricing is the most important decision a grooming business owner needs to make to turn a profit, and there are a number of things that will influence this decision, including location, the staff’s education and experience in the industry, demand, local competition and more.
Of course, you have flexibility in how you set up your prices; there is no exact science or formula to apply. Pricing services can be more difficult than pricing products because you can calculate the cost of buying product, but it’s more subjective to calculate the worth of your staff’s expertise, and the value of your time and overhead. However, you do have more wiggle room when setting prices for services than you do when pricing products.
Here are the major factors that all grooming business owners should consider when determining what price to charge for their services:
Groomers need to be aware of what competitors in their area are charging for similar services—information that should be simple to collect from websites or phone calls. But this pricing information isn’t necessarily for use in helping you compete on price; instead, it should simply be used to make you aware of what is going on in the local market. Successful groomers compete on their service, quality, atmosphere and other dynamics that set them apart.
If you have to compete on price to win a pet owner, you should ask yourself whether this is the type of pet owner you want for a client. A client only focused on price will eventually move to the cheapest groomer in town. They may eventually come back because of your quality, but you can’t count on that.
Groomers should look to build long-term relationships with pet owners. To do this, you need to prove to clients that you are giving them great value in terms of service and quality, and show that you truly care for them and their four-legged family members. Personally, I think of my clients as an extended family. I am now servicing third-generation pet owners and have cared for third and fourth pets with the same owners. I can’t begin to guess how many tears I have shed with them and over them.
Pricing services is very subjective. You need to determine how much a customer is willing to pay for your service. It is not always about how much time you spent on the service, but rather what is the perceived value of that service to the client? To many pet owners, there is value in lightened workload needed to maintain a clean house because of your de-shed program. Likewise, they may see value in the time you saved them in maintaining the dog’s coat at home. It might be that they like the dog to look like the breed standard, and you are the only groomer in town that can do it. The bottom line is that you need to understand what brings pet owners to your business. For me, I know it is not because I get the pets groomed in one hour; it is the quality of the overall groom and the fact that I can do specialty work. What makes you special?
This normal method of pricing looks at the cost of completing a service, then adds the amount needed to generate the desired profit. To use this method, you first need to fully understand the costs associated with providing the service. Material costs are the costs of supplies you use when providing the service. A grooming salon would need to figure in the cost of tools (dryers, clippers, blades, nail trimmers, grinders, brushes and combs), maintenance of the equipment, paper towels, cotton balls, cleaning solutions, shampoo, conditioner, specialty products, ear powder and cleaner, styptic powder, laundry, rubber gloves, towel, etc.
Labor costs would be your stylists’ wages while they are providing a service. To calculate these costs, use a computer program, punch-clock or a time sheet to track how much time is needed to groom each pet.
Overhead costs are the necessary business expenses that are not directly related to the service being provided. These include the wages of a receptionist, bather or the person doing your payroll, as well as monthly rent, taxes, insurance, utilities, advertising, office supplies, equipment depreciation, etc. To calculate your overhead, don’t just depend on numbers from last year; you need to charge rates that cover your current costs.
After determining your costs, it’s time to decide on a fair profit margin. This is a delicate balance. You want to ensure that you achieve a desirable profit, but at the same time, you want to make sure that your business doesn’t get a reputation for overcharging for services. Unfortunately, there is no real clear standard net profit margin that groomers can focus on. Margins for services fluctuate greatly, ranging anywhere from 10 to 50 percent or more, depending on the service. However, 20 percent seems to be a good average.
Based on the groomer’s speed, a 20-percent profit margin will require an hourly rate of $15 to $20-plus an hour. This is based on a regular groom on a small-breed dog with no added services. Those prices are a low average for both shop and mobile grooming services, but that is all we need to achieve a 20 percent margin. So, you can see how charging just $5 or $10 more per dog can really increase your profitability. Of course, average base grooming prices start between $50 and $70, and most mobile groomers start at $70 and go up.
Pricing can be done as an hourly rate or a predetermined per-dog fee. An hourly rate is preferable because it guarantees your rate of return on the actual time and labor invested in grooming of each pet. This approach is more often used in situations with a single owner/operator, as opposed to businesses that use labor and materials from others. In this case, hourly rates should be determined by your grooming expertise—the higher the level of expertise, the higher the hourly rate.
One issue that arises when we charge hourly is that while it might take an experienced veteran groomer just one hour to do a full groom on a Standard Poodle, a groomer that has only been grooming for two years will not be able to produce the same finish in that timeframe. It may take her two hours to do the same work. This presents a challenge in salons that employ multiple groomers of varying experience levels, as it is hard to charge the same dog different prices each time it comes in. Still, coming up with a reasonable base price for an hour should work, as most small to medium dogs can be done in that amount of time.
Many shops charge a flat per-dog fee and have variable pricing for additional services over and above what they consider a normal part of the grooming service. This will cover additional time beyond what was calculated in the base pricing scale. Some groomers have a hard time charging different pet owners with the same breed different rates, but you must consider that no two dogs of the same breed are alike. I have groomed American Cockers that weigh 18 pounds, and I have groomed some that have weighed in at 40-plus pounds. None have the same coat type or get the same trim. All of these things need to be considered.
In my business, I consider the weight of the dog and coat type to determine price. Then I account for any additional services that add time to the overall grooming process—for example, scissor time over 15 minutes, matting, aggression, soaking in special shampoo products, nail grinding, etc. This approach makes it easy for clients to understand when extra care is needed and it reflects your extra time spent working on the dog over what is normal. It also gives the groomers employed in a salon incentive to provide additional care to the dog because they receive a portion of the additional charges.
Another good way to add income for the business and staff is by creating monthly packages that focus on specific issues a dog might have such as a shed control, sensitive skin or skin-soothing package. For example, you might offer a Hydrating Spa Treatment with Hydrosurge Oatmeal Shampoo, followed by Hydrosurge Milk Bath Condition in the dead of winter for dry skin.
Once your prices have been set, it’s important to keep track of the impact of any increases in overhead. In the grooming business, your biggest cost is your employees. If you are having trouble making an acceptable profit, the problem might be that your employee costs are too high, rather than the price being too low. You should look at your overhead costs to determine whether there are other cuts you can make to bring your profit margin up.
However, if your expenditures are under control and you’re still having trouble turning an acceptable profit, it is time to raise prices. There are risks to raising prices, particularly when your clients may be going through tough financial times. I never like raising my prices, but I think of it this way: if I raise my prices $5, for example, and groom eight dogs a day, the price increase paid for the a few dogs a week I might lose.
The bottom line is you owe it to yourself and your staff to be focused on managing your pricing strategy. Here’s to the bottom line and loving what you do.
Christina Pawlosky is a Certified Master Groomer, professional handler, breeder, and successful pet store and grooming shop owner (The Pet Connection) since 1985. She is currently the National Training Manager for Oster Professional Products and produces grooming DVDs through her website GroomerWorks.com.