Multi Version Pricing – At Salons

Salons are not the first place a marketer would look for pricing nuggets. But interestingly enough they practice almost all  pricing techniques in the book, more than we see in other businesses:

  1. Unbundled pricing – separating the price of haircut from shampoo and blow dry. There is also complete unbundling that some salons do not want to see happen.
  2. Price discrimination by age – children and senior pricing
  3. Price discrimination by segments – student discount, men and women at different price
  4. Price discrimination based on cost to serve customers – additional  charges for long hair
  5. Price Promotions – coupons and new customer acquisition

Almost all salons practice  price discrimination, from the low end chain stores to single store boutiques. No salon posts a single price, there are always multiple prices – trying to cover all segments.

Of all these there is one pricing scheme practiced by some high end salons comes close to getting customers to pay their true willingness to pay. Look at this price list from a salon

model thursday 21
apprentice 36
new talent 46
junior 50
senior 55-80
artist 130

They have at least eight price levels available to a customer – all based on the customer’s perceived value of the haircut they would get from the stylist. I claim perceived value because of two reasons:

  1. if the “apprentice” really does such a poor job compared to the “senior” then she would not be working there. A customer who looks at this price list
  2. It is hard for a client or even for am objective observer to tell the difference in the end product, so the price serves as a stand in for quality.

The beauty (no pun) of this multi version salon pricing is that it comes close to first degree price discrimination. This gives the salon an opportunity to nudge the customers to self-select themselves and pay close to their true willingness to pay.

So if salons, even with their  resource limitations and almost non-existent IT systems, can successfully practice multi-version pricing  should you not?

If one price is good, two prices are better!