DAYSPA is the business resource for spa & wellness professionals! Each issue covers the latest in skin care, spa treatments, wellness services and management strategies.
Issue link: https://dayspamagazine.epubxp.com/i/902908
dayspamagazine.com • december 2017 • [ 59 ] New prices for services can be rolled out pretty easily, as customers tend to be aware of infl ation and rising prices across the board. Lisa Starr, senior consultant at Wynne Business in Swarthmore, Pennsylvania, says it's a good strategy to raise prices on a portion of services fi rst, then focus on the rest later in the year. "Get your clients accustomed to the fact that costs go up now and then, and it won't be a big issue," she advises. Price hikes should generally be spread out, which requires advance planning. For example, Grod anticipates increased prices in fall 2018—and aims to wait until January 2020 for more. Raises at the start of the year make sense to both his business and his customers, he says, because people typically view this as a time for new beginnings. Jarred Fajerski, vice president of operations for Trevose, Pennsylvania-based chain Hand & Stone, says that pricing changes are implemented on a store-by-store basis (there are 326 across the country), although sometimes a group of franchisees in one area will band together to request that prices go up. All increases have to be vetted by the head offi ce, and typically they're raised by $10 for new customers' monthly dues, nonmember pricing and introductory off ers. Hand & Stone locations tend to increase the costs of all services in one fell swoop. "We don't see much diff erence in bookings between spas that added $5 or $10 to charges, so you may as well go with $10," adds Fajerski. But you shouldn't do it too often either; if you "condition customers to expect regular price increases," he warns, it might put them off . Starr advises raising prices a maximum of 7 to 10 percent. She also suggests implementing these changes for a few top-selling services and leaving less popular ones alone. "Consider the 80/20 rule: 80 percent of your income comes from 20 percent of your services," she says. "Focus on treatments that will create the most impact to your bottom line." Dealing With Backlash Unsurprisingly, the m ain concern with raising your prices is disgruntled clients. Realistically though, they do expect increases and typically understand, says Grod. To soften the blow, he gives them a month's notice. He also off ers guests opportunities to buy services and memberships in advance—at the old price points—which raises sales by about 10 percent. Once the new prices kick in, he reports a 3 percent decrease, but it only lasts a month or two, "until people realize it's not out of line." This decrease is so small and so temporary that Grod says he doesn't need to take any action. An alternative to raising prices is to reduce the length of services, e.g., from 60 minutes to 50, suggests Starr. "That in eff ect is a price hike, but the client doesn't have to pay more. And this allows employees to turn the room on the hour," she explains. Another option, says Starr, is to off er add-ons or samples. The latter carries an extra bonus: more retail sales down the road. Hand & Stone franchises like to give clients incentives when prices go up. "Sometimes they add a $5 coupon for an enhancement, which can get customers hooked on something new—and more expensive," says Fajerski. One thing the chain won't do? Increase membership prices for existing members— price hikes are for new additions only. Grod, on the other hand, prefers not to throw in extras. "I don't want to devalue our off erings," he says. Getting the Word Out Price hikes ca n't come out of the blue, however, no matter how much you think your customers might expect them. Grod notifi es clients about upcoming price increases via store signage and emails. He keeps it brief, because they generally understand why, he says. Fajerski reports that Hand & Stone franchises mostly communicate via email, and they too keep it short or members won't read it. Don't make a big deal of price jumps, recommends Starr. "A small note at the front desk, in a nice frame, is plenty," she says. "If prices are raised incrementally now and then on a handful of services, it won't require a whole campaign." Be sure to phrase it in a positive light as well. Starr suggests something like, "We've increased our prices so we can continue to provide you with the great service you expect from us." However, cautions Fajerski, avoid being the fi rst in your neighborhood to raise prices. "Follow the competitive landscape. You don't want to be perceived as the most expensive or the cheapest," he advises. He prefers Hand & Stone locations to be seen for what they are: middle of the road with great services. u © GETTY IMAGES "Focus on treatments that will create the most impact to your bottom line."