DAYSPA is the magazine of spa management. Spa owners and spa managers turn to DAYSPA for spa management trends, spa management tips and more.
Issue link: https://dayspamagazine.epubxp.com/i/311523
PROFIT CENTER 100 DAYSPA | JUNE 2014 often used in the restaurant industry, where entrées are typically priced at food costs times fi ve. If you're using an expensive product line, or the treatment requires additional train- ing or resources to perform, these impacts on your profi t margin have to be factored in. With her spa recently voted the No. 1 spa in Chicago by readers of USA Today, Allyu Spa owner Tamara Wills acknowledges that she origi- nally set her prices based on those of her competition. "We opened in October 2007, when the economic forecast was (correctly) predicting doom; discretionary income was dwindling and competition was high," she relates. "Our space had been chosen for its convenient loca- tion to primary neighborhoods in Chicago and its reasonable rent, but the reason for that rent was the de- veloping state of the neighborhood. I knew we would have to 'lure' people here to some extent, and I wanted to be known as an approachable, urban neighborhood place, rather than the annual luxury visit." IS THE TIME RIGHT? A key challenge is deciding how and when to raise prices. For instance, in the fi rst year or two following the worst of the recession, when clients began returning, spa owners were particularly reluctant to change anything. But the economy isn't the only yardstick. "When we raise prices it's usually due to a combination of factors," says Misty Hay, owner of Escape Day Spa in Rock Springs, Wyoming. "For ex- ample, sometimes we just decide that a certain service is worth more, so we add a couple of dollars to the price." Allyu Spa raised its prices for the fi rst and only time about two years ago. "It was because we needed to hire a few more employees to handle our traffi c, and I wanted to add some benefi ts and incentives for the staff, such as CEU compensation, paid vacations, retail and service credit bo- nuses," explains Wills. Keep in mind that, depending on your compensa- tion plan, raising prices does not ensure that any of the gains will fall to your bottom line. If you're in the old-fashioned three-way relationship of a commission-only plan, you may have to institute back-bar charges or raise prices substantially to real- ize any benefi t. (See "Paid in Full" in DAYSPA's December 2013 issue for more on compensation strategies.) In addition to good timing, there's a little psychology involved in a suc- cessful price-raising strategy. Spa Gregorie's Duncan advises stagger- ing increases, rather than trying to introduce a menu-wide hike. "Begin with items that may not be as easy to dayspamagazine.com/freeinfo • Use FreeInfo #47 Inadequate INSURANCE Coverage Could Injure Your Business SALON NATURALE KNEW BETTER. When a patron suffered burns during a waxing procedure, she sued the salon, claiming negligent hiring, training and supervision of the technician. Fortunately, when it came to their insurance, Salon Naturale knew better. They were prepared with Beautician's Professional Liability from SASSI. Loss: Bodily Injury Claim Paid: $25,000 In this case, inadequate insurance would have caused a salon business meltdown. Phone 888-823-9380 Email info@SASSIagency.com www.SASSIagency.com I NSU RA N C E W H E N YO U K N O W B ET T E R ® P r o f i t C e n t e r . i n d d 1 0 0 Profit Center.indd 100 5 / 1 / 1 4 3 : 4 3 P M 5/1/14 3:43 PM