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96 DAYSPA | JUNE 2014 PROFIT CENTER Service pricing doesn't have to be a guessing game, if you examine all of the playing pieces. By Lisa Starr Is the Price Right? Do you know how much a gallon of gas should cost, or a gallon of milk? How about a 50-minute massage? Spas and spa services are becoming mainstream, which is good for the industry, but it also risks commoditiza- tion of our treatments. And, spa owners don't ease the matter, borrowing generously from each other when it comes to prices and treatment descriptions. Our spas offer a wide array of facilities, amenities and therapists' skill-sets; yet, within a particular market, spa service prices tend to be remarkably similar. The truth is that even post-recession, this is still a scary time to do business. No spa owner wants to risk being the most expensive, or giving clients any reason not to return. We recognize that certain services need to be more competitively priced—massage and nail treat- ments, for example, both of which are increasing their presence in neighborhood locations with value-based price points. Facials, on the other hand, aren't getting any less expensive. But to the average consumer, our "herd pricing" mentality may blur the differences be- tween one spa and another. What's the answer? There's no one easy response, but let's take a look at some of the variables that might help you arrive at the appropriate price points for your particular spa and services. PRICE-SETTING LITMUS TEST There are a variety of questions to ask yourself when set- ting pricing at your spa, including: • What is your overhead expense? Are you located in a high-visibility, high-rent area, or in more moderate surroundings? • What is your labor cost as a percentage of rev- enue? An expensive labor or commission plan forces your consumers to pay higher prices. • What does your facility offer? Do you provide locker areas, or do your guests change in the treatment rooms? Do you have lounges, tranquil- ity areas, wet amenities? Premium environments enable you to charge premium prices. • What are your product line costs per treatment? • What is your desired profi t target? • What about regional pricing? What your clients are used to paying is a useful barometer for gaug- ing a starting point on your pricing menu. Beyond the above factors, a major component of your pricing structure entails understanding your value proposition to your clientele. Do they see you as a premium choice in the market, or more mid-level? The facts of your rent, physical plant and labor costs are unavoidable, but the wild card is the intangible value © ISTOCKPHOTO.COM Signature Massage P r o f i t C e n t e r . i n d d 9 6 Profit Center.indd 96 5 / 1 / 1 4 3 : 4 2 P M 5/1/14 3:42 PM