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Old 01-29-2014, 09:05 AM   #21 (permalink)
 
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Re: Competing with ridiculous Competitor's specials

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Originally Posted by sunrisetan View Post
If it's a lose lose as you refer to it as...how do you assume that salon is still on the block? I see plenty of eft type salons practicing these methods...low monthly fee's, then comes the art of upgrading them.

The $1 menu working just fine at mcdonalds and Burger King. One would think it would put em under.
It may look that way, but I once heard that the average ticket at most McDonalds is around $15.

As they say, McDonalds built an empire asking if you want fries with that (upgrading)
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Old 01-29-2014, 09:07 AM   #22 (permalink)
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Re: Competing with ridiculous Competitor's specials

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Fixed costs do not change like variable costs...
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...but they are costs that must be factored into your cost per session because they are costs that you actually incur every month.
You would never include fixed cost in to production costs ever; in any industry. How the heck would you figure out your gross margins? The #1 most important number to any business.
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Old 01-29-2014, 10:08 AM   #23 (permalink)
 
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Re: Competing with ridiculous Competitor's specials

Don't degrade your self by getting down on the other salon level. Sounds like a last ditch effort to either get some magic hat to stay in business or know they are going out and trying to steal customers money and bankrupt. Don't worry about them. Don't talk to your customers in a negative way. Tell them what you do to give them a great tan at a great value. Don't speak for other business but I do this 1. 2. 3. 4. 5. 6.
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Old 01-29-2014, 12:06 PM   #24 (permalink)
 
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Re: Competing with ridiculous Competitor's specials

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Originally Posted by SunseraWarman View Post
It may look that way, but I once heard that the average ticket at most McDonalds is around $15.

As they say, McDonalds built an empire asking if you want fries with that (upgrading)
If McDonalds didn't control their total cost of doing business, they could sell a billion hamburgers and still not make any profit. Anything that produces a product or service has a cost of production which includes the cost of equipment, building leases, utilities etc. Net Profitability is a function of both these fixed and variable costs. Accounting 101.
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Old 01-29-2014, 12:10 PM   #25 (permalink)
 
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Re: Competing with ridiculous Competitor's specials

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You would never include fixed cost in to production costs ever; in any industry. How the heck would you figure out your gross margins? The #1 most important number to any business.
Gross margins?, who the heck cares about Gross margins? I want to know what I am going to make after all costs and taxes. That is what I need to know in order to decide whether it is worth it to go on another year.
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Old 01-29-2014, 12:54 PM   #26 (permalink)
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Re: Competing with ridiculous Competitor's specials

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Gross margins?, who the heck cares about Gross margins?

You really should check with your local community college and see if they offer any intro business courses.


How are you going to know how many customers you must tan on your various levels to break even? How are you going to plot your marketing strategy to hit the numbers you need? How are you going to control costs correctly? How are you going to gauge if your prices are set correctly? What client acquisition cost should you consider acceptable?

Sure the bottom line is the end game, but how do you plot your map to get there if you do not care about your GM? How would you even do projections without knowing your GM?

Throughput, Inventory reduction and Gross Margins; master these 3 track-able metrics and you will always know if you are going in the right direction.
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Old 01-29-2014, 04:17 PM   #27 (permalink)
 
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Re: Competing with ridiculous Competitor's specials

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You really should check with your local community college and see if they offer any intro business courses.


How are you going to know how many customers you must tan on your various levels to break even? How are you going to plot your marketing strategy to hit the numbers you need? How are you going to control costs correctly? How are you going to gauge if your prices are set correctly? What client acquisition cost should you consider acceptable?

Sure the bottom line is the end game, but how do you plot your map to get there if you do not care about your GM? How would you even do projections without knowing your GM?

Throughput, Inventory reduction and Gross Margins; master these 3 track-able metrics and you will always know if you are going in the right direction.
House of Tan, I have an BBA degree with Major in economics and a minor in statistics. My strategy is not to try to figure our how many packages of each level I need to sell, my strategy is to get each customer to buy the highest level package that I sell. My inventory strategy is to buy at the lowest prices possible to create the highest margins possible. My equipment acquisitions are designed to add value to the highest level packages so that upselling them is easy. I do look at quantities and types of packages that we sell to try to maximize my sales per customer. But as for trying to figure for our 20 different beds, spray tan and massage, what my variable cost per session is, is....a useless statistic.

As for the break even number, that would definitely a function of both variable and fixed costs. What the heck else would it be? You could have great margins on everything that you sell and still not make a dime if your fixed costs are too high, dude!
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Old 02-05-2014, 08:40 AM   #28 (permalink)
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Re: Competing with ridiculous Competitor's specials

Fixed costs, variable costs, or GM, who cares. At the end of the day, If I can stick a few hundred bucks in my wallet, and use my credit card receipts to pay my expenses, I'm doing well. My bottom line dictates if I'm above board, and this is all I care about. I've always flown by the seat of my pants, in every endeavor I've tried, and have done right well in most. Very simple logic, has been my guide.
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Old 02-05-2014, 03:16 PM   #29 (permalink)
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Re: Competing with ridiculous Competitor's specials

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Sunsally, what do you think it costs to run a VHR bed like a S-Class? How about a big HP?

S-Class --- factor about $1-1.50/session

HP -- depending on lamps, session times, etc -- but approx $3-4.
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Old 02-05-2014, 03:18 PM   #30 (permalink)
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Re: Competing with ridiculous Competitor's specials

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S-Class --- factor about $1-1.50/session

HP -- depending on lamps, session times, etc -- but approx $3-4.

The variance in those numbers will be:

1. Your local area electrical rates

2. How much you pay to relamp

3. How often you relamp.


Some HP beds should see lamp changes around 300-400 hours --- others can go 600, and SOME claim they can go as long as 1000.....

Some HP beds might cost $1000 on a relamp (mattress, less lamps, or less expensive lamps) -- others can be upwards of $3000.


Same idea holds true for VHR beds - or any units.
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