Competing with ridiculous Competitor's specials

[peach]

Originally Posted by sunrisetan

Maybe at $15.99 they only have one or 2 base beds...and to avoid waiting, co pays to upgrade. Makes sense to me. They sell enough of the monthly's to create the wait. What would you do, sit and wait to get in a crappy ol base bed or pay a few bucks more to get into an upgraded nicer tanning unit? The low price brings them in...you only lose if you have too many base beds.

That is a lose-lose proposition; a lose for the customer, because of the waiting and pressure selling, and a lose for the store because you would have to sell a ton of these to make them profitable

[lemanski85095]

And its another lose for the store because if i did that special and then ahd to wait every time i went in i wouldn't go back so just sit tight because all they are going to do is **** people off unless they aren't waiting

[sunrisetan]

Originally Posted by peach

That is a lose-lose proposition; a lose for the customer, because of the waiting and pressure selling, and a lose for the store because you would have to sell a ton of these to make them profitable

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.

[shane3434]

never change your prices... you have to sell value and you have to sell customer service.. you will lose some and you will gain some.. keep your price the same, but offer more.. you have to fig this out...

[SunseraWarman]

Originally Posted by shane3434

never change your prices... you have to sell value and you have to sell customer service.. you will lose some and you will gain some.. keep your price the same, but offer more.. you have to fig this out...

Never change your prices?!? I up my prices almost every year ;)

[peach]

Originally Posted by sunrisetan

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.

Have you calculated what it costs to run a base bed for 20 mins?....More than $1 I can assure you.

So if Someone sells 1 month for 15.99 and lets say it costs $1.50 to run the bed (per visit), how are you going to do over the long run? You had better do one heck of a volume. Most people do these cheap specials for 1 reason only; to take market share (your business). In the long run, You cannot maintain equipment or improve your salon with those low margins. The fact that they haven't stopped those specials tells me that they are in trouble.

[sunsally]

Originally Posted by peach

Have you calculated what it costs to run a base bed for 20 mins?....More than $1 I can assure you.

Not true.

There are fixed costs and variable costs.

For example - your rent and payroll and any loans you took out are fixed costs you have every day whether you turn the beds on or not.

The VARIABLE costs are those that go up - because you turn on the bed. Generally speaking - the cost of the electricity to fire up the unit and the amount of "wear" you use on the lamps.


To run a base bed - somewhere between $.25 and .50, depending on how many lamps, what you pay for lamps, how often you change them, and your cost of electricity.

[sunsally]

Originally Posted by gena1968

how do you compete with another salon, I might add, in a small town who is running 20 free visits with purchase of a bottle of lotion? I mean seriously??

I could buy a bottle of lotion for $5 - sell it for $50.

And give 20 visits on a L1 bed - which would cost me about $10.

Meanwhile - during the 20 visits - talk to you about the benefits of upgrading, for "only a few dollars more today". Get you to do that even just a couple of times - maybe another $20-30.

At the same time - your friends might ask where you tan and THEY check me out. Not EVERYONE will buy the free visits with lotion package -- just like not everyone eats from the dollar menu at McDonalds.

It CAN still make a little money for the salon. But most of all - it is done as a 'Lure' to get you in the door, NOW, before busy season. When that package runs out - the staff sells you another one - NOT at that same big discount the next time.

And they are locked into THAT salon for season. Rather than their competitors (your salon).

[Lobo 77]

Originally Posted by sunsally

Not true.

There are fixed costs and variable costs.

For example - your rent and payroll and any loans you took out are fixed costs you have every day whether you turn the beds on or not.

The VARIABLE costs are those that go up - because you turn on the bed. Generally speaking - the cost of the electricity to fire up the unit and the amount of "wear" you use on the lamps.


To run a base bed - somewhere between $.25 and .50, depending on how many lamps, what you pay for lamps, how often you change them, and your cost of electricity.

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

[peach]

Originally Posted by Lobo 77

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

Sunsally, you are giving people the wrong impression. Fixed costs do not change like variable costs, but they are costs that must be factored into your cost per session because they are costs that you actually incur every month. You are trying to use the fast food model (high volume-low margin) for doing business in the tanning industry, and just doesn't work for several reasons:

1) The tanning industry is shrinking not growing.
2) The tanning business is seasonal
3) Not everybody is going to tan indoors even once in their lifetime. (1 out of 10 or less)
4)Tanning is not a homogeneous service

As I have said before, these low price "gimmicks" are designed to take your marketshare away, not to be profitable long term.