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-   -   Pay-As-You-Use Hour Program (Tan America)? (http://tantalk.com/new-tanning-business/2348997-pay-you-use-hour-program-tan-america.html)

JerseyTanning 07-04-2005 07:32 PM

Can someone tell me how this works with Tan America?

I'm assuming this is a lease program, are they tracking the hours online somehow? If so, this is a smart idea for both the salon owner and Tan America.

If anyone has experience with this program from Tan America I'd be really happy to hear how it works, which beds qualify, etc etc.[ This Message was edited by: JerseyTanning on 2005-07-04 19:33 ]

DWhite6872 07-04-2005 08:19 PM

I am assuming that you are talking about a time share program? What are you trying to accomplish?

JerseyTanning 07-04-2005 08:47 PM

I guess that's what this type of payment plan is called "time share program", I'm not familiar with this, but it seems to be a great idea if that is the case.

http://www.tanamerica.com/myhtml/home.html

On Tan America it says:

Announcing The $250 Down Pay-As-You-Use Hourly Program!
Don't hassle with long-term commitments! 1200 hours and your Matrix is completely paid for. Pay for your Matrix with $$$ it has already earned!

So I'm assuming they are saying that you pay for a bed over 1200 hours (with the additional interest percentage points added onto the actual price of the beds).

So if I'm not mistaken this would work something like this:

Bed Cost = $20,000
$250 down over 1200 hours = $16.66 per hour.

And if a bed is a 12 minute bed, you would get 5 tans per hour, so you're earning $55.00 gross sales per hour on the bed with a lease payment of $16.66 per hour.

Obviously there are other additional costs such as electrical, bulbs, and the interest on the loan... but it still seems like a pretty nice way to pay (as you go), but is this is only for their Matrix line of beds?

_________________
[ This Message was edited by: JerseyTanning on 2005-07-04 20:53 ]

DWhite6872 07-04-2005 09:32 PM

Okay, if this is your only option...and you can secure a huge bed, (like the Matrix HP) then go for it!
If you can pay cash or get financed on your own then go this route first!

I am one of the most possitive people breathing...so....if this is the only way you can get a big bed and you know how to market your salon.....then GO FOR IT!

JerseyTanning 07-04-2005 10:16 PM

It isnt the only option for financing that I have, but it appears to be a sound option IMHO due to the fact that it's such a large expense and that you only pay for the hours used... basicallhy the market will dictate the payments on the bed, not just a time frame if its not generating revenue.

Beach Club Tans 07-04-2005 10:33 PM

Good and bad. I can see this being a problem in this way: The "Pay As You Use Bed" is VERY busy, but other beds in your salon aren't performing as well. That would leave you a big nut to pay in those months towards one bed, not towards total equipment/overhead. For an established salon making a major purchace this seems like a decent deal. You'd already have overhead covered (hopefully) and the equipment would pay for itself as it's used. For the owner just starting out, cash is king and you'd be limiting your potential cash to pay for your other equipment/bills/overhead. Make sense?

sunsally 07-04-2005 10:56 PM

There is a VERY good post from "Sparky" regarding this topic from another website (TSO).

As he points out, the "pay-as-you-go" programs have a "catch" which is there is a minimum hours. So yes - when you ARE pumping people through there - no problem. But in October? Still owe the minimum hours, even if it sat empty.

Using his numbers, it comes out to $850/mo minimum, with a lease length going as long as 5 years (20 hrs/mo minimum for 1200 total hours) or a total of $51K. Given that you have to be an applicant with "excellent personal credit", you might be able to get that same bed on a 3 year lease for a total cost of probably $42-45K or take out an equity line on your house for perhaps as little as $38K.

SO - not a "bad" deal, just a "different" one. All depends on your situation and goals. If you can't afford $850/mo for it to sit unused, don't even think about it!

p.s. As you figure your revenue potential for these kinds of situations, keep in mind that not everyone will pay walk-in price. Also, if you let staff tan for free or you tan, those will also be counted "hours"


DWhite6872 07-04-2005 11:11 PM

If it is your only option...go for it! I think we all know there are other catches when you have a pay as you go!

JerseyTanning 07-04-2005 11:13 PM

I knew there had to be a catch. The minimum hours per month makes a lot of sense from the standpoint of Tan America, how else would they get their money for a bed that is purchased and placed in a bad location. Thanks for the info!

sunsally 07-04-2005 11:24 PM

And to be clear - this isn't just a "Tan America" thing. Revenue Sharing plans have been around for quite some time offered by many companies (Sun Capsule is another particularly well known one), and will continue to be around.

But as you figured out - it isn't "hey, if it takes you 20 years to finally get to the minimum number of hours, that's ok - we'll wait!". They WILL get paid!

It works for some people, in some situations. But remember, if it sounds "too good to be true"......you aren't understanding it correctly!!




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