Don Smith

Some questions and thoughts about Robbie’s business model:

Question 1. Does his $18.88 monthly fee make sense?

He said:

“Thanks for the question. I think this will be of great help to many of you and may help to silence my critics who think my strategy is too low-priced and predatory.

I developed the concept of the $18.88 long before I choose tanning as the vehicle to do it with. Car-washes and Gyms were also on the list.

Many still continue to charge what they think people will pay to tan. I started out with a much different approach.

I asked, “how much would you pay me each month, NOT to tan?” $18.88 was as much as I thought, and still continue to think, I can get away with.”

Thought 1: In other words, the $18.88 monthly fee was picked because it was the “highest” that could be used and not have the customer concerned about not using the package that they had purchased (“I can get away with”). Thus, this model is based, IMHO, on the premise that the majority of the people who pay the $18.88 monthly fee will tan infrequently or not at all. Here are some numbers to consider:

1.$18.88 @ 4 visits per month = $4.72 per tan.
2.$18.88 @ 6 visits per month = $3.15 per tan.
3.$18.88 @ 8 visits per month = $2.36 per tan.
4.$18.88 @ 10 visits per month = $1.89 per tan. (probably the average).
5.$18.88 @ 12 visits per month = $1.57 per tan.
6.$18.88 @ 20 visits per month = $0.94 per tan.
7.#18.88 @ 30 visits per month = $0.63 per tan.

Therefore, if you get a lot of people signing up who come 20 – 30 times per month and (1) do not upgrade, and, (2) do not purchase lotions, you have got a full-fledged economic disaster on your hands with this model!

Question 2: Then, does his “model” only make sense if people don’t tan?

Robbie said “Many corrupt this concept by thinking that I am trying to make money off people who don’t tan. Such money is marginal in my model. Remember, I am the guy focussed on my NOS and PPA’s.”

Thought 2: Unless I am missing something, the ONLY way to make money using his “model” is (1) for people not to use it (2) that the people who do use it upgrade most of the time, and, (3) that the people who do use it and upgrade most of the time also buy lots of lotions.

Question 3: If “upgrades” are critical to success, how do you get more upgrades?

Robbie answered that when he said “The $6 S Class upgrade…”!

Thought 3: Thus, in this model you are FORCED to offer upgrade equipment at low prices in order to “encourage” or “entice” them into upgrading most of the time.
Question 4: Is there anything else going on we missed?

Robbie continues “The $6 S Class upgrade” (PAY ATTENTION HERE!) “is the price for our members who buy a $200 package.”

Thought 4: Robbie is a sly fox! He “entices” a them with a $6.00 “sticker price” but the “small print” of the deal says that you only get that price IF you buy a $200.00 “S Class” package!

Question 5: So, is his “list price” much different than anyone elses?

Robbie continues “My system is based on the principle that members pay half-price for upgrades and half again for the big package. This means that my non-member walk-in price has to be 4 times my lowest price, i.e. $24. How’s that M&C and Alex— still too cheap for an S-Class?”

Thought 5: Robbie IS a sly fox. Here he had “Ask Don” fooled into thinking that his “model” was “predatory” when, in fact, he is just “packaging” his offerings better than the rest of us dummies. His members get the upgrade to the S Class for $12.00 (members pay half-price for upgrades) and people who buy the $200 package (and half again for the big package) get the $6.00 fee. [Question to Robbie: $200 divided by $6.00 comes out to 33.3 tans. Is this correct?]

The “bottom line” is that Robbie has developed a “model” that works quite well for him and that proves conclusively that he is a VERY SLY FOX!

Will it work for everyone? THAT, Virginia, is the question!

Is there a risk with his model. You betcha, Lone Ranger!

Comments?

Don

PS: My bride was reading this over my shoulder and her comment was that Robbie is smarter than we are! LOL

Robbie

Don,

There is already a thread for these types of questions. Would you be so kind as to post them there? Cross-threading gets too confusing and I'd rather keep this information all in one block.

Also I believe you have less editorial powers over there and I do not suffer editors galdly--just ask Bruce.

Robbie