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Old 02-15-2008, 10:31 AM   #1 (permalink)
 
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New Salon in Area

My fiance and I bought a salon last april that had been open for over ten years. The prices were fair and the beds were great but the salon definitely needed some work put in. Which we did and are still doing. There was only one other salon in our town, and our prices were about the same.

The month after we signed a new salon opened about 3 miles down the road. The owners of that salon were a family that lived in town and have a daughter in the town high school. Anyway, their base price for a month is $40 and they began with a special for $19.95 for a month (with no eft or anything). They also had their daughter hand out TONS of coupons for a month for $10. For the first NINE MONTHS they did this special for $20 for a month. Then they went up to $40 for a month for two months, then went back to $20, which they are still at right now. They also have huge rent... about 3x ours.

At first we lost a LOT of customers. In the past few months, though, we have gotten those people back, and a lot of new people who used to tan with them. *LET ME JUST SAY THIS I do not bad mouth other salons to anyone- this is what I have heard from a lot of customers and our employees though.* Everyone is saying that their beds don't get you tan. I'm not sure if it is their beds or bulbs... anyway great for us. People are actually realizing you get what you pay for.

What I am wondering if anyone has any like experiences or advice... I mean can you really offer a month for $20 and make money??
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Old 02-15-2008, 10:44 AM   #2 (permalink)
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Re: New Salon in Area

In my experience the younger the client the more usage. A good example is week unlimiteds I recently sold. Average was 3 sessions in that week. But those under 20 used 5 or more, those over 25 used 2 on average.

So they catered to a group that may be much more likely to use the packages to the full extent. Then they offered it cheap, too cheap. Once you factor in all the over-head there is little to no profit (if any) on $20/ month. Of course that depends on hidden expenses that we do not know. But for your typical new salon, no way.

Not only that, but people will be EXPECTING deals now and forever. Heck, it happens here! We had a sale, 10 tans for $30 last fall. Thats a deal, we never go that low usually. Our regular price is 10 tans for $50. This lady came in a LAUGHED at the 10 for $50. I told her is was regular price now. Anyway, clients there will expect those low prices and when they dont a lot of those kids will just walk out. They probably wont tan anywhere though, they want it for $20 or nothing at all.

You cant run a business like that.
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Old 02-15-2008, 10:51 AM   #3 (permalink)
 
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Re: New Salon in Area

Thanks, that helps.

I feel like when you do a really low priced special you can't do it for very long or that is at what price the customers will always value it at.
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Old 02-15-2008, 11:19 AM   #4 (permalink)
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Re: New Salon in Area

It all depends on your overhead.I sell all my monthly packages at my competitions eft prices.Do we make money,yes.Do our customers get tan,yes.Our overhead allows us to undercut our competitors and still show decent profit.Can you get rich selling $20 packages,probably not,but we survive comfortably in the slow season and thats all that counts.

Volume can make just as much money,might be more work,but its steady.
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Old 02-15-2008, 12:26 PM   #5 (permalink)
 
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Re: New Salon in Area

Quote:
In my experience the younger the client the more usage.
You are correct sir!

Carry on.
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Old 02-15-2008, 12:51 PM   #6 (permalink)
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Re: New Salon in Area

So we are teaching the "young ones" that there are deals out there. Then when they get older, they are the ones *****ing that we are too expensive. Quit giving deals to the "young ones" and make them pay jsut like everyone else. Then when they are 25 and up, they won't come into your salon and ask "whats on sale?"
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Old 02-15-2008, 02:05 PM   #7 (permalink)
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Re: New Salon in Area

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Originally Posted by TomorrowSun View Post
So we are teaching the "young ones" that there are deals out there. Then when they get older, they are the ones *****ing that we are too expensive. Quit giving deals to the "young ones" and make them pay jsut like everyone else. Then when they are 25 and up, they won't come into your salon and ask "whats on sale?"
I give students with a valid I.D Including college up to 25 discounted tanning.If it wasn't for my discounted price for students.I would be crying like all the rest during JASON.My worst month was November and I was still made payroll for myself.

Im sorry if my marketing concept detracts and de-stabilizes the industry for higher priced salons,but Im in business to make money,not friends.If my discount prices cause you to lose business,reduce your profit margin,get your equip repo'd or whatever,you were probably in over your head to begin with.
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Old 02-15-2008, 02:32 PM   #8 (permalink)
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Re: New Salon in Area

I do student discounts with valid ID also, but only on a per-tan basis. And that way they usually spend more a month than a regular price unlimited anyway. Many student dont want to spend $50 for a month up front, but they will sure come 12 to 15 times a month and pay-per-tan.

By the way, we sell a package in Helios called "Student Membership". Its lasts 6 months and cost nothing. Then we have a BSS (Buy Student Special) sales code that will ONLY work if they have been sold a membership. It helps to remind us to check IDs every 6 months and at the same time we dont have to check it everytime they come in.
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Old 02-15-2008, 03:26 PM   #9 (permalink)
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Re: New Salon in Area

My god you are all so low. Are your rents and overhead that much cheaper? Our one month $65.
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Old 02-16-2008, 05:04 AM   #10 (permalink)
 
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Re: New Salon in Area

The cheapest in our area is around $30 and we figured out that we do higher sales than they do even though they have more customers.

let's say they do 200 people a day and we only do 120. At the end of the day we are making alomost double what they do as our tanning price for a month is around the 50 -60 mark usually in our city. These people (salons) all have the same problem, their beds suck as well as their customer service. Another thing I hate about salons that go too cheap is the fact that they can bring you down with them if they go out of business, let me explain. This is a situation I see happen over and over again in my city here's what happens: Salon A is open for a number of years with no competion in the area and charges reasonable prices for tanning. Salon B comes along (a new salon) and looks at the business that salon A is doing and says to themselves " I want a piece of that market" The first way both salons get screwed is when salon B decideds to open across the street from salon A. Now both salons have an area based clientele that they have to split. By area basd clientele I mean people that live in the neighborhood that tan at a specific salon because it is close ot them. The next thing salon B does is come in with ridiculous prices. Salon A now has to not only split their local client base with another salon but now have to lower their prices as well to compete with salon B. As time goes on, the competetion may increase and get to a point where NO salon is making money because the " price wars" have brang the prices down so much that they are not capable of supporting a tanning business. In the end, both salons lose and if they don't correct their prices, they will go out of business. When I was younger I remember when they had "Gas wars" It was when gas stations would sell their gas ( sometimes at a loss to the owner) to get business through their car washes , conveinience stores etc. Every one learnt their lesson from this and no one does it any more in our city. The only thing a price war does in the end is close businesses. I realize there may be an exception if a salon could double or triple it's volume and justifiy a price cut that way, but that is not realistic in most cities. The customers in an area that have price wars get the advantage at the end as they would have maybe spent $50-$60 a month for tanning but now they don't have to spend anymore than $20 a month because both salons are so low. The bottom line is these customers (local area) would tan no matter what the price, but now they get a deal and the owners of the salons struggle to stay in business. This can all be avoided when a new salon starts up as they could find thier own area (ie. not across the street) and not have to get into a price war becuase they wouldn't be sharing a customer base then with another salon. This is only my opinion and I do live in a small city so I realize that in a large city it may be a different case when it comes to competition. In this day and age with rent and wage as high as it is, ridiculous price undercutting in the tanning business just doesn't work if you want to make money unless your pumping huge numbers through your place. This is just my opinion though as I'm sure others on here disagree.
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