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Old 10-08-2009, 05:36 PM   #21 (permalink)
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Re: Annual Memberships - To Offer or Not to Offer!

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Originally Posted by Jeff762 View Post
No, I want $500 now! One month in this level sells for $85. My point regarding this question was if what I am currently charging was enough based upon such a low PSA. We are at an average of 28% lotion sales for the year. Though I believe everyone could do a better job at this, I think we are doing very well for this year. These annual folks are buying lotions, very infrequently.... the ones that retail for $20, and that have been marked down. They simply dont believe in using lotion, or spending money for anything beyond their annual memberships. As for upgrades, there is no other bed to upgrade too. They are level 3 tanners, not level 1.
For some reason, at some point, you made a decision to sell your top bed (Level 3 - Ergo Avantgarde) at $375/yr or approx $31/mo. The normal walk-in month is $85.

In my salon, that bed would be $119/mo or $59/mo on EFT ($720/yr). If they choose to do a pre-pay year they pay 10 months - or $590 (plus the enrollment fee).

So - could you get more for it? Maybe. But as kpower points out - a customer spending $375/year is a good customer. You just priced it too low and now regret it.

You aren't "losing" money on this customer - it doesn't cost more than $2.56/tan to turn that bed on. They aren't 'contributing' that much to your other overhead - labor, rent, etc -- but they just bought what you sold them!

So these 6 customers contribute $2250/yr to your bottom line. If your salon is grossing 100K/yr -- they are more than 2% of that. If you are grossing 200K/yr -- they are more than 1% of that. Not bad for 6 people.

If you try to change it drastically - you may well lose them. Do you want to lose $2250/yr to a competitor? If so - go for it and see what happens.

I'd say at this point I would "grandfather" those folks in and maybe raise the price slightly - like $400 this year, $425 the next. And if you chose to continue to offer that membership - make it $500 or something you will be happier with. OR - just set up an EFT instead OR sell only annual memberships on level 1 and make them "upgrade" to the other levels.

Overall - don't get too worried about small numbers. These 6 customers are coming to your salon about every other day. Hopefully when others comment on their tans - they tell them they use your salon. You may be getting even more "benefits" than you realize. And - you are taking in $375/year each -- see how that compares to the totals from your other customers and see if they are among your more "valuable" from a spending standpoint.
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Old 10-08-2009, 07:37 PM   #22 (permalink)
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Re: Annual Memberships - To Offer or Not to Offer!

sunsally has great advice again

grandfathering the regulars in is a great idea...tell them as log as they keep renewing the year unlim you will lock them in. tell them they need 2 renew before their year runs out, if not they loose the old pricing
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Old 10-11-2009, 02:20 PM   #23 (permalink)
 
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Smile Re: Annual Memberships - To Offer or Not to Offer!

Quote:
Originally Posted by sunsally View Post
For some reason, at some point, you made a decision to sell your top bed (Level 3 - Ergo Avantgarde) at $375/yr or approx $31/mo. The normal walk-in month is $85.

In my salon, that bed would be $119/mo or $59/mo on EFT ($720/yr). If they choose to do a pre-pay year they pay 10 months - or $590 (plus the enrollment fee).

So - could you get more for it? Maybe. But as kpower points out - a customer spending $375/year is a good customer. You just priced it too low and now regret it.

You aren't "losing" money on this customer - it doesn't cost more than $2.56/tan to turn that bed on. They aren't 'contributing' that much to your other overhead - labor, rent, etc -- but they just bought what you sold them!

So these 6 customers contribute $2250/yr to your bottom line. If your salon is grossing 100K/yr -- they are more than 2% of that. If you are grossing 200K/yr -- they are more than 1% of that. Not bad for 6 people.

If you try to change it drastically - you may well lose them. Do you want to lose $2250/yr to a competitor? If so - go for it and see what happens.

I'd say at this point I would "grandfather" those folks in and maybe raise the price slightly - like $400 this year, $425 the next. And if you chose to continue to offer that membership - make it $500 or something you will be happier with. OR - just set up an EFT instead OR sell only annual memberships on level 1 and make them "upgrade" to the other levels.

Overall - don't get too worried about small numbers. These 6 customers are coming to your salon about every other day. Hopefully when others comment on their tans - they tell them they use your salon. You may be getting even more "benefits" than you realize. And - you are taking in $375/year each -- see how that compares to the totals from your other customers and see if they are among your more "valuable" from a spending standpoint.
That is exactly what I did with these folks, and it worked. They just renewed.
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