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Pricing Facials From a Cost Perspective

You’re finally enjoying a few days away, and you decide to take part in what your valued clients experience as they visit your spa on a regular basis. A phone call later and you’re heading to the best spa in town.
Lady luck prevails, because the facial treatment blows you away. Since you can’t take the service provider home with you, at least you can offer that particular service at your spa when you return.
Bring home as many details as possible, and go to work bringing this new service to life in your spa.

In order to do that, one of the most important questions you will ask is, “What should we charge?” In the past, the process you used to determine the answer to this question may have included some of the following steps:

· Contemplating your cities economic climate (as compared to the city where you received the facial)

· Evaluating the luxury and amenity factor (as compared to the spa you visited)

· Searching the Internet for your competitors pricing of any similar services

Sound familiar? Many of us who own or manage spas or skin treatment rooms have been guilty of this haphazard approach to pricing services. Not only is it frustrating, but incorrectly priced services can eat away at our profits and even eventually cause our business to fail.
Let’s look at a foolproof method for determining if a facial service is even worth offering, and if so, how to price it based on the cost of goods used. After all, you wouldn’t put a selling price on a private label line of skin care products without first knowing what it cost you to buy them, now would you?

First Things First:
We initially need to consider every ounce of skin care product used, as well as miscellaneous fixed overhead items like gauze and cotton 4x4s, disposable spatulas, rubber gloves, lancets, microdermabrasion heads, etc. Once we’ve determined the cost basis of goods used, and factor in overhead including labor costs, an intelligent selling price based on an appropriate profit margin can be established.
Wait a minute, you say, why not go to the manufacturer and ask them the product cost for a service? You may do that, but be forewarned that you can get some discrepancies in calculating average amounts used that can distort your true cost, and always remember a manufacturer naturally will err on the side of less rather than more.

Spreadsheets:
Whether you are computer literate or not, you need to develop a spreadsheet (or spreadsheet-like chart, hand made on graph paper) something like the one pictured below:

Costing out The Pure Perfection Facial:

Vendor

Description

SKU

Size

Measured in (ml or oz)

Unit of use

Wt of unit of use

Spa cost for jar

Number of use units/ jar

Cost of use unit

Number of units/ treatment

Wt used/ treatment

Number uses per jar

Cost/ treat.

Sampar

Pure Perf. Cleanser

#102

50

Ml

1 pump

1 ml

$25

50

$.50

2 pumps

2 ml

25

$1.00

Step 1: Duplicate the column listings above (vendor, description, SKU, etc.).

Step 2: Fill in the “known” factors for each product. These include vendor, description, SKU, size, measured in (ml, oz), unit of use, and spa cost for the container.

Step 3: Physically go find out the weight of your unit of use. Above example: unit of use = one pump; weight of unit of use (pump) = 1ml. Enter 1ml in chart under weight of unit of use.

Step 4: You then divide size by weight of your unit of use to give you number of use units/container (jar) (above: 50ml divided by 1ml = 50). Enter 50 under number of use units/container (jar).

Step 5: To find cost of use unit, divide spa cost for jar (container) by number of use units/container (jar) (above: $25 divided by 50 = $.50). Enter 50 cents under cost of use unit.

Step 6: Find out how many pumps (use units) are used in each treatment by the service providers. Enter two under the number of use units/treatment.

Step 7: From previous calculation, we know that our unit of use (one pump) = 1ml. Since we use two pumps for this treatment, we would use 2ml as our weight used/treatment. Enter 2ml above under weight used/treatment.

Step 8: To find the number of uses per jar (container) we divide size (50ml) by weight used per treatment (2ml), to get 25 as our number of uses per jar. Enter 25 above under number of uses per jar.

Step 9: So, to finish our first line entry, which would be the cleanser cost per Pure Perfection Facial, we need to multiply the number of use units/treatment (2) by the cost of use unit ($.50) = cost per treatment ($1). Enter $1 under cost per treatment above. We’re now done with the cleanser.

To finish the costing of the Pure Perfection Facial, we would simply do this for each skin care product involved and add up the final column, cost per treatment, to get our total for skin care products used. The industry average for this number should not typically exceed 10 percent of total retail price. Then we must take in to consideration fixed and variable overhead, including labor, to get a final total.

With these examples, you can see how a spreadsheet, where formulas are programmed in to calculate cells over, and over can be advantageous. But, once you get the hang of it, doing it manually is still much better than guessing at the retail price of a service based on pure conjecture. As stated before, that’s a good way to either price your spa out of the market, or make little or no profit, with both roads leading to bad places.

Advice from a Success Perspective:
We asked Lynda Plain, Spa Director of the Spa at DelMonte, about how they protect profitable services by using correct pricing strategies. Plain explained, “We need to inflate the cost of goods used number provided by the manufacturer, mostly to take into account varied usage per provider. Then we take into account the labor cost, and other fixed expenses including disposable goods (spatulas, cotton pads, etc.) in establishing a cost per service number.” She adds, “In regards to labor cost, we recently restructured to pay commissionable amounts on services. With commission, it’s possible to apply a labor cost to services as a fixed percentage of treatment.”
It’s simple. If you put a little extra work in on the front end of introducing a new treatment, creating a marketable and profitable selling price based on accurate cost, chances are you’ll be around long enough to introduce many more.

Ameann DeJohn is an active consultant and educator to top salons, spas, and skin care manufacturers across the U.S. DeJohn is a former spa owner and a licensed aesthetician with more than 17 years experience in the beauty industry. She has been featured on all major networks, lectures at trade conferences, and continues to write for industry publications. To reach her, please email This email address is being protected from spambots. You need JavaScript enabled to view it..

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