Pricing Facials From a Cost Perspective
×

Warning

JUser: :_load: Unable to load user with ID: 31566
Friday, 25 May 2007 10:49

Pricing Facials From a Cost Perspective

Written by  

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..

Want to read more?

Subscribe to one of our monthly plans to continue reading this article.

Related items

  • Successful Upselling Foreward Successful Upselling Foreward
     
     


    Upselling and add-ons – a challenging subject to talk about even in the best of times. But here we are in the middle of an economic crisis, so you must be asking yourself how we could possibly consider this a reasonable topic when you are just happy you are able to sustain your clientele. Many of you are probably thinking there is no way you would jeopardize that relationship by asking the client to spend more money. All of which are perfectly reasonable thoughts and questions. However, I will ask you to put them in a box briefly, clear your mind, and be open to consideration for just a moment.

    Let me give you an example of an effective suggestion that happens millions of times, everyday, all around the world. You go to your favorite restaurant; you sit down, and look over the menu. Your server comes to the table and takes your order, you tell him what you would like and he confirms your order then says, “Would you like a salad with that tonight, or can I interest you in a glass of wine?” A perfectly harmless question, that was neither painful nor offensive. At worst you say “No, thank you.” At best, he just enhanced your dining experience, increased your bill, and ultimately his tip. Job well done!

  • Creating the Ideal Retail Mix - December 2008 Creating the Ideal Retail Mix - December 2008
    by Melinda Minton

    Selling retail is an essential part of a well run spa. This is true not only because the additional revenue is so crucial to a spa's bottom line, but also because prescriptive home care is the necessary second step to the professional care given to a client in the spa. While mastering the retail sale can be difficult from a team or individual perspective, there are methods for making your spa’s retail routine hum.

     

     

    Your Spa's Style

    Oftentimes spas try to sell a bit of everything in an attempt to accommodate everyone. This can be a fatal error. The more fragmented your retail mix the more clients and staff will be confused. There must be a driving force behind your spa philosophy. Are you primarily a spa focused in on medical skin care, contouring services, water therapies, or all organic non-ablative therapies? Before you can determine the best retail mix for your spa, you really need to dig deep and understand your theme, focus, and primary therapeutic offerings. Moreover, remember that if you can’t get the product on them in the treatment room—there is a much smaller chance that the client will be taking the product home with them for further use when not at the spa. Integrating the treatment experience with the retail experience is crucial. When determining your retail mix, be cognizant of your client. Do you primarily offer clinical services or is your treatment mix somewhat more “fluffy” or gift-oriented?

  • Deal or No Deal Deal or No Deal

    When Sarah Hughes skated off with the gold medal, she pulled off one of the biggest upsets in Olympic history. Her surprisingly simple secret? “I didn’t skate for a gold medal. I went out and had a great time.”

    Athletes say it all the time: “I just went out there and had fun.” And, admittedly, they do look like they’re having a great time.

    Fortunately, fun isn’t the sole province of superstar athletes. It can work for the rest of us in the skin care industry, too. The link between having fun and business success has been proven in countless studies. When we’re having fun on the job, we are more creative and more productive.

     

  • Sugar... Not Just for Coffee Anymore Sugar... Not Just for Coffee Anymore

    by Lina Kennedy

    A couple of decades ago, offering cream and sugar for anything other than coffee or tea would have sounded quite ridiculous! But in today’s realm of aesthetics and cosmetics promoting coffee and chocolate to soothe even the jitteriest skin, or offering sugar as a real hair removal solution to an age-old problem is very realistic. And as post treatment, applying a good trans-dermal cream to hydrate and moisturize the skin is simply a great, soothing and natural way to complete your sugaring service.

  • Jan Marini - August 2010: A Legend in Aesthetics
    By
    Jan Marini - August 2010: A Legend in Aesthetics
    Jan Marinin

     

    Those who know Jan Marini refer to her as a visionary. While Jan might agree in principle, she sees this characterization as both a strength and a weakness. She envies those who are able to savor the moment. Where others view life in snapshots that capture real time, Jan sees broad borderless landscapes and endless possibilities. She does not see a product, she sees a business and in that same instance her mind is flooded with the business plan and all the accompanying details. Even when she is not envisioning empires, she is never satisfied with the status quo.
    Given her background, perhaps this is an understandable if not necessary survival tool. Jan’s mother, Florence, was a single mom of three boys in an era when divorce carried a major stigma. Florence remarried and unexpectedly gave birth to Jan late in life. The family struggled to live a very meager existence. Her father died when she was eight years old and the family was thrust into poverty. Florence worked only menial jobs and food was often scarce. It was no wonder that Jan viewed her world not as it was, but as it might be, and that she softened the bleak reality by envisioning a larger and more optimistic scenario brimming with potential. Because of her early circumstances, Jan is adamant that in order to succeed you must be tenacious, doggedly determined, and completely focused on the ultimate goal.
    Jan describes herself as a product researcher. “Back in the early days I was considered a product ingredient expert. I lectured to medical professionals, skin care professionals, and consumers about how ingredients really performed and what they could realistically expect to provide.” She also did talk radio and T.V., because as she puts it, “consumers love to hear about ingredients and whether their products really work. It is a popular topic that lends itself to talk shows.”
Login to post comments

January 2023

Business Blogs

Brands of the Month

  • DMK Skin Revision Center
  • Repechage
  • Eminence Organic Skin Care
body { overflow-y: auto; } html, body { min-width: unset; }