Proper Salon Spa Compensation Plan

Compensation Must-Do
Christopher Brazy

You KNOW you should stop overpaying your staff. You know you NEED to if you ever hope of making a penny for yourself. Now when times are tough is the best time to make the dreaded switch-over with your staff. Do it and thrive. Fail to do so and go under with the other spas that pay out more than they bring in.

Get Ready
First off, if you happen to be on a high percentage, you will lose your staff, BUT THAT’S OK. Really, it is. It really, really is. It’s a shame, but it necessary. THAT PAY IS PUTTING YOU OUT OF BUSINESS. And changing pay will worry staff and they will leave (even if it’s just a different way of doing basically the same thing). Please, realize your worth, realize your situation, and realize you HAVE to make a change.

Bringing new staff in, or having them ready in case everyone “jumps ship” wouldn’t be a bad idea. Again, you need to watch for staff talking, old ones that are against the idea and plan on leaving will spoil the new ones in about 1 minute.

Common Sense
You would think that someone should be concerned with how much their paycheck IS. In our industry they’re concerned with how much of the pie they’re getting (what %). I try to educate people and be very straightforward with them. With new hires, people tell me they made 60% …I ask “how much was your paycheck?” They say $280 per 40 hour week (tips included). I show them that they were working for $7/hour ($280 divided by 40). So this setup (hourly, fee per service, whatever) is more. They ALWAYS get stuck on the percentage (they’ll even figure out the percentage if you’re on a fee/service setup). YOU need to keep educating them and showing them what they are making HOURLY (on average), tips and retail commission included.

Attitude is KEY
You must have confidence and believe in your compensation plan. If you don’t buy it they won’t. They will SMELL your fear, your uncertainty, your desperation. That’s why we spoke on the philosophy of it for a bit in “stop being the lowest paid person in your spa,” to get your mindset in the proper place. But if you’re an owner in todays economy that shouldn’t be too hard to accomplish.

Don’t get too technical
We initially moved from a % to a fee/service and explained all the benefits. Instead of figuring out the money that came in, deducting coupons, deducting package discounts, etc. we figured staff was really making about $20/hour, so we setup a fee/service plan based on that and now they don’t have to worry about who has a discount or who is in a package, it’s always the same pay. Some staff stayed, some quit (we went into too much detail and it looked like we were defending our position), then the ones that stayed quit. However anyone new that came on, and wasn’t aware of the previous setup they had no problem with it at all.

When new hires ask about pay, just say this is our compensation plan and we’re very happy with it. Don’t be too defensive or explain too much, it’ll make you look desperate and make them think something is fishy. Like accepting tips (you should say “thank you” and that’s it), just say “here it is and we feel it’s very fair.” That’s it.

Baby Steps
IF you feel you can’t accomplish this move but need to do something, try this for a baby step in the right direction.
The least you can do if you’re on a percentage deal is to deduct any discounts/promotions before figuring out their cut.
Or you can keep your staffs pay but instead of figuring it out as a percentage, set it up as a fixed fee. So instead of 50% for an $80 massage, just pay $40/massage. Now you can do a few things. First, raise your prices. Since your staff isn’t tied to the price via a % this is pure additional income for you.
You can also associate fees to be deducted from their pay. Let’s say a linen fee (it costs us $1/sheet to clean them) or a product/backbar fee. You could subtract the merchant transaction fee from the service and/or tips.
Years ago when we first moved from the % setup to a fee/service we figured all those expenses and discount coupons in and lowered it from $30 (half) to $20 and told them “whenever there’s a discount you don’t have to worry about it, it’s already figured in.”

Probably the best answer is an hourly setup (with a tight watch on how you schedule!). So instead of arguing about coupons and charges, say this:
“We’re going to help you out during these tough times by giving you a steady income you can rely on, an hourly setup of $10/hour (or whatever) PLUS tips AND retail commission” (up their retail pay for goals met) …so they should still be making $20/hour. Put that way, who would turn down $20/hour?

How to Make Your Salon Spa MORE Profitable

Stop the LEAKS (and keep your $$$)
Christopher Brazy

Feel like you’re on a sinking ship? Doing alright but would like more profit? I know of a spa that does over $800,000/year and ONLY takes home any money at all because she does services herself all day.

We’re so busy trying to get new clients we don’t even know if they’re helping us stay afloat. A bigger boat with more people/clients on it will still be sinking if it’s got leaks. What we should be focusing on is stopping the leaks. Streamline your business and make it as profitable as possible BEFORE you try to get one more client through the door. Don’t fixate on expanding your client base until you maximize your profitability. Below we’ve give you some ideas on proper mindset and how to start.

So what’s the best way to keep your profit? It’s not by making more sales. If you’re working for free or worst yet, LOSING 5% on each sale, more sales would be more loss! START by minimizing your expenses. If you’re only making 5% per dollar imagine how much easier and nicer it would be to make 25% per dollar. Every sale would go 5 times further since you’re keeping 5 times as much.

Fixed expenses you can look at, but there’s often little you can do with them. Perhaps you could renegotiate your rent, or try for a smaller lease payment, but that should be done after you’ve revamped your major expenses, which are most likely variable expenses. Start with this, create a list of your expenses and prioritize them from highest to lowest. Then get to work on the highest expenses.

In our industry, payroll will most likely be your highest expense. Others (including myself) have been blazing the way for you to be able to lower your staffs pay. The “salon model” of 50% is long gone. 50% AFTER expenses would be fine, but that’ be closer to 5% and quite a paycut! There’s other models to follow. There’s hourly, like the rest of the nation. Offer your staff $12+/-/hour and you’ll have no problem filling the positions. If you stay on commission, then try something that works out to around $12/hour (20-30%? it depends on how busy you are). After tips and retail commissions they should still be around $20/hour which is more than fair. There’s a related article link below on how to switch staff pay over if that’s where you choose to start.

Go through your list of expenses, high to low, and see what you can trim. Do you need 2 locations? Do you need to be open 7 days a week, 12 hours/day? Can your staff help out with cleaning and clerical duties? We’re all in this together, if you can’t make it they won’t have a place to work. There’s also other ways to keep more money aside from cutting your expenses. Rescheduling is key (that’s why membership plans are so nice). Retail is crucial. Motivating staff via monthly meetings, quarterly trainings and sales contests make a difference. Making sure the front desk is never saying “no” and always getting people in, or getting their information so you can build your list. Whoever answers your phone can literally make or break you.

Now hopefully you’ve got a better mindset. Get a pen, find some alone time and make your expense list. Pick out the top item and decide what you’re going to do about it. It’s up to YOU to start and WE can do it together.

The Money-Making Salon Spa Menu

The Money-Making Menu
Christopher Brazy

How you design and what you offer on your menu not only speaks volumes about your spa but also affects your profit. So what can you do about it? You’d be suprised how simple the answer is. With simple changes to your layout, services and packages you can greatly improve your bottom-line.

First off, make it easy! People pick up menus and have no idea what they’re looking at. Many have to take it home and study it. Make sure yours is easy to read with these steps.

• Use dark text on a light background. Vice-versa is too hard to read.

• Use a readable font like Times New Roman or Arial, avoid frilly fonts and scripts.

• Don’t “center” everything, a left align is easier to read.

• Make the sections clear (massages, facials, etc).

• Place contact info in an easy to find spot so they can book with you.

• If you’re printing large runs of menus, do NOT include pricing, it makes it impossible to change without reprinting. Place pricing as an insert (like lunch specials).

• Make the services clear, what is an XYZ massage and what does it consist of?

Instead of offering a regular massage and another deluxe (longer) one with a slightly different name, list just the name of the massage. Then list to the side the options for it, i.e. 50 mins. 70 mins. & 90 mins. By doing so clients will have the chance to upgrade themselves.

You can also “load” your menu. This means to balance the services offered so that there are more high-end ones. So if they were to choose at random the odds are greater of choosing a high-end service. For example, we offer a deluxe glycolic facial. Instead of offering just one on our menu, we created one for each skin type, adding four to our menu.

McDonalds is the master of this. If you’re old enough you’ll remember it used to be you’d just order a hamburger and they’d ask “would you like fries with that?” Now you order the whole deal, a “number 1.” They’ve tripled their income with these package deals; the fries and drink are already included. But did they stop there and give up their add-on? No, they ask if you want that super- sized. Why? If they’ve already got the “whole sale” why go for more? Because people will take it. It’s all a numbers game; the more you offer it to the more will take it and if you don’t you’re leaving money on the table.

The obvious upsell is more time. The menu has now got that covered for you so when you recommend it they’ll already be familiar with it (and you should always recommend the longer service, it’s better for them and you!). The not so obvious is the add-on. Create add-ons that require more time and ones that can be done without extra time (so you can still offer something even if there’s another booking right after). Extra add-ons that require extra time could be a foot scrub, extra extractions, eye/lip masks, etc. Add-ons that don’t require extra time could be a firming gel application, hypnotherapy, etc.

A HUGELY common mistake out there is to offer a package discount. Let’s look at this closer, what do we know about packages? They take up the whole day, so are harder to schedule. They often are with non-spa goers (received from a gift certificate) so they don’t know spa etiquette and will often no show or not tip. They are the “yearly vacation” spa goers, not your monthly regulars and will want Saturday which means our lifeblood (regulars) will have a tougher time getting in with us.

To offset these negatives, we need to make sure we’re getting premium pricing.

First, do NOT offer a discount. Let me say it again. Do NOT offer a discount. When someone asks “what’s the special” just before Mothers day respond with “this is our ultra-deluxe spa package, she’ll love it!” People are wanting a spa experience, not a McSpa value experience.

Second, do not offer your regular services in there. Create special services that are NOT on the menu. These could even be “limited edition” services, like a chocolate wrap, that should be $20 more, or you could price it at a normal rate if you’re hung up on offering discounts.

Thirdly, add-on another $20! This is just for the no- show/pain of it all. They won’t know because the services are not on the menu. If you want to account for it, toss in lunch or some flowers for free.

Series, not packages
If you want to go one step further, sell a series of monthly treatments instead of packages. They promote return visits which will hopefully earn you a monthly regular as opposed to a yearly vacationer. It could be a “5 for 4 special” or better yet “a year of massages.” What sounds better, “A day of bliss?” or “A year of heaven?” Retail sales will increase with it too since you’re getting your message across to them again and again. There’s also a cash flow benefit since it’s not being redeemed all at once.

Make sure to look at our sample menus to see a bad/better example in our download area (they’re rough, but demonstrate the point).
Now your mission for this week? Redo your menu, take action and make it happen!

How to Price Your Salon Spa Services (for PROFIT)

Pricing your services for PROFIT
Christopher Brazy

Are you having trouble seeing the profit from your business? There are MANY factors that affect profit, but one you have direct control over are your services. By simply looking at things from a slightly different perspective, we can easily make changes that will do wonders for your bottom line.

How we all began
Most spas out there do a simple comparison of what other spas charge …and then charge less. Why? Just human nature I guess, to be a little below average, a little better value. We did it too when we started way back when. Guess what. We raised our prices (we couldn’t make it with what we were charging) and got busier! But there’s more at stake than that. Our prices define us and help with our reputation. So what do we want to be, an average spa in town or the best? The best spa in town certainly won’t have average pricing. And even the smallest place can be the best. It’s not about the location or the size of your facility; it’s about your service. Do you work on creating a REALationship with your clients? Do you go the extra mile to completely WOW them? If so, you can easily be the best and should charge accordingly.

Believe it or not, a study recently showed that the perceptions of higher prices (i.e. higher quality) actually infulences peoples experiences. They gave testors the same wine, but told them bottle A was $5/bottle and bottle B was $45. Even though both bottles were the same wine, people said the $45 one tasted better!

By the numbers
Once we know how we want to be perceived, we should probably look at our business plan. How many clients are we seeing a day (ARE we seeing, not COULD we see)? What’s the cost of the caregiver (hopefully hourly, not a percent)? Product? Rent? Credit charges? Receptionist? Advertising? Now how much are you paying yourself? What about a return on your investment?

If you know your expenses, you can work backwards and figure out where your pricing NEEDS to be to make a profit. Personally, I’ve always believed an owner who’s got everything at risk shouldn’t be making less hourly than a caregiver.

Once you’ve got your basic services priced, what can you enhance? Create a lavender aromatherapy massage for $10 or $20 more than your regular one. Combo services together to make one “kitchen sink” super service and charge top dollar for it. A quick and easy way to make more is to lower your expenses. The TRICK is how can you do a simple, inexpensive upgrade and create an exciting new service that you can charge top dollar for.

Remember, people buy from who they like. Price isn’t everything to them. With every market, there are those who only want the best. Do you think a Mercedes man would ever be seen in a Yugo dealership? Of course not. By pricing yourself at the top end you’ll attract those types of clients. If you price yourself average, why should people come to you? There are hundreds of average spas to choose from. It’s the coupon-clipper/price-shopper clients (the ones that are always a pain and never satisfied) that you’ll attract by being the cheapest. Who would you rather have for a client, Coupon-Clipper Carrie or Ivanna Trump?

Now, get your menu, get your pnl statement and get to work on it. At least price yourself profitably, if not rock-star! You can make a change immediately and be better off for it.

Make Your Salon Spa Competition Proof

3 keys to being competition proof
Christopher Brazy

With low price massage and facial franchises competition popping up all over and large health club spas making a big presence following these steps is a must to keep your client base from straying.

Be Unique
As attractive as “one stop shopping” is as a profit idea from the owners standpoint, focusing on a niche is what is excelling. Look at all the department stores and malls that are on the way out. And what’s in? Specialty stores. Starbucks, take-n-bake pizza and so on. By focusing on what you specialize in, you are creating a unique image. You can still offer additional services, but don’t try to brand yourself as such. Why be a “jack of all trades, master of none.” Be the Acne Expert or Relaxation Specialist.

Take a look at the phone book, what do you see? Lists and lists of everything under the sun service-wise. Lets’ say Relaxing Day Spa offers massages, facials, wraps, waxing, hair, nails, acne, anti-aging and microdermabrasion treatments. What does Tranquil Day Spa offer? The EXACT same list. We’re all identical! When we’re all the same in the clients eyes, what do they fall back to? Price. Who’s the cheapest. Whereas if you do body work and specialize in accident recovery, who do you think will get the call for those insurance massages? FOCUS. Find what your unique talent is and reap the benefits for doing so.

Be the Expert
Once you’ve got a USP (unique selling point/proposition), you should seek to establish yourself as the expert in that field. After all, if the news is doing a story on teen acne, where would they look for input? The day spa/salon/nail shop? Or with the Acne Expert?

You should start to build a list of local media contacts. E-mail the editors often with NEWSWORTHY information and articles you can provide and ask them to contact you for further information. Landing an article, or being published, will offer MUCH more business opportunity than a paid advertisement. Your credibility will also skyrocket and you’ll be able to charge premium fees since you’re THE person to go to.

We had a group of returning soliders call us from their plane to book a day at our spa. Luckily I had the sense to call the papers (with their permission) to let them know what was happening. They came out and did a story about their return and how they cared for themselves overseas in the desert that not only landed us some amazing quotes and photos but the front page! People still mention to us that they saw that story, years later.

Be a Friend
Lastly, and most importantly, is being a friend to your clients. And I don’t mean going out together or getting together for cards, but really CARING about your client. It’s your relationship with your client that will keep them from straying. And don’t let that relationship stagnate. Never take them for granted. Always treat your clients like a first date.

It’s truly amazing to watch my wife work. She’s long given up her caregiver role and focuses on management, at which one of her main tasks is individually greeting the guests. I’ve watched her more than once say hi, ask how they are, and then end up sitting down and catching up on what’s going on in their lives for 10 minutes! Even the call back the next day (during her caregiving days) built that relationship and was once even quoted “she’s even called at home to see how I was doing” to the newspaper.