Rent too high?

[Beckybee]

And there likes the problem. A lot of people in this industry dont look long term. Short term decisions have long term consequences. By everyone keeping prices at a reasonable level, say £50 a day, it forces those who rent the room to not to put their prices too low, thus avoiding a price war.

Throughout October and March i run every treatment for £5 and have done for the last 10 years. This keeps me just below the VAT threshold and keeps the therapists busy busy. This keeps the customers coming in, keeps me in the public eye and puts pressure on nearby salons. A couple of times in March ive done every treatment for £1 to keep me below!

Surely you have just contradicted yourself there?

 

[KHS]

And there likes the problem. A lot of people in this industry dont look long term. Short term decisions have long term consequences. By everyone keeping prices at a reasonable level, say £50 a day, it forces those who rent the room to not to put their prices too low, thus avoiding a price war.



Throughout October and March i run every treatment for £5 and have done for the last 10 years. This keeps me just below the VAT threshold and keeps the therapists busy busy. This keeps the customers coming in, keeps me in the public eye and puts pressure on nearby salons. A couple of times in March ive done every treatment for £1 to keep me below!

Very contradictory.
Surly Putting pressure on nearby salons by charging £1 and £5 for every treatment is engaging in a price war by putting your prices so low?

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[libbylou]

And there likes the problem. A lot of people in this industry dont look long term. Short term decisions have long term consequences. By everyone keeping prices at a reasonable level, say £50 a day, it forces those who rent the room to not to put their prices too low, thus avoiding a price war.

I have 3 salons and look long term with every decision i make. I implemented a £10 cancellation/no show charge many many years ago and stick by it rigidly. My ladies accept it and pay it no questions. I get virtually no no shows and what cancellations i d8 get are well in advance.

Throughout October and March i run every treatment for £5 and have done for the last 10 years. This keeps me just below the VAT threshold and keeps the therapists busy busy. This keeps the customers coming in, keeps me in the public eye and puts pressure on nearby salons. A couple of times in March ive done every treatment for £1 to keep me below!

This is a contradiction in it self. It is no good moaning about cheap prices when you actively participate yourself,regardless why you do it, you still do it. I believe offers like these just de value our whole industry.

 

[Cheshire_Gal]

Not at all, it is my strategy. If you go £1 above the VAT threshold then you pay VAT on the whole lot, around 15-16K. October and March were generally my quietest months for people through the doors, but still busy enough to push me over the threshold. Im not paying £15-16K for going 2K over, doesnt make good business sense. By running these offers, which i have done for 10 years, it gives me more profit, keeps people coming through, the door, keeps me in the public eye, keeps people talking about my salons. Lets just say October & March are chocca, but dont actually take much £ wise. But over a 12 month period it makes me more £. Method in the madness! Ive had loads of salons open and close near me offering treatments at ridiculous prices. Im just o0protecting my intetests.

 

[squidgernetball]

Is there also possibly the view that if you had gone vat registered 10 years ago your profit now would be soaring?
Just a thought!

We have moved away from the op. I think she has had some good advice on here and I hope it had helped with decisions.

Charging extortionate prices for renting a room helps no one. Especially someone just starting out.

I have a great interest in the therapists that rent from me and if one of them was struggling with the rent I would do my best to support them.

Vic x

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[Cheshire_Gal]

Is there also possibly the view that if you had gone vat registered 10 years ago your profit now would be soaring?
Just a thought!

We have moved away from the op. I think she has had some good advice on here and I hope it had helped with decisions.

Charging extortionate prices for renting a room helps no one. Especially someone just starting out.

I have a great interest in the therapists that rent from me and if one of them was struggling with the rent I would do my best to support them.

Vic x

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I havent done too bad. 3 salons and own each building. Been hard though, but reaping the rewards now and then some. I made the decision no to be VAT registered for a number of reasons. As beauty us a service industry the VAT that you recoup us disproportionate. I could also see which direction the industry was going. Generation Y, people being encouraged to be self-employed / work for themselves, VAT increasing etc. At 80K turnover now i pay no VAT. With a turnover of 100K i have to pay 20K VAT leaving me with 80K the same. Then i have to employ someone extra to make up the extra 20K. Too hard to sustain. Easy option for me. Im not a charity unfortunately and will fight tooth and nail to keep my lifestyle x

 

[Beckybee]

Not at all, it is my strategy. If you go £1 above the VAT threshold then you pay VAT on the whole lot, around 15-16K. October and March were generally my quietest months for people through the doors, but still busy enough to push me over the threshold. Im not paying £15-16K for going 2K over, doesnt make good business sense. By running these offers, which i have done for 10 years, it gives me more profit, keeps people coming through, the door, keeps me in the public eye, keeps people talking about my salons. Lets just say October & March are chocca, but dont actually take much £ wise. But over a 12 month period it makes me more £. Method in the madness! Ive had loads of salons open and close near me offering treatments at ridiculous prices. Im just o0protecting my intetests.

In all honesty I can see your point. Not being near the threshold myself I have never had to think about it. So if you add up your turnover and let's say at 10 months you are at £78k, for the next 2 months you operate at a loss to stop you going over.
Mmmm

 

[orchid11]

Just wanted to ditto this comment!
As a salon owner, i'm always intrigued to know what others rent their rooms out for and each time it makes me think that mine is being rented far too cheaply!! (Yet, my SE beautician still moans!?!)
I charge her £300 a month.. So approx £15 a day and this includes tea, coffee, phone, wifi, water, electricity, appts being booked for her.. Basically everything except her products!! And like you say she has no other overheads.. We're situated on a busy main road only a 15 min walk away from the centre of town.. Hmmmm!

Wow £15 per day? She really shouldn't be moaning that's cheap!

 

[Spa Therapist]

I havent done too bad. 3 salons and own each building. Been hard though, but reaping the rewards now and then some. I made the decision no to be VAT registered for a number of reasons. As beauty us a service industry the VAT that you recoup us disproportionate. I could also see which direction the industry was going. Generation Y, people being encouraged to be self-employed / work for themselves, VAT increasing etc. At 80K turnover now i pay no VAT. With a turnover of 100K i have to pay 20K VAT leaving me with 80K the same. Then i have to employ someone extra to make up the extra 20K. Too hard to sustain. Easy option for me. Im not a charity unfortunately and will fight tooth and nail to keep my lifestyle x

Very savvy, you're obviously a great businesswoman (or have a great accountant!) I'd be interested to know if this could be classed as avoidance though? Don't get me wrong, I'm only curious.

 

[surf girl]

That was the term I was looking for! It does sound a bit like tax avoidance

 

[Cheshire_Gal]

That was the term I was looking for! It does sound a bit like tax avoidance

I dont see how it could be tax avoidance. Its a thank you to all my lovely customers. If i havent earned it i havent earned it. Its only like someone earning 80k in 6 months and then going on holiday for 6 months. Totally legal.

 

[BeautyByP]

I pay £20+VAT per day so £120 a week for 4 days. and thats without any products i have to buy my own/pay per time I use the shellac.

 

[Pixie28]

Just an update. I've found a lovely new salon in a percentage split which works really well!
The owner is helping with advertising too