Pricing for Cosmetic and Podiatric Services

How to Price Beauty and Podiatry Services?

This is a question that anyone who plans to start a business or who is adding new services to their existing offerings asks themselves.I also get a similar question from owners of existing beauty salons: whether the price for a service is appropriate, or whether it’s too low or too high.

The issue of pricing in the cosmetics and podiatry industries is quite complex.The pricing of one service should not necessarily serve as a model for pricing another service.Why?Well, services in cosmetology and podiatry differ in many ways.Some require more time, while others require the use of expensive equipment (e.g., a laser).I believe that each service should be priced individually.That doesn't mean every office should have different prices.On the contrary, I believe that prices should be standardized as much as possible.Particularly when providing similar or identical services in a given city or region.

What to Consider When Calculating the Price of a Service?
The price of a service or procedure is influenced by factors such as:

1. Business Operating Costs.
2. Employee Costs.
3. Costs related to the purchase or depreciation of equipment.
4. The cost of purchasing cosmetics or products needed for the procedure.
5. Training Costs.
6. Net pay, or profit from running a business.
7. Taxes Payable to the Tax Office.

Below are explanations regarding the factors listed above.
1.Business Operating Costs are costs that include, among others:

• rent – the average cost is 1,500 – 1,800 PLN per month.the premises are too small for the two people who work there (owner + employee),
• utility bills – the average cost is 450 PLN per month, including electricity at 140 zł and heating at 160 zł per month.water and sewer: 70 zł; phone and internet: 80 zł
• business advertising – 600 – 1,000 PLN /month
• bookkeeping – 200 – 500 PLN
• the owner's commute to work – 200 – 300 PLN (cost of fuel for the car)
• maintenance of a vehicle used for business purposes – 500 – 800 PLN per month (insurance, repairs, depreciation)
• Accident insurance, employee insurance, property insurance – 80 PLN / month

2.Employee Costs - Owner + 1 employee (they work in the same office).
An employee's pay for 1 work hour is 20 PLN gross, or 3,400 PLN per month, which is 2,435 PLN net (take-home pay) per month.Cost of two full-time positions = 8,210 PLN (2 × 4,105 PLN—including all insurance premiums and taxes) Source: http://www calculator.banker.en/tools/payroll-calculator

3.Costs related to the purchase or depreciation of equipment.
A single-chair dental office equipped with high-quality equipment costs between 40,000 and 50,000 PLN.
Depreciation over 5 years amounts to 833 PLN per month.The equipment includes an armchair, a chair, a specialized cabinet on wheels, a lamp with a magnifying glass, a podiatry drill, an autoclave, tools, etc..

4.The cost of purchasing cosmetics, preparations, sanitary pads, and disposable supplies needed for the procedure.
This factor depends on the procedure being performed.I estimate the average expense to be about.1,600 PLN per month.I assume that the daily number of clients served per salon is 8–10, and the consumption of supplies (cosmetics, products, etc..) is 10 zł per person.

5.Training Costs.
To run both a beauty salon and a podiatry practice at a high level, you need to pursue education, continue your professional development, attend seminars, and simply stay up to date with the latest trends.The expertise of a cosmetologist or a podiatrist costs a lot of money.Although customers don't see this, the knowledge we've gained is, above all, for them—the customers.Therefore, the costs associated with continuing education and training should be included in the calculation.The average amount that should be allocated for this purpose each year is 3,250 PLN (ranging from 1,500 to 5,000 PLN annually), which comes to 270 PLN per month.

6.Net pay, or profit from running a business.
Every business should be profitable.By this, I mean generating profit to invest in creating new jobs for additional employees, expanding our premises, purchasing more furniture and equipment, or participating in paid exhibitions or trade shows.
Where can we get the money for these investments??
The ROE ratio should be used for this purpose (more on this below).
Taking into account the expenses listed in point 3 that are directly related to the investment, multiply the amount of 833 zł by 1.3.In my opinion, this is a valid factor to include in the service calculation.This exchange rate also allows for growth and further investment.In my case, this amount is equal to 1,083 PLN per month.
To put it simply, the equipment you purchase will pay for itself in 5 years.Then I can buy the same one or a similar one for the next 5 years.
After 5 years, used equipment can be put to use, for example, in another office.In this way, the savings generated by the stated ROE—return on equity—will allow me to grow the company.

7.Taxes Payable to the Tax Office.
Everyone pays taxes.In addition to the VAT included in every purchase of goods and the taxes related to employee wages, a business owner also pays income tax on the profit earned.Currently, this amounts to 19% of the amount obtained by subtracting general expenses—that is, deductible expenses (items 1 through 6)—from total revenue..

VAT payers calculate VAT based on the net value of the service.

Calculating the Value of 1 Work Hour.
All costs related to operations are the sum of points 1 through 6.
Monthly operating costs total 16,926 PLN.
The number of work hours per month is 170.
Value of 1 work hour = 99.56 PLN.

How to Price a Specific Service?
Once you have calculated the value of 1 rbg, simply multiply it by the amount of time needed to perform the service.
To make the price calculation easier to understand, I’ll assume that the service to be calculated is a specialized pedicure.
I assume that the time required for this service is between 1 and 1.5 hours.The time required depends on the practitioner's experience, skill, and the complexity of the procedures to be performed during this treatment.
In addition, you should factor in the time needed to prepare for the procedure, approx..15 minutes (client/patient chart, preparation of instruments, dental chair, etc.).).In my opinion, the total time spent on this service is 1 hour and 30 minutes.
The rounded amount for this service is 150 PLN net (exactly 149 PLN).
VAT payers should include VAT in the value of the service.

Is it therefore possible that the procedure in question would cost 60 zł instead of 150 zł??
Yes, unfortunately, that does happen.Most often, services at such a low price are provided by people without the proper professional training, or:

• people who are unable to perform actual calculations,
• if the calculation is based on a short-sighted business approach focused on rapid but short-term customer acquisition,
• if the service is performed at home,
• when the potential for development at an appropriate level is not taken into account,
• if the service provider uses the least expensive products or equipment,
• out of concern for its competitors,
• out of a desire to “finish off” their competition,
• at the beginning of its operations, out of concern for its future and survival in the market.

What Are the Arguments in Favor of Using Real Prices??
These days, customers not only want to be served properly, but they also want to be sure that the service or treatment will be performed reliably and professionally.
More and more customers are willing to pay for a touch of luxury.So, when faced with the choice between a service costing 60 zł that’s, let’s say, of average quality, and a service costing 150 zł that promises success and effectiveness, will the customer choose the cheaper one??

A service provider offering lower prices will, sooner or later, be forced to raise the price of its service in order to keep up with industry advancements and requirements.However, any adjustment to the price list for regular customers is not well received by them.
It's better to set realistic prices from the start and, in return for their trust, offer them, for example, an extra massage, a cream, or a loyalty card—thereby encouraging them to return or visit more often..Dumping prices doesn't help anyone, and counting on competitors to go out of business on their own is a mistake.Contrary to appearances, such practices can lead to the destruction of one's own achievements and to what is known as "bankruptcy".Agreement among competing companies (including on pricing) builds up, while disagreement tears down.That's not the point, is it??

Where might there be differences in service prices?.
I believe that the price for the same service can vary only between a practice located in a large, more populous city and one in a small town where there are fewer people or higher unemployment..However, prices should never vary drastically, because in the end this bodes ill for the entire sector.

It is best to create a uniform price list for services for all clinics in a given city.
Is that possible??Yes, all it takes is a few phone calls and some goodwill on the part of the service providers to get together and set uniform (realistic) prices..On the other hand, every owner of a newly established practice should contact the owner of an existing facility and obtain a price list from them free of charge.

You could also create a single standard price list for everyone throughout Poland.Based on such a price list, anyone could provide their services and have the same opportunities for growth as others.
This does not mean that everyone can be promised a lifelong presence in the market.The way a business interacts with customers, the service provider’s knowledge and expertise, and marketing skills continue to play a key role in running a business.

Whether the skills of a beautician, cosmetologist, or podiatrist will be in demand depends primarily on them.Pricing policy is just one branch that helps the fruit of the entire tree thrive.
I wish everyone plenty of delicious fruit

Marek Cyrulik – Lady's Nails Cosmetics

article added31.10.2015

Below is my proposal regarding podiatry services and treatments:

Price List for Services at the Podiatry Clinic  (link to PDF)

I suggest you also read the article titled.Real Prices or Dumping Prices? (link)