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Jun 26, 2014
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Discounting Or Bundling Services 101

Salons and spas are always looking for strategies that they can use to offer an incentive to their customers, loyal and new. While offering a different promotion every four to six weeks is smart business, it also makes sense to focus your attentions on having clients try more than one service or product in a group. For example, instead of just a haircut, it makes sense that a client receives a haircut, deep conditioning treatment and a color service, or from a product standpoint, that they receive a shampoo, conditioner and styling aid that support their maintenance needs.

It is simply smart business to encourage clients to take advantage of multiple treatments in a single visit.

If you’re going to attempt this, there are some important things you should do and some things to avoid. If you’re new to the concept, bundling occurs through offering several similar goods or services together, or by offering additional goods and services at a discount. In an effectively bundled deal, the sum of the bundle is distinguishably less than individually priced goods or services.

Let’s also differentiate bundling from packaging:

  1. Bundling: the combining of products or services at a reduced price point
  2. Packaging: the combining of products or services with the addition of an added value product or service.

Bundles have significant benefits for both salons and customers. Customers recognize and appreciate real savings offered through bundled goods and services, and, for price-conscious customers, bundled services may mean the difference between choosing any salon and choosing your salon. For salons, bundling strategies offer unique opportunities to drive average ticket values by increasing the number of services provided.

It proves highly effective to offer bundled packages in a tier formation or to offer different levels of service, from basic, to medium, to high-end. Placing the most value in the medium-priced bundle will draw the largest amount of customers from basic and high-end brackets, stabilizing your clientele while generating steadier cash flow for stylists and the salon in general.

Bundled products and services may be customized to your specifications by including higher priced services that are not being utilized to their fullest potential.

For example: Highlights at Salon X are $75, a haircut is $40. If the customer purchases the highlights and haircut on separate visits, the total ticket will be $115. Your price-conscious customers may find it difficult to part with $115 on a single visit, although your strategically created bundle builds considerable value for the customers and offers these services for $100. This results in the customer recognizing a real savings of $15.

Because customers fully enjoy the freedom to choose, this bundle could also be offered as a package in the following way: The two services are paid for at full price and the client receives a product at no charge. Marketing a bundle either way illustrates real value for the customer, while the salon still receives a higher average ticket and the potential of a client coming back into the business for more than one service regularly, a long term win. Additionally, retail sales could increase because a bundle such as this causes products to move if you opt for scenario two. (Retail sales should naturally increase either way due to clients being introduced to new services which require different products to support maintenance in between visits.)

You may be thinking, “I would lose $15 per sale!” Look closely, though. What actually happens is that a client, who may usually receive only $75 highlights, may opt for the additional $40 haircut because of the perceived “free” shampoo or savings on the services. What would have been a $75 ticket builds into a $115 ticket, and there you have it.

It is also a good practice to offer the bundle as a way to have clients try the services and then bring the price back to its normal amount moving forward. If the client tries the services in the bundle and loves them, odds are they will pay $15 more for them moving forward.

Remember clients enjoy feeling as though they have the freedom to choose, and when offering the value of bundled services, consider these tips:

  • Price bundles based on desired average ticket values.
  • Within the bundle, build value the client can see with simple math (as with the $15 savings example).
  • Utilize the “floating discount” concept which says: The more products/services you select, the larger the discount (i.e., choose two or more services, get 10 percent off; choose three or more services, get 20 percent off!).
  • Clients love freebies. It may be worthwhile to throw in freebies for purchases higher than a certain amount. Some excellent freebies are nail files, travel-size hairspray, samples, etc.

This strategy can also be helpful from a retail sales standpoint if you have products that are sitting on the shelves that need to be moved, putting three of them together and putting a discount on them can make a difference. It also puts focus on the underperforming products by making the team have to talk about them, which could lead to a long term boost in sales for that particular item. If not, at the least you make progress in diminishing the amount of items that are on the shelves which will free up space for your high moving items.

Looking at where common consumer trends are leading us, it is evident that clients are looking for value. Bundled services or products can provide you with a higher volume in a shorter time, and what that means for you is increased profit in less time with little effort. As long as the bundle isn’t used long term it makes sense. Now that’s working smarter, not harder!

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