Chapter 2: Inventory & Pricing
Deciding how much inventory to stock, and then how much money to ask
for your products, are two key factors for successfully retailing lotions
in your salon. Deciding how much is enough is an individual task that
requires serious consideration if you are to run a profitable business
and retain satisfied customers.
Don't Be Caught Short-Handed
The amount of inventory a salon should carry will depend on a number
of factors, including the size of the salon, how many pieces of tanning
or spa-related equipment it offers, the type of clientele it caters to
as well as how much business it does per season. Obviously, a salon should
stock up on its inventory at the beginning of its high season and then
order more products as necessary as the season begins to taper off.
However, the general consensus among industry experts is that the worst
thing a salon owner can do is be caught short-handed, at any time of the
To be caught short-handed is the worst thing you can do, especially on
your hot products, says one industry veteran. There is no magic answer
to inventory; however, salon owners should not be afraid to have enough
because lotion sales mean money.
Some salon owners say, 'I don't want to get stuck with a case of something
I can't sell.' However, properly marketed any salon owner can sell lotions.
For example, if a salon owner has a slow-moving product, provide a couple
of free tanning sessions with the purchase.
Knowing your customers and anticipating how much business will come through
your door in a particular month will help you determine how much inventory
to stock. A helpful strategy is to go back and look at the previous year's
receipts to see what sold, how much of it sold, and if its sales increased
or declined during a particular month or season. Whatever the case, if
you are going to carry a product, never have a quantity of just one in
According to one Colorado salon owner, one item on a shelf will never
sell because people think nobody wants that one bottle. He suggests having
at least three each of one item because it will help sell the product
A national distributor reiterates this point saying never have just one
bottle of a product. For example, if you go into a grocery store and you
see one can of baked beans left on a shelf, most people will not buy it.
Nobody ever wants to buy the last can or bottle of anything, as they feel
like it's been there too long or something is wrong with it. If you have
a good amount of lotion, it looks like you're stocked up and you're wanting
to sell it; however, if you have just one pitiful-looking bottle, I don't
think people are going to want to buy it.
In addition, having only one or two bottles of a product in the salon
means that if one customer buys a bottle, and then another customer also
decides to buy a bottle, in one fell swoop you have no product left.
This is especially true with the top-selling items. Salon owners should
always have a good stock of product on the shelves, and some for backup.
The shelf life of most lotions is at least one year, if not two to three
years. One national lotion manufacturing company suggests always making
a fresh supply of products available to customers, and displaying them
in substantial quantities.
For instance, some salons tend to put out one or two bottles of each
product, perhaps because they want to make their retail area look artistic,
or maybe they just don't want to invest in a lot of inventory. However,
it's definitely much more appealing to present a fully stocked retail
center with rows and rows of products.
A salon owner in Detroit says her hot products move even faster when
she creates a display with a quantity of 12 or more products because it
reconfirms to clients that the product must be great because she has a
lot of it compared to everything else. She tells clients that she is stocking
up on the product because it's the hottest-selling item and she doesn't
want to sell out.
Salon owners also should study the various manufacturers and order quality
products. Once you have decided on which products to order, keep them
stocked consistently in your salon so that regular clientele can depend
on the product being there when they need it.
"If your customers constantly are seeing different products in your
salon every time they come in, they will think, 'The first lotion I bought
must not have been worth anything, because they're not getting it back
in,'" says a salon operator in Atlanta.
Finally, most lotion products can sustain variations in temperature without
the quality being affected. Should a salon need to store its surplus inventory,
keeping the products at room temperature is ideal as extreme heat or cold
can produce slight changes in color and consistency.
Pricing Lotions to Move
Before deciding how to price your retail lotion products, try conducting
a break-even and return-on-investment analysis of your business.
According to industry experts, in doing so, salon owners will determine
how many tanning sessions they will need to sell each month and what profit
they make if they sell X number of bottles of lotion. When they want to
make a profit, they can look at their fixed overhead for the month, see
that they need to tan X number of people or sell X number of bottles of
lotion to achieve their break-even point, and after that they will start
making money for themselves. It's always that perfect combination of the
two, the tanning and the lotion sales that will bring you to your break-even
point and start making you money. If you can't break even, you can't make
a profit, so you've got to know where your break-even point is. You need
to walk before you can run.
Most lotion manufacturers and distributors offer a suggested retail price
that will allow salon owners to make up to a 50-percent profit on each
bottle of lotion they sell.
Most manufacturers offer a generous markup for salons, so they can make
a profit with the suggested retail price. In addition, most suggested
retail prices are very fair and if a salon wants to discount a product,
they can still make a profit, and, if they want to charge more for a product,
they can do that as well. It just depends on how salon owners want to
run their business.
Some salon operators use the suggested retail prices to ensure uniformity
of pricing in the industry. "That's what retail is there for--it's
for everybody to be uniform," says one salon owner. "The suggested
retail price gives us enough money to make a profit, and I don't think
anybody needs to ask more than that. We also use it so that when a customer
buys a $60 tanning package, we can give them $3 or $4 off a bottle of
lotion if they buy it at the same time. If we ask suggested retail, we
have that ability."
Offering three levels of prices on lotions, an entry-level, mid-range
and high-end price, also will encourage sales by catering to a wide range
Salon owners need to appeal to everybody, and there is always someone
who wants to upgrade and try the next step up. Salon owners can refer
to other industries such as airlines, which have coach, business and first-class;
the auto industry has economy, mid-sized and full-size cars.
Besides its suggested retail pricing, some manufacturers have developed
price curves for their lotions, such as: for excellent results, very good
results and good results. One manufacturer suggests when selling lotions,
salons start with the excellent products because they don't necessarily
know if customers will object to the price. Salon owners always should
start off with the higher-end products and work their way down. If the
customer says the price is too much for them, then there always is something
else to suggest.
Other ways salon owners can move their lotions while still making a profit
are to offer a percentage off a tanning package with the purchase of a
lotion, or vice versa, or to offer a free tan with the purchase of a bottle.
Another sales method that is gaining popularity is to sell a sample packette
of a lotion to a customer, who then can bring back the empty packette
to use as a coupon for a certain amount off the price of a full-size bottle.
One salon owner offers an additional piece of pricing advice to salon
owners. "If I sell someone a $50 bottle of lotion, and they are coming
to my salon to tan, I've got to look at that person for at least 10 or
12 more visits," she says. "If their $50 bottle of lotion is
not performing, I'm going to hear about it, and I don't ever want that
to happen. We can always use a demo bottle, but if somebody pays for a
lotion and in their first visit or two it's not working for them, then
we get them into something that is. Otherwise they've lost the trust in
what I've said about lotions, and I've lost them as a lotion client. If
I get them into a lotion that suits their needs, they're a lotion client