I’m sure many of you can relate to this experience. While on my way to St. Louis for the CCSA convention, I had to pony up an additional $25 to check my bag even though I paid for my airline tickets months ago. Then, I had to make sure it was under the weight requirements so I did not have to pay even more. I also had to wait in line while entering the plane so that all of the people toting their suitcases could stuff them into the too-small overhead compartments to avoid paying the $25 fee. Did I mention It was lunch time when I flew so I also had to make sure I took some food on board with me so I would not have to shell out money for a nasty sandwich? My experience in flying was frustrating as usual. Why can’t the airlines just tell me how much it is to fly me happily to my destination so I can be excited about traveling instead of being annoyed with the nickel and dime charges all along the way?
Is the experience in your studio better than that of the airlines? As a CPA who works with studio owners across the country, I am always asked about the pros and cons of studio fees versus all-inclusive pricing. One of the main reasons for combining prices on an all-inclusive scale is to be upfront with your customers and avoid surprising them later with fees that may upset them, thus ruining customer goodwill. Let customers concentrate on a great experience in your studio rather than being surprised or angry in their final moments of checking out at your studio.
Have you ever struggled with telling a customer about a combo studio fee since more than one person is painting a piece (or just let it go without charging it since that seemed easier)? I know none of you has ever had an employee in a hurry (or heaven forbid it was you) forget to ring up the studio fee. Moving to an all-inclusive model can also help grow your revenues and give you a great excuse to fix those pricing issues that you have been dragging around with you.
One of the biggest obstacles I hear for moving from studio fee to all-inclusive is promotions. Many offer free studio fee days as a promotion and fear that moving to all-inclusive model will eliminate this option. Yes, it will eliminate this option, but let’s not forget that the studio fee is not a “freebie” for the studio owner either. It is there to cover costs of operating the studio. A free studio fee offer is ultimately a discounted price. As an example, let’s say a customer paints a $14 mug and you normally have $6 studio fee. You gave them the studio fee for free as a promotion. That is really the same as offering a 30% discount. Ouch! With only a 15% profit margin allotted for the studio, you just took a loss by selling that customer a mug.
You can still offer promotions in your studio even when you are all inclusive, but you probably don’t have to take as large a percentage off to be an effective offer. Use cross promotion to offer a discounted class with the purchase of a ceramic piece of $30 or more to get customers to try something new. Or look at your slow moving inventory to create a promotion to give half off the slow moving piece with a $30 purchase. Christmas is a great time to offer a free ornament with a purchase of another item or dollar amount. There are lots of creative ways to structure promotions without having a studio fee separately stated.
If you decide to move your studio from a separate studio fee to all-inclusive pricing, let’s look at the steps to make the process easy and to help your customers see the benefits for them.
Why to make the change?
Less confusion for customers
Less for your staff to forget when ringing out sales
Set a date for conversion
Set a minimum price for item in studio
Reprice products to all inclusive – see our link to pricing
Sell the change
Hype the upcoming event
Exciting news coming
At least Annual price increases going forward