Nail Salon Owners realise they earning less then the minimum wage - so collectively decide to raise their prices

[cakeorwine]

Manicure price rise: Are you happy to pay more for your nails? - BBC News

This is a strange story - I have tun a business so I am more than aware of overheads and the actual cost per hour I made. And if you factor in admin time, as opposed to time spent with customers then it's even less. It's Business 101 - profit and loss, cashflow etc. Small business owners sometimes do earn less than the minimum wage when they look at the profits versus hours worked.

"Ms Jenkins did not realise she was making less than the minimum wage with her current prices.

"I was earning under £8 per hour, which was shocking to think that.
"The fact you're earning under minimum wage makes you quite upset.”
She said she was “nervous but very excited” to be upping her prices.
“It’s really beneficial that we are all raising our prices the same day and you know no-one is going to undercut each other."

"“It will vary between £5 and £10 per service," she said. "I’ve tried to keep it as low as I can because of the cost of living crisis.”

Many would say having your nails done definitely falls under the "luxury service" category, which she said she is aware of.

“We don’t want to put our prices up but we want to live again”.
Cost of overheads is one of the main reasons why Ms Jenkins, from Aberdare, Rhondda Cynon Taf, has decided to up her prices.
“No-one really understands the overhead part of a business. I’ve got three to four lights on constantly so my electricity bill is always higher. I pay extra council tax and I don’t pay [into] a pension because I can't afford to."

Many nail salons in Wales are going to increase their prices on the same day because "Ms Guy, from Liverpool, had the idea of the price increase day to give nail techs the confidence to correctly calculate their prices based on the cost of running their business."

"She did a study through her business and said it showed that on average its members were being paid £7 per hour.
"We know that the alternative is that we're not really making a profit and the fact that if we want to continue doing our clients' nails for years to come, it's a change that has to happen.”

Running a business is expensive - and setting your price right so you get a decent income and can make a profit is important.

I guess they were setting their prices depending on what other people were doing - without doing a cashflow analysis.

I worry that some might lose customers - and will lower their prices to get customers back.

I also suspect that if other small business owners did the maths, they are probably earning less than the minimum wage.

Good on them. Running a business is hard work and expensive. Why shouldn’t they earn a living wage?

I agree

It's something that people should realise when they start a business about the actual overheads involved.

Getting your price right is important.

I think that market forces might still operate - and if they do start to lose customers, they have several choices - lower prices, reduce overheads or shut down.

I'd always assume a salon that clearly charges less than it costs to cover costs including minimum wage is money laundering and/or people trafficking.

When I worked in an office someone worked out that, factoring in weekly unpaid overtime, we all made much less than min wage

I do wonder if salons that don't take part in this are the ones where such activities are taking place - and customers will go there if it's cheaper.

I do look at some small businesses and think about their overheads versus the price charged and wonder how they make a profit, let alone a profit that pays at least the minimum wage.

Isn’t this illegal price fixing?

Good for them and they are right. People are woefully ignorant about the overheads most businesses have. They assume that the difference between the cost they pay for the service and what the service costs to provide is all 100% profit for the owner/person.

They simply dont consider things like property rental, heating, staff costs, PAYE, tax, insurance, admin, mandatory business membership costs, equipment etc

Market forces are tough. People will respond to price changes and the "supply of salons" will adapt to the number of potential customers.

I’m pretty sure it’s illegal…

I'm confused how this isn't price fixing?

I get my nails done and I’ve always preferred to go to owned businesses where the nail tech is self employed, rather than a salon with employees as I like to think the person doing the work is setting their own prices and keeping all of the profit.

when you find someone who’s good, they’re worth the higher price. Who will struggle are the nail techs who aren’t as skilled, but expect to be making the same money as more advanced techs.

I also think the market nationally and locally will dictate somewhat what can be charged. A good way of increasing your hourly rate is by working quicker and more efficiently.

It doesn't appear she knew her costs either.

In which case I don't know why her clients would.

This is one of the problems with being self employed and you accept it when you make the decision. In a CoL you find you need to out your prices up. However, the CoL is hitting everyone. So prices go up too much for luxury services and people won't pay the price. They will do it at home.

When self employed it's not just about 'I make little profit so put my prices up and everything will be fine', there will be a loss of clients because, for some, tit not long affordable OR worth the price in their opinion.

Its been interesting to see similar online discourse with (mainly) US hair dressers. Many have used their prices for services. For reasons from product prices increases, to 'knowing their worth'. Which is all fine. Alot of them felt if you couldn't afford it, you just shouldn't go instead of expecting them to lower their price. Again fine.

However plenty have found that clients left them or come less frequently so they are worse off.

Being self employed, selling a service is very difficult. But this is all over of the package.

And I think many business owners themselves would be shocked if they looked at their profits before tax versus hours spent on the business - to get a wage per hour.

It's slightly more complicated as the minimum wage is taxed, you have NI costs etc - versus dividends etc in a business - but ultimately, it's what you end up with in your pocket versus time spent.

(Plus other things like sick pay, pension contributions, holiday pay etc)

You’ve missed the part of the story where The Gel Bottle, one of the biggest nail polish wholesale providers, announced they were going to increase their prices on the same day that the nail techs had agreed to collectively increase theirs, effectively eating up the profits from the increase.

Business 101 may be to charge enough to cover your overheads. However Econ 101 is not to charge more than people are willing to pay.

Some of these businesses will not be viable. Price fixing (illegal) will suit some of the stronger businesses as it will destroy some of their cheaper competitors. thereby reducing supply and allowing supply to meet demand at a higher price point.

That’s what I was thinking. I am 100% behind charging a decent price, raising prices when necessary, all that stuff. They’re going to need to find another way to do it though because all agreeing to raise your prices at the same time is explicitly prohibited by law.

(I support the principle absolutely mind you.)

If the cost of your supplies go up, then you have to make tough choices.

Just as businesses across the country are.

Running a small business is very hard - and we live in a market economy. Getting your price right, and distinguishing yourself from the competition is important.

It's slightly more complicated as the minimum wage is taxed, you have NI costs etc - versus dividends etc in a business - but ultimately, it's what you end up with in your pocket versus time spent

Oh for sure, I agree. But from comments Ive heard people make about various businesses, many people dont seem to realise the costs involved of running a business. They naively think what they pay goes 100% to the owners pocket which is ridiculous

Absolutely

I run a small business on the side - and I know that the price I charge is not the money I end up making.

It's a shame she has posted about this on Instagram and it's on the BBC

I had this argument during marriage counselling when the counsellor thought I was being controlling by having a separate (private) account for my freelance income.

My attempts to explain that this was not actually profit, but simply a holding account before VAT, income tax, office costs and other business expenses fell on deaf ears 🤷‍♀️ She seemed to genuinely believe that when a business account was paid, it should go directly into our joint account as family income.

No wonder so many people run into financial problems.

I can’t quite tell if you’re being sarcastic or not. Just because she’s publicised it doesn’t make it legal.

The cost of getting your nails done regularly has crept into ‘not really sustainable’ IMO.

The usual cost for me is about £28 but a couple of salons I previously used have now gone up to £35+ (one £45!).

It doesn’t take very long so that’s all eaten up by overheads presumably.

We are killing the high street with high rents, taxes and energy costs. Depressing.

Petrol prices all seem to increase within the same day, maybe not all at the same time, and incidentally are slow to fall.

Many broadband contracts have the same formula for annual increases.

Perhaps those are the issues to deal with, not increasing prices to ensure that the law is complied with.

Literally came to say this is an illegal price fixing cartel, surely?!

Interesting thing to go to the press with…