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.

This is the website with calculations

National Nail Tech Price Increase - The Nail Tech Org

It probably reflects naivety and not being aware of such legalities. Well intentioned but there are laws.

I admire them for sorting this out collectively. No one should work for less than minimum wage. What a great idea to raise the cost collectively, so they feel confident to do so. It is a luxury to have nails painted, so if we can afford it, we should be happy to pay a fair price for the service.

I don't think small businesses price fixing is an issue if it's required to pay a living wage. Bigger businesses temporarily lowering prices to force small businesses to close is much worse.

Surely it depends on the current price in that salon. I have paid 37.00 for nails and I certainly wouldn't pay more. It takes about an hour and a half. Individual salons need to price according to their skills and clientele. Not all hairdressers charge the same and so it will be for nails. People are paying for the service, the environment, the skill etc etc.

I heard her on women’s hour saying ‘it’s about collaboration not competition’ and raised an eyebrow. Can you imagine if the energy companies or banks said that!

I do think part of the problem is the black market - nail salons and car washes are well known areas for employing undocumented workers so they can charge much lower. Makes it very hard for legally run ones to compete.

I also think nails are one of the areas that will always be hit first in COL crisis

I'm all for it. I only get my nails done at Xmas but I'd happily pay more or not have them done at all than exploit anyone.

I suspect the problem many will find is that not everyone can afford to pay a fair price. So they’ll stop getting the luxury thing done. Then they have to increase the price for remaining customers. Which will see some more people drop off until you’ve only got one person who can afford to pay you £2k per month to get their nails done…

That said, my nail tech hasn’t put her prices up for nearly 2 years which shocks me every time I go!

From the site:

THIS MASTERCLASS IS FOR YOU IF…☆ You never seem to see a real profit at the end of the month, regardless of how many hours you’ve worked.

☆ You’ve been hesitant to raise your prices, fearing it might drive clients away, and you need guidance on implementing fair and profitable rates.

☆ You struggle with calculating your costs, setting prices that cover your expenses, and ensuring a healthy profit margin for your nail business.

☆ You’re ready to shift from a mindset of scarcity to abundance, understanding that charging fair prices is key to building a sustainable and profitable nail business.

☆ You know that your prices don’t reflect the service that you provide, but you just don’t know where to start with implementing a price increase

And yes - charging fair prices could lead to building a sustainable business BUT it can also lead to losing customers and losing your business.

When I started my business, the first question my advisor said was "What is the demand for your business and how do you know?"

Then you need to think about your customers, what they can pay - and how much they need your business.

Setting a price is the hardest thing in any business.

Oh for sure. I just couldn’t tell whether you were implying that I must be wrong because it had been on the BBC. You never know on Mumsnet 😜

I wish them all the best and hopefully nothing more than a bit of a warning will come their way. I’m no lawyer but presumably making everyone aware of how much they’re actually making and what a reasonable calculation would be is absolutely fine. It’s the “let’s all do it on the same day” that worries me. However, I don’t know who would reasonably lodge a complaint about something like this so without a complainant, I guess there’s no case? (Again I know nothing about law!)

Technically, minimum wage does not apply to the self employed. I think some people doing self employed work would be shocked to look at their earnings per hour. Their actual earnings per hour.

Yep mine’s pretty low. It’s worth it for me right now because of the flexibility, but other people are doing quite well out of my education, skills and experience!

I'm a bit confused as to the OPs point here. Are you saying business owners should accept that earning very little is par for the course? Or you're surprised the salon owner didn't realise she was earning less than MW? I'm pretty surprised about that too as she would surely have been paying herself a salary as an employee of the business and she would notice her monthly income was lower than MW. Unless she's also got income from 'other sources' which is usually the case with people who run these type of businesses.

If 4 in 5 salons raised their prices in order to make a living wage, and one maintained their prices despite inflation, is the one then pricing in a predatory way as prices have dropped in real terms?

Setting a price is the hardest thing in any business

It is. What we did in our business was write to all our existing customers and explain why prices were rising. So, we listed out government guidelines, recommendations in our industry that were easily findable online from respected organisations and explained that due to rising costs we had no choice. We also gave people the opportunity to give us feedback on it and to discuss with us if they had any questions/concerns. Literally noone complained and noone left, there were no questions either. I suspect they may well have rung around and found that our prices were still reasonable in comparison to our competition too.

I think most people are sensible enough to realise that everyone is being squeezed at the moment and communication is key here. You'll keep customers if you communicate with them. Thats super important.

I’m not sure the competition commission will be investigating! Maybe the could just issue a statement reminding people about price fixing.

it is important people understand how to work out their profit so any education on that is a good thing

and for pp who said that in their old job they worked out they were getting less than minimum wage - the new rules mean companies have to show that isn’t the case and will be named and shamed and penalised if caught. Only works for employed status but at least gov is looking at ensuring min wage is enforced. The lists are very interesting!!

https://www.bbc.co.uk/news/business-65968986

I think it's about people running a small business but not being aware of the actual income they are making versus what they could make in an employed job.

Knowing your costs versus setting your price and predicting your income should be Business 101.

I can't really get the worries about price fixing. I know I AIBU but nails are totally a luxury thing that folk can choose to have done or not.
Sadly apart from the fact I am too scruffy / fidgety to want to have my nails done. Salons make me think of modern slavery. Like hand car washes.
They should definitely charge the right amount in salons ( collectively or otherwise) to ensure that those working to provide the service are getting a decent wage.

I suppose it depends on their overheads.

Maybe they have less overheads - or more efficient ways of working.

I cannot believe the amounts people will pay to have their nails done to be honest. £35+ 🤯

@flowertoday I’m certainly not concerned about price fixing in this case. It’s more that they could get themselves in trouble for breaking a law that’s in place. It sets a precedent for other industries.

(Am not hand-wringing, just saying why it could be considered a problem)

Yeah this is a blatant infringement of competition law. There’s no problem if they all decide to raise prices unilaterally to bring it above minimum wage, the problem here is that they’ve all got together to raise prices to stop undercutting each other (as she says in the article). Yikes.

I'll be honest. I think a lot more people will just start going to the cheaper Vietnamese run salons. It's like people buying cheap clothes from Shein and Temu rather than high street stores.

Looked at the website:

Annual Income - £27,968 (that's 16 clients, 1.5 hours per session, 24 hours with clients at £38 per set) - and includes 5 weeks holidays plus a week of cancellations

Expenditure - £18,318

That's a profit of £9000.

Before tax, NI and any pension costs etc.

Strangely, they have included the sick pay and holidays in the expenditure - which I don't think is quite right - it should be excluded - and then priced into the overall profit.

National Nail Tech Price Increase - The Nail Tech Org

Would it come under the lipstick effect, where people buy small indulgences like lipsticks in an economic downturn as they can’t afford bigger luxuries? Or perhaps nails cost too much to be a small indulgence