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.

If you're not earning minimum wage I don't see why you'd bother. Top-ups from UC?

It's possible some customers won't pay the difference and some businesses will fail, but they weren't sustainable anyway.

If they were to say, "right, we will all charge £50 for acrylics from Monday onwards", that could/would be price-fixing.

But it's perfectly ok for them to get together and say, "right, from Monday we all charge a price that means we earn at least NMW after costs".

You should take home what is sustainable for you - maybe you own your own home or have little personal expenses, so you don't need to make much money. But you shouldn't be able to claim benefits though in that case.

I pay a somewhat high price when I get my nails done (around £40), because I go to a reputable salon which pays its staff properly. A lot of the cheaper salons near us use Vietnamese labour that is almost certainly trafficked, and I am not willing to participate in their exploitation.

It is expensive but they last for weeks and it is my treat to myself.

One thing that I don't understand about the costings that they have calculated is that they are based on the technicians working 24 hours. It seems to me that profits will inevitably be low if people are working so few hours because the overheads are split between so few clients. I can't imagine that many businesses would be profitable if run on that basis. Of course, I get that there will be some time spent on admin etc, but realistically, how much admin does a nail salon generate?

From what I've seen on TIk ToK they did all get together.
There's a FB group for nail techs and they all discussed and collaborated on that.
From there it spread to those obviously not in the groups.
But they are open in their 'story times' that this was a big discussion that went on for months.

Surely for it to be price fixing they woukd have needed to decide on a minimum price to charge they haven't they have just said make sure you are earning at least minimum wage. It will totally depend on overheads as to what the eventual price will be, so not price fixibg at all.

Ultimately, people can charge what they can get away with.

It's a bit like The Prisoner's Dilemma - some people may not raise their prices and see if they can hold out / attract more customers whilst other businesses go under.

Aside from the exploitation of immigrants in many salons, it’s yet another example of women’s labour being devalued and priced cheaply.

It's the price that someone is prepared to pay - you can charge what you want for a service - but if it's discretionary spending, you have to charge a price you can get away with - supply and demand and market forces.

People will pay more, especially for good service.

Business owners should base their business strategies on profitability not customer discretionary spending.

If customers aren’t prepared to pay a fair price then the business owner should change locations or type of business.

Absolutely - a business needs to make a profit.

And it's much harder in a COL crisis where you rely on discretionary spending.

I don't think it's got anything to do with female labour and the value of it though.

I wondered this too. If I was speaking to all my competitors and agreeing to price fix, I definitely wouldn’t be advertising that fact on the bbc 👀

I don’t really see the big competition issue. Helping a large group of ( very largely) women think through the real costs of their business and how much they are charging in order to pay themselves a modest wage is fine, it’s just basic business training which I imagine many nail techs are never taught. Hell, I’ve worked in high end corporate consulting roles on a day or hour rate after many years in corporate roles and even I underestimated the length of time all the non chargeable admin time of running my own business would take me, dragging down my in practice hourly rate.

If they said “you should look to charge x for gel nails, y for acrylics” that is very different. The trickiest part is probably encouraging people to do it on the same day. But I’m going to go out on a limb and guess the Competition and Markets Authority have better things to do with their time.

I think what's really important - and the message that any small business owner needs to know is - know your overheads. Work out what you are actually earning and ask yourself - is this viable?

If people are earning wages that are below minimum wage, how are they sustaining themselves? Do they have a partner who can support them? Or can they get by with a low income?

There has been tonnes of research and many papers written about the consistent devaluing of women’s labour.

Yes - but that's in employed work.

This is self employment - people can charge what they think they are worth but in a self employed market economy, reality hits - and they might just find that people aren't prepared to pay the price for the service.

They may of course undervalue themselves - and not think they are worth the price they charge.

It does sound like it's a breach of competition law.

Whether the CMA has the resources to pursue it remains to be seen.

You could potentially argue it's like a trade union and it's a form of collective bargaining on pay.

I buy a cheap nail varnish from Superdrug and do my own!

No, research has been done in creative industries as well. Women are consistently devalued vs men.

.

But who is devaluing them? They are setting their own price. It's the market that responds. It's not like an employer who pays roles that are often done by women at a cheaper salary compared to a role done by a man that has similar skill levels.

If I run a business and set a price for my own labour- how do I set my price?

It's also mainly women who use such businesses.

I’m not sure this is about females being devalued. Anecdotally more than half the technicians in the salons round my way are men.

ultimately it’s a discretionary spend and fairly new when you think of how long these salons have been appearing.

i don't use nail salons because i don't like most of the trends (I do like the ones in the photo in the OP tho)
Also a lot of them are using trafficked people and/or money laundering so wouldn't ever use them and i will tell anyone who i know is about to go to one the background of that.

But. Announcing that you all got together to "fix prices" - while they definitely should be paying themselves properly, and i absolutely agree with them for doing that, the "collusion" aspect may attract unwanted legal attention. I don't think it qualifies as price fixing, but there may well be investigations and they may have to show their working, as it were.

Good luck to them though

A smart owner would wait to see what the competition does - and if the competition raise their prices, then maybe offer a deal to attract new clients.

It's Machiavellian - but it would work.