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.

True - but this is a different scenario

This is someone running their own business.

So they can set their own prices - they aren't negotiating with anyone - if a price works, someone will pay it.

But again - this is self employment. Not employment.

If a woman sets up as self employed, how does she set her price per hour for her work?

How does she set the value of her work - and how does the actual market set the value?

She could think she is worth £30 an hour but when she sets a rate so her pay is £30 an hour, but she gets no customers, then has she set her value correct?

I don’t really understand what you’re arguing against.

I’m self-employed (and a woman) and the things I mentioned apply to me just as much to people negotiating with an employer.

I really don’t get what you’re disagreeing with me about.

when we have added it all up, lots of teachers earn less than the minimum wage per hour too. I used to, in some schools, but not in the school I am currently in.

The conversation about "women's work being undervalued"

I know that in employed work, there is plenty of evidence that salary negotiations and jobs paying low because they are seen as women's work.

But how does that work here?

How do you set your value?

You can decide what you think you're worth - and someone might pay that.

It's someone setting the rate for their business. They are deciding their own rate and what they are worth.

If they set a rate that is ok to people,they will get customers.
If it's low, then they might get even more customers but are potentially undervaluing themselves
If it's too high, then someone else might get more customers than them.
But they are the ones who are setting the rate and the market is working out the value.

Just as when someone decides to buy something - you look at it and decide if it's over valued, under valued or acceptable.

How do you set your value for your work and how do you know that your rate is acceptable?

If there is a market for your work, then you should get business.
If someone thinks you are charging too much, then you won't get business but someone else might think it's ok and pay it.
And if you are too cheap, then the only way to really know that it to raise your costs and see if it works.

That's basic market economics.

Unless you think that a bloke who offered a higher rate for the same work is more likely to get that rate than a woman offering a lower rate for the same work?

I think the argument would be when we set our price its emotional tied up in our self worth, what people in our peer group and family earn, what traditionally others charge, how we think society values us and our work its not happening in a vacuum.

It's the going rate for getting your nails done. A job traditionally associated with women doing it.

That's the price the market has decided in a local area. I don't think it has much to do with it being "work done by women and the value of women's work"

They can increase the prices - and see if the market will sustain it.

that is why if you set up a business, you need to know your market, and your limitations in supplying that market.

I know that in my day job my day price varies (depending on client and job) between abut EUR 1,250 and EUR 2,000.

I have often thought about setting up and turning my hobby into a business. I may stilll do that. But i am not going to undervalue my hourly rate for working. It wouldn't be lower than EUR 40 i suspect.

Good on them? I am sorry. What they are doing is illegal, it's collusion.

Imagine if all burger chains collectively decided to raise prices £3 per burger after meeting each other. They would go to jail.

Or if all airlines decided met and collectively decided to add £200 per ticket to Europe and £500 to North America. The competition authority would file a case instantly.

@AbbyEidyn but that isnt what they are doing they are raising individual prices to what they personally need. So a at home less overheads tech will charge less than a swishy salon but still make a profit. It isnt collusion or price fixing cos they aren't fixing a set price just discussing and empowering each other to make what they need.

They aren’t doing that.

Why should a self employed person work for less than minimum wage just so other people can have their nails done cheaply?

No, as I and others have posted (including @Itsalwaysthelasttime just above me) they're not price fixing.

They are saying that as of X date they will all charge a price that means they are left with at least NMW after their costs.

That's nothing like price fixing.

It's not illegal. Cartels are when wholesalers set the retail price or collaborate with competitor suppliers to set a fixed price. Retailers can set their own prices.

Besides, there is no fixed price here, this is a trade organisation (of sorts) working together on a general campaign to advise that industry prices are increasing to reflect minimum wage but without discussing what that price is - it varies by business.

A similar campaign would be "moments worth paying for" which is an anti-piracy campaign by the film industry. They don't set prices but they do publicise the fact that paying for a service supports wages.

I understand collective bargaining by individuals, like in unions. But if you own a nail salon business and work there, you are a business, and you can't collude with other businesses. It doesn't matter what they all agreed, a single price, a similar increase in rates, whatever. You just can't do that.

It will be interesting to see what happens - raising the price you charge is always hard as you never know the reaction, especially in a market with lots of competition and when you are supplying something that relies on discretionary spending.

But OTOH, overheads are increasing and people obviously need to make a wage they can live on.

I hope it highlights to anyone setting themselves up as self employed to do a business plan, to work out the overheads, their projected income and to see if that income meets their expectations.

You can look at what your competitors are charging - but that still does not mean it's a good income for you - especially if people generally undervalue themselves.

But the market is tough.

this. They can charge v little because most of the money going in is being laundered. Simples. How else do we explain the huge rise in nail bars sitting on expensive roads that have no customers and charge £10 for a set?!

I'm not sure you have a good understanding of competition law- it is much broader than that. This is what the U.K. Competition Act says,

"(2)
Subsection (1) applies, in particular, to agreements, decisions or practices which—
(a)
directly or indirectly fix purchase or selling prices or any other trading conditions;
(b)
limit or control production, markets, technical development or investment;
(c)
share markets or sources of supply;
(d)
apply dissimilar conditions to equivalent transactions with other trading parties, thereby placing them at a competitive disadvantage;
(e)
make the conclusion of contracts subject to acceptance by the other parties of supplementary obligations which, by their nature or according to commercial usage, have no connection with the subject of such contracts."

Now the competition and markets authority has picked this up.

www.gov.uk/government/publications/open-letter-to-nail-technicians-about-compliance-with-competition-law#:~:text=This%20letter%20reminds%20Nail%20Technician,guidance%20published%20by%20the%20CMA.

I thought they may deal with it this way.

i don’t think the campaign even considered that ‘collaboration not competition’ would be controversial

Starting and running a business is a tough business, along with an understanding of staying the right side of the law.

This might be some "small print " that was added - I am not sure

"not all nail techs will need to increase their prices and taking part in this campaign is not mandatory, however we believe that you deserve to understand your business, so that you know you are making a fair income from your work & calculating these costs for yourself is the first step*

A campaign to encourage people to learn more about running a business and the financial implications is a good idea and they have certainly attracted a lot of media attention

The trouble is, with the price increases many will not be able to afford it, or prioritise other things, meaning the nail techs will have less work, and therefore less money...