Increase Price of Gift Cert

[KitKat]

I have been tossing around the idea of price increases and wondered if any of you charge more for a g/c than you do for the standard one hour massage.I would like to increase the cost of a g/c over the price of a standard massage simply because the g/c does not include price increases should they occur in the future.  Some recipients hold on to g/c for months and sometimes, years.Any thoughts, please?

 

[Katherine J]

Increase Price of Gift Cert

I'm not sure of others' results of doing this if they have, but I personally would not pay more for a gift cert than to schedule an appointment. Doesn't seem fair. I understand about the price increases and whatnot, but why not just raise your rates then sell gift certs at that price? Or just sell gift certs for a $ amount, such as $20, $40, or $60?

 

[geeko]

Increase Price of Gift Cert

I would definitely *not* charge more for a GC than for the same amount of appointment time. If I were a client, and knew that I had to pay more for the piece of paper, I would just say "OK, then, I'll just book the appt. for my friend and pay for it" rather than buy the GC. Guess that's why people use expiration dates, though they are not legal everywhere. Perhaps you can create a policy that GCs will be honored at any time, but if they are redeemed more than 1 year past their purchase date, they may be subject to increased rates (and the recipient is responsible for the $ difference). Might not make for happy recipients, though. I think Seforum.xxxg's on to something with the set $-amount approach, though. Kind of like a gift card -- they can apply it however they choose.

 

[Baden]

Well,Some interesting responses.  I have decided that it is not a good time to increase all  rates.  That is not to say that I am not worth it , but I  would like to put any response to the contrary to rest, now. After some research and serious thought I came to a few conclusions:1.  About 98% of my client base come from referrals2.  About   1%  of my client base is the result of a g/c3.  About   1%  of my client base is the result of       advertisementBased on the above:1.  I sell more massage pkgs (series of massage at discount)2.  Most of the g/c sold are during major holidaysI will continue to  encourage referrals by giving those who refer, a g/c for massage.  I will continue  do this at the end of every year.  I have increased the profit margin on the massage pkg., dropped the 30min massage and I will increase the cost of a g/c.   Most, if not all of my g/c sales are through other merchants and are usually sold to people looking for a unique or quick gift for a friend or family member.  I think the increase will make up for paperwork involved tracking the g/c and future price increases.  The g/c does not have an expiration date.Thanks for helping me work this out

 

[Reza]

You know, I just had to respond to this.  I would really rethink the idea of raising the prices of your G/C's.  I understand your reasons for it but you don't ever want to make someone feel like they got ripped off and this is the potential risk that you are taking.  Think of it like this....Someone purchases your g/c for $65 for a friend name Sue.  Sue comes in to redeem the g/c and rebooks an appointment.  She pays $60 for her next visit with you and decides she really likes your massage.  She comes in a few more times and decides that she wants to get a g/c for her friend Mary....you tell her it's going to be $65.  Don't you think she'll wonder why??  Do you think she going to want to continue to do business with you?  Why take the risk for a few extra bucks.  I say, find another way to make a little extra money....I don't think it's worth it.  

 

[Ablebaby]

I understand your reasons for it but you don't ever want to make someone feel like they got ripped off and this is the potential risk that you are taking.Hmm,  I see your point and I certainly wouldnt want anyone to feel like they got ripped off.  But, we could look at your concern from another point of view.  That is, Sue enjoys the massage she has received and would like to purchase a g/c for Mary.   She purchases it at $45 for one hour, the hourly rate in Dec 2004.  Mary is a busy woman with little time for a massage and anyway, she's going to be moving into a new home.  She calls the MT in June of 2006, she's going on vacation and would like to redeem her g/c asap. One other little thing, she lost the g/c when she moved.  Well now, the MT has to research the g/c number just to make sure it has not been redeemed, make an appt for the client within her 10day window and by the way the price for a 1 hour massage is $60 per hour.  Mary doesnt think she should pay the $15.00 difference because, after all, it was a gift and she is a very busy lady and cant be bothered with time constraints.   In my mind, if it takes her 2yrs to redeem the g/c, chances are she isnt going to make a follow up appt with me every two weeks.  Making an appt and purchasing a g/c are two different objectives.  

 

[BiancaC]

Increase Price of Gift Cert

So it sounds like you are looking at gift cert. sales as a way to make money when chances are they won't redeem it anyway. That they won't become regular clients so it really doesn't matter what you charge. If Sue likes massage and she wants to buy Mary a gift certificate, don't you think Sue is going to wonder why you are charging her more for the cert. for her friend than you do for Sue's actual massage?

 

[Pompal 09.]

Increase Price of Gift Cert

I see your point as well handsonlmt but let me add to it... Which of these do you think are more likely to occur?  Do you really think someone who hasn't used their gift card in 2 years, who has moved, who has lost their gift card, is going to come in to you and ask that you look it up and want to redeem it?  Sure, it COULD happen...but is it really going to?I just see it as a real potential turn-off more than a money generator.  Why not raise your rates a bit....or offer a 75 minute massage for a little extra $$ than the 60 minute.  Add an upgrade...there must be something.  You know, back in the day...gas stations used to charge extra $$ if you used a credit card.  example...if you paid cash your gas was $.97 a gallon...if you paid by credit card your gas was $1.04 a gallon. (not exact figures...just an example)  As you stated earlier...you pay more for the "convenience".  But as you notice, they don't do that anymore.  Why do you think?  It's still a convenience for people...even more so now than back then.....

 

[Pompal 09.]

Increase Price of Gift Cert

So it sounds like you are looking at gift cert. sales as a way to make money when chances are they won't redeem it anyway. That they won't become regular clients so it really doesn't matter what you charge. If Sue likes massage and she wants to buy Mary a gift certificate, don't you think Sue is going to wonder why you are charging her more for the cert. for her friend than you do for Sue's actually massage?

Well,

Yes.  One of my objectives is to make money.  As I mentioned in a previous post, I do not retain many recepients of g/c as long term/regular clients. This is my experience in my business. I am not to concerned about my long term clients feeling ripped off.  That would suggest a lack of trust in the way I operate my business or that I am unethical.  

Maybe, those of you responding would like to share your experiences with g/c sales.  Are they a large perceneforum.xxxe of your annual earnings? What is the % redeemed as compared to % sold, in say, a month?  Do you retain the g/c recipient ?  Are you able to collect the difference between the cost of the g/c and increased hourly rates?  What if the client that purchased the g/c found out that you were trying to collect the diffence on a g/c from the recipient? ???

 

[Due April 9th with second]

Increase Price of Gift Cert

I am not saying there is anything wrong with making money. But if you have a long term client who is buying a g/c for a friend and you charge them a higher price...don't you think they are going to want to know why? What will you answer when asked that? I know I would want to know why it cost me more to buy a gift of massage for my friend than it does for me to have a massage?

 

[snipe4lyf]

Increase Price of Gift Cert

I am not saying there is anything wrong with making money. But if you have a long term client who is buying a g/c for a friend and you charge them a higher price...don't you think they are going to want to know why? What will you answer when asked that? I know I would want to know why it cost me more to buy a gift of massage for my friend than it does for me to have a massage?

They have the benefit of redeeming the g/c at their convenience.  It could be next week or 5 yrs from now.  I wont call my client or the recipient and ask them for the difference when my prices increase.  

 

[Cheetah_K]

Increase Price of Gift Cert

How often do you raise your rates?

 

[Jon K]

Increase Price of Gift Cert

I'm with Pete re: 40% redemption allows for a lot of play - you're definitely not losing any money and you might increase the 1% of recurring clients from GCs to 2% (or more) (or help retain Sue who may find out from Mary what happened...)Additionally, as a consumer, I would be very upset if there was a time limit on GC. Being a recipient of quite a few myself, I believe that the company/MT has already received the money and there should be no time limit set on it. However, be a responsible adult (sometimes) I wouldn't expect a business to honor a GC I can't seem to locate.

 

[Me Fornever]

Increase Price of Gift Cert

I'm with what Seforum.xxxgnant said at the beginning. If you sell your gc as dollar amounts instead of "one hour massage" (make sure you put 'not redeemable for cash') and then in the envelope, put your brochure, card and policies, you can reduce the problems you are bringing up now. On the policies put something like "Although our gift certificates have no expiration, we encourage you to make your appoinment for your massage soon. Prices are subject to change." Or something even more inviting sounding. When and if you do raise your prices, contact the purchaser and let them know that the recipient has not come in and in order for them to use the gc as intended, they should make an appointment soon, or else pay the difference. (In a nice, more subtle way, of course)I think people will appreciate the heads up and then if they don't take you up on it, you just have to stick to your poilicies.

 

[ishameluvu]

Our state requirement:  No expiration dateI dont know about you, but I dont use the dollars earned on a gift certificate until it is redeemed.  Futhermore, the monies paid on said date of purchase to date of redemption decrease in value.  I know what my dollar will be worth at the end of the day.Cheesy, maybe, but when you go to the grocery store do they give you a deal on one can of corn  purchased or several cans of corn? But, my clients know and expect that the more they use my services, the better rate they get.  You have to admit that g/c are usually a one time deal.  But thats just been my experience.I cant imagine telling someone who has lost their g/c that I cant help them.  Oh, to bad, I dont keep records, so you're out of luck.   Or, gee, forgot your g/c?  That's too bad, no massage for you today.  By the way, my g/c have serial numbers on them.Have you really explored my point of view?PS  I mentioned that I dont want to increase my prices to my client base.  But, maybe I should consider charging for applying hot and cold pacs? Or, for essential oil used in my massage products?  I am trying to keep it simple

 

[Anonymousgirl]

I think there are other ways to slightly increase your prices, some mentioned already, without increasing the price of g/c. It just feels wrong and with so much of the same input maybe that is not the way for you to go.  If you are already using hot/copld paks without charging or aromatherapy oils without charging I don't know about adding $$ to the price of a massage they are already accustomed too. But maybe you could add other things and charge for those or maybe you could just do a price increase in the next few months. Like $5 more and advertise that now through whenever your prices remain the same but in _____ month they will be going up to $$ So book now! It may help to pick up the slack of the slow month after Christmas. You haven't mentioned what you charge now, or what the going rate in your area is. How much would you increase if you go that route, how long have your clients been paying your current price, etc....?

 

[gintzer]

Increase Price of Gift Cert

In finance circles it is well known that a dollar today is worth more than a dollar tomorrow and worth even more than a dollar one, two or five years down the road.  While I agree with this theory it doesn't take into account that we aren't talking about a 100% redemption rate of GC's which would definitely cause a loss -- but rather a 40% redemption rate -- leaving 60% of the money collected in your pocket.  My guess is that 60% is a fairly handsome cover on any potential loss down the road.

Maybe, those of you responding would like to share your experiences with g/c sales.  Are they a large perceneforum.xxxe of your annual earnings? What is the % redeemed as compared to % sold, in say, a month?  Do you retain the g/c recipient ?  Are you able to collect the difference between the cost of the g/c and increased hourly rates?  What if the client that purchased the g/c found out that you were trying to collect the diffence on a g/c from the recipient? ???

I would say my GC sales account for 20% of my income with a redemption rate of around 60%.  As far as my GC's sales and retention I actually do quite well with GC holders becoming regular clients.  I'm also one that you have to present the GC in order to receive the massage.  

I'm curious, does the state regulation of GC's state you cannot collect additional fees once it is purchased?

All of my GC's state a 1 year expiration from the date of purchase though I honor every GC I've ever sold regardless of when it was purchased.  The caveat is that if there has been a price increase since its expiration date then the GC holder is responsible for paying the increased amount.  Yes, I've had this happen several times where an expired GC has been presented.  I explain that I will honor the GC however, the prices have increased since it was purchased and they are responsible for paying the difference.  Everyone paid the additional money without any hesitation.  One way to avoid this whole problem is by selling dollar amounts rather than services or timed services.

I do agree with several others here that charging someone more for buying a GC may upset people considerably -- leading them to not buy a GC at all.  

Knowing your redemption rate is there really that much of a chance that you are losing money even five years down the road?

 

[LoScMa]

Increase Price of Gift Cert

But, maybe I should consider charging for applying hot and cold pacs? Or, for essential oil used in my massage products?  I am trying to keep it simple

I personally wouldn't charge for using hot/cold packs (that's just something I add for the client's pleasure). However, my chiro does. He does ONLY insurance billing, and he makes note that he charges for hot and cold packs.

As for essential oil use, yes, I'd say charge. Have an aromatherapy fee, say $5 more per session. I do, and the clients that DO use it are more that willing to pay the extra $5. Not many of them do, but I really don't go out of my way to market it nor educate my clients on the benefits. Why not you ask? Because I don't know enough about them to educate them. I use what I was taught, and that's about it. But by all means, many people charge aromatherapy fees, so why not? Essential oils aren't cheap!

 

[noodlecakes]

Increase Price of Gift Cert

I think of gift certificate sales as a form of referral. If I am willing to reward my clients for referrals, why would I penalize them for purchasing a gift certificate for a friend? If my rates increase between the time of purchase and the time of redemption, I just eat it as a cost of doing business. I make sure the recipient is aware that I am doing this by saying something like, "My rates have increased since this certificate was purchased. But since it was a special gift, I'm happy to honor it for a full hour massage anyway." Clients love it and repeat it and are more likely to buy a gift certificate for another friend, and so on and so on. It's a small price to pay.I think quality always wins out. I have started using a homemade peppermint shea butter on feet and lavender/vanilla on the hands for every client who says yes, at no extra charge. When I add an aromatherapy massage to my menu, I will charge an additional $5, but for the 4 drops (or so) I use currently per client it's a nice free touch.

 

[Free to be.]

Well,Thank you all for the input.  I must come to the conclusion that charging extra for a g/c has not been well received by the majority.  As for charging a little something extra for hot/cold pacs and/or aromatherapy use, that seems divided.  Strange, I think because I have always used e/o's in my butters and oil, I have always used hot/cold pacs in my practice at no "extra charge" and when I received a $100 spa massage all of the above was "extra".  I must admit, I felt very put off by that.Some of you do collect for the difference if your rates increase and some dont.  I cant see it but it may be an option now especially since the g/c has no expiration date as required by law.  I will have to research the law futher regarding price increases.It is obvious, that we all have our various ways of doing business.  That is the beauty of being self employed.  But, I think that many of the decisions I  make are based on the rapport I have with my clients.  That said, I believe that most would not question an increase in g/c if it were to occur