Should your salon or spa adopt a COVID-19 tax or fee?

Should your salon or spa consider implementing a COVID-19 tax or fee on services? It is certainly an understandable option for service-based businesses across industries reopening post-COVID lockdowns. After all, temporary COVID-19 closures resulted in a months-long hit on revenue. Moreover, with reopening, salons and spas must tackle added costs – everything from supplying personal protection equipment to employees to investing in more cleaning products.

So, is a COVID-19 tax or fee right for your salon or spa? And, if so, what do you need to consider before implementation?

Here are three key tips:

1. Envision how your customers would react to an added tax or service fee.

You and your employees know your customers best. Take the time to reflect on your salon or spa’s position and any unique circumstances. Your business may be in an area harder hit by COVID-19 cases. Customers in these locations may be more understanding and receptive to your salon or spa’s decision to add a fee upon reopening. Alternatively, your salon or spa may be in an area less impacted by COVID-19. In these cases, customers may be less inclined to accept the reasoning behind added fees.

Ensure you evaluate all potential reactions and establish appropriate explanations, back-up plans, and responses. For example, how would you respond to customers accusing your salon or spa of profiting from the COVID-19 pandemic? An appropriate response may include statistics pointing out loss of business during temporary closures or added expenses of personal protection equipment.

2. If you decide a COVID-19 tax or fee is right for your salon or spa, do not call it a “tax.”

Some words carry negative connotations, and “tax” is one of them. Even customers receptive to the concept of an added service “fee”, may be turned off by an added “tax.” Consider these alternatives:

• “Service fee”
• “Health and safety charge”
• “Temporary servicing cost”

3. Determine whether an alternative approach would better serve your salon or spa.

You may accomplish your objective – i.e. recuperating lost revenue or covering added operating costs – by simply raising prices. While adding a COVID-19 service fee is temporary, raising prices – however slightly – is often permanent. Of course, the decision to raise prices carry additional concerns. Your salon or spa must consider everything from staying competitive in your market to disappointing loyal customers.

As with implementing an added COVID-19 tax or fee, your decision to raise prices must be accompanied by a messaging strategy. Ensure you have a plan to communicate the reasons behind your price increases clearly and effectively– especially to your loyal customers. Consider mitigating the potential disappoint of price increases by offering special bonuses or services to your loyal customers.

The bottom line? Whatever you determine is best for your salon or spa, accompany your decision with a comprehensive strategy.

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