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Chapter 4: The Financial Abundance Factor
By: Jamie Scalise
Posted: June 16, 2009, from the July 2009 issue of Skin Inc. magazine.
page 15 of 19
$245/week x 52 weeks = $12,740
Yee Haa! If Angela averages a 30% increase in upgrades in our hypothetical example, in one year she will earn an additional $6,370 in commissioned income, and at a 60%, upgrade average, which IS doable if I can do it, Angela would earn a staggering extra $12,740 in her paycheck!
Let’s add in Tips
And again, here’s the better news – these calculations don’t even take into consideration the additional TIP revenue Angela would generate, so let’s apply a conservative 12% in calculating additional tips based on the increases in revenue from allowing client upgrades.
Additional TIP calculation:
$ 6,370 x .12 (12%) ~ $ 765
$12,740 x .12 (12%) ~ $1,530, so…
EXTRA INCOME FOR ONE YEAR @ A 30% UPGRADE AVERAGE: $7,135
EXTRA INCOME FOR ONE YEAR @ A 60% UPGRADE AVERAGE: $14,270
And remember, the spa owner is making even more profit than that for in our Spa Bella example, the spa was getting 65% of the total service increase from your efforts of allowing clients to upgrade, as you were getting your 35% commission. Is anyone besides us excited yet? Yes, you guessed it, now we do the owners increases using the exact numbers based on this example, so sit back and enjoy…
The Owners Additional Revenue
Here we are going to do additional profit projections for Spa Bella made possible from Angela’s efforts (one provider), as from this example begun earlier we know we’re projecting the differences between amounts generated based on the Basic Facial as our base facial performed, versus allowing client’s to upgrade to the Kiss or Super Kiss. So again, what we are calculating here for the owner is almost all additional profit (a nominal additional product cost, between $3 - $6, needs to be noted for each upgrade) on top of, and in addition to what the Spa would have made if Angela did all Basic Facials in her one hour time slots, which unfortunately can be pretty close to reality.
Let’s do a 2 day, 1 week, 4 week (month), 3 month (quarter), and a 1 year projection for our fictitious Spa Bella example based on a 30% upgrade ratio by Angela, where 20% of her clients do a Kiss Facial, 10% do a Super Kiss; and a 60% upgrade ratio, where 40% do a Kiss, 20% do a Super Kiss. Remember were using the commission scale shown below that is paid by our more moderately priced Spa Bella.
Spa Owner: Spa Bella, additional profit projections from Angela’s effort only
Fictitious Commission Program for Spa Bella (with the commission rate @ 35%)