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All About Private Label

By: Pamela Jo Busiek
Posted: July 23, 2008, from the August 2008 issue of Skin Inc. magazine.

A spa owner may question the value of investing in a private label, and it is important to know the benefits of owning a private label before pursuing such an endeavor. So what’s in it for you? For starters, it enhances the profitability of your business, lends prestige to your name and builds brand equity. Additionally, it decreases the cost of your facial and extends your service menu.

Profitability

No matter the direction of the economy, a successful spa relies on its product sales. There is a limit to the amount of income a spa can generate from treatments alone. That sum can be calculated by taking the number of operating hours in a day, multiplying it by the number of available treatment rooms and subtracting any expenses. Theoretically, there is no limit to the profit a spa can generate from product sales.

Profitability is one major advantage that comes from purchasing a private label. A spa cannot be profitable if it is working on a 50% markup. At the same time, taking on a private label skin care line doesn’t mean banishing your branded line. Focus groups have shown that clients prefer to be given a choice. Instead of presenting a client with one recommended moisturizer, place two before them. Highlight the benefits of each and allow the client to make the final decision.

Private label products enable your profits to skyrocket. Such a product line has the ability to strengthen your identity, improve your margins and allow you to achieve phenomenal success as a spa owner.

Pricing your facial

One of the major advantages to owning a private label is found in the treatment room. Spa owners should calculate the cost per ounce of products utilized in a treatment to determine the profit margin of each service on their menu.