Luxury Services Slowing Down? Readjust for Today’s Economy

When money is tight, the first thing consumers cut from their budgets are “luxury” items (the $4 after-lunch latte, a new iPod) and services they perceive they can do themselves (hair coloring, car washing). But with a simple tweak in pricing options, service-oriented businesses probably won’t see much of a drop in business.

In this week’s Ask Lynda, a masseuse looks to readjust her pricing plan to keep clients — and even expand her customer base.

Hi, Lynda,

I loved your views on today’s Patt Morrison show! And I’ve already bookmarked your blog, too.

I have a question. I’m a massage therapist, and I’ve seen a huge dip in my practice since October 2008. I also teach, so the teaching has definitely kept me afloat, but I’d love to get my clients back in through the door again.

Recently, two colleagues in the building next to me have been running a pay-what-you-can type of promo and have even been written up in our local magazine and featured on the evening news. They tell me, “Life is unpredictable — all is good,” but I don’t really know whether they mean business is good or not.

They’ve suggested a pay of $40 to $80 for 30-minute and 60-minute sessions, respectively, on their interviews, so maybe that’s what they’re getting. My question is: Is this good for a service business — changing clients’ perceptions of you and your practice — or is it a genius idea that I may have to adopt, too?

I sell wellness packages — 5 or 10 at a time for a discount of 5% to 10% respectively off the total price — so I feel that doing something like the pay-what-you-can promo is not fair to those who pay close to the full price for their sessions when they could have paid less.

It’s kinda long, and I apologize for the length. I just love your view that things will get better, and I know they will.

Thank you!
Velvet Madrid

Dear Velvet,

What a great name. Yes, you are right; it isn’t fair to those that pay full price to give a discount to others. However, giving a shorter massage for less money works. Also, you can go to some businesses in your area and perfect the technique of doing shoulder and head work for 15 minutes on people at their desks. We are all so very stressed right now that it might work. I am afraid people are really pulling back on so many of the things they consider luxuries. It may be impossible to build up your business in this economy.

Can you think about ways to change your business model to use your creative talents for something else? Don’t waste your downtime. Go to nursing homes and help the elderly once a week, or a children’s hospital to do foot massage on the little ones. You won’t be paid in dollars, but you will be paid in blessings.

I wish I had better news. But don’t despair; this will pass. It always has and it always will. You just need to concentrate on letting your clients understand that what you are giving them is peace of mind and an escape from the stress of our daily lives.

I wish you all the best,