You’ve entered a booming industry. Within the beauty and aesthetics field, microblading is the fastest-growing non-invasive treatment, according to the American Medical Spa Association. As a microblading artist, you have a chance to do something you love and enjoy financial success. So you want to make the most of your investment. After all, launching your own salon has costs. Sage, an accounting software company, estimates that starting a beauty salon costs between $100,000 and $500,000. And on top of your initial investment, you have ongoing expenses, such as insurance, labor, equipment upgrades, marketing, and more. Don’t forget about credit card payment processing, either. An ill-advised choice here can decrease your profit margins by double digits in the long run.As a business owner, it’s important to learn about how you can reduce your credit card processing fees. It will make your microblading business more profitable and more sustainable. Let’s go over the questions you should ask yourself first. Then, we’ll discuss how you can take home 100% of your revenue.
How much do you pay in credit card processing fees?
What your microblading salon pays in credit card processing fees can vary. The following chart shows averages for each card network. Fees range from 1.43–3.5%:
A survey of microblading artists that run their own salon would probably show they pay more than just a flat fee per transaction. Certain merchant service providers (MSPs) may have monthly subscription fees, pricing variations, and multi-tiered plans. You have to look closely to see exactly what you’re paying. For instance, if you look at Shopify’s pricing, you’ll see monthly subscription plans for basic, standard, and advanced accounts. You’ll even see different fee structures for in-person and online credit card payments, as well as an additional fee for using other payment providers.
Basic (left); Standard (middle); Advanced (right)
While many payment providers like Shopify provide fee transparency, you should analyze everything to understand what you’ll pay.Even worse, some MSPs know you’re busy and make fee structures unnecessarily complex. To avoid getting a bad deal, you have to do more research on your end.As a business owner, finding time to shop for the best MSP can be difficult. But remember the right MSP is crucial to business success. After all, those credit card processing fees can cost your microblading business tens of thousands of dollars per year.
How much of your microblading revenue comes from credit card transactions?
Revenue at your microblading salon comes from a mix of cash, debit cards, and credit cards. But how much comes from credit card transactions? Probably more than you think. First, consider the average microblading cost: $400. It’s a high-value transaction. As research from the Federal Reserve shows, credit cards are more commonly used for larger transactions, while cash is most common for small transactions. Look at the average value of a credit card transaction:
For microblading and other permanent makeup services, a good portion of your clientele probably pays with a credit card. In fact, it’s possible 60–70% of your microblading revenue comes from credit card transactions. So, a significant portion of your revenue is subject to credit card processing fees. But how much is it costing you in profits?Consider the following example:
Your microblading studio serves 6 people per day at an average cost of $400. That’s $2,400 per day in revenue. You’re open 320 days per year, so your studio generates $768,000 per year in revenue.
After all expenses, including money paid to other microblading artists, you achieve a net margin of 10%. That means you earn $76,800 in profit for your microblading studio.
An income of $76,800 may be good for you, considering it exceeds the average household income in the United States. But if you look at what you pay in credit card processing fees, you may discover a lot of money was left on the table:
60% of your microblading studio revenue comes from credit card transactions. That’s $460,800 in total.
You pay an average credit card processing fee of 3% per transaction. That equates to $13,824 per year in credit card fees.!
Now, think if you can eliminate that $13,824 in fees. Your income would jump from $76,800 to $90,624 per year. That’s a salary increase of 18% year after year.Clearly, it pays to pay attention to credit card processing fees. Over a decade working as a microblading artist, it could mean more than $130,000 back into your pocket.Think of what you could do with that extra income. Save more for retirement, buy a bigger house, give to charity, take a better vacation, and more!
What should your microblading business do about payment processing fees?
Know this: You don’t have to pay credit card processing fees! You can take home 100% of your microblading revenue. How do you find the cheapest credit processing?First, learn about how credit card payment processing fees work. The total fee you pay comes from the following individual fees:
Interchange fee: paid to the card-issuing bank
Assessment fee: paid to the card-issuing brand
Processor markup: the MSP’s cut, which could come in the form of monthly fees, software costs, etc.
When you choose for a pricing model, avoid tiered pricing, as it complicates things. Opt for pass-through pricing. This itemizes all your fees when they’re passed on to your microblading business.Also, know you can negotiate markup fees. There’s no reason to pay all those extra fees, and typically you can cut 5–10% off what your MSP initially requests.Furthermore, if you have to refund one of your microblading clients, you still may have to pay transaction fees. See if your MSP can reduce those in such cases. If a transaction is canceled, you may still be subject to fees, though your MSP should waive these (insist on it).Other MSPs may implement rate increases because of “inflation”. Find another MSP if they try to pull this fast one on you. Credit card processing fees are a percentage of the transaction, and therefore naturally rise with your revenue.
Cash discount programs are the cheapest credit card processing
Now you know everything you need to about credit card processing fees and how to reduce them. But did you know you can avoid them altogether? To take home 100% of your microblading revenue, employ a cash discount program. A cash discount program, combined with affordable MSP, offers you the cheapest credit card processing possible. You eliminate credit card processing fees by offering your microblading clients a choice: Pay in cash for standard pricing OR pay with a credit card at a markup. That way, you get 100% of your revenue no matter how your customer pays. And your customers get the option to save money with a cash payment. It’s a win-win for everyone. Want to learn more? Stop the bleeding today and eliminate credit card processing fees. Give us a call at +1 (929) 293-1800 or click the link below: