Every dollar matters, especially when you run a business like a tanning salon.
The tanning salon industry has enjoyed an average growth rate of 7.5% from 2014-2019, according to IBISWorld, a market research firm. And more than 35% of American adults say they have used a tanning bed.
So, you’ve made a smart choice by starting a tanning salon. Not only can you earn solid money, but you can help people improve their appearance and self-confidence.
But to keep those tanning booths in operation, you must manage the business well. And you must find ways to increase your tanning salon’s profits.
You may think that’s easier said than done. Guess what?
With just one simple change in how you do things, you can increase your tanning salon’s profits by 10%. All you have to do is eliminate credit card processing fees.
In this article, we’ll discuss why and how you can do that:
First, let’s look over your finances.
So, how much does the average tanning salon make?
Market data shows the tanning salons earn profits of around $65,000 per year. Depending on your location and size of your operation, you may earn more or less than that. The average tanning booth or bed generates roughly $15,000-$20,000 in revenue per year.
Now, how much does it cost to start a tanning salon?
According to Palm Beach Tan, tanning salon startup costs often exceed $400,000. That amount includes expenses for tanning booths, salon construction, insurance, labor, POS systems, marketing and advertising, and more.
The point is this: You’ve made a big investment to start a tanning salon. As the owner, you can’t afford to lose tanning booth revenue to expenditures like credit card processing fees.
Sure, you could do employ other strategies to increase your tanning salon’s profits, such as:
However, none of these are a sure bet. Eliminating credit card processing fees is a sure bet to increase your tanning salon’s profits.
Every small business, from tanning salons to botox clinics to e-commerce shops, should make the effort to reduce credit card transaction fees. Because the fact is this: These fees kill your bottom line!
Just look at the average credit card processing fees below. On every credit card transaction, you pay between 2.40% and 3.15% in fees, depending on the payment network. And that doesn’t even include the merchant service provider fees.
You may think that it’s just 3% or so. No big deal, right?
But it is a big deal, especially when you consider your operating costs, margins, and how much tanning booth revenue comes from credit card transactions.
If your tanning booth customers pay like the average consumer, 40% of your customers will swipe the credit card.
Considering that credit card usage rates increase as transaction values increase, it’s possible 60% of your tanning booth revenue comes via credit card transactions. Many of your higher paying customers will swipe the plastic.
To give you a clear idea of how much you could increase tanning salon profits, let’s do an example. Let’s say:
And let’s say:
If you pay an average of 3.5% in processing fees, that means:
Now, imagine if you could wipe away that $7,350 in fees overnight. This is what would happen:
Think of all that you could when you don’t have to pay credit card fees on tanning booth revenue. You could expand your business, save more for retirement, take a nice vacation, and more. The important thing is you’ll have more money back in your pocket. And that should make you jump for joy!
Need any more motivation to start looking for the best credit card processing? Because you can take home 100% of your tanning booth revenue.
Do these three steps:
After doing these three steps, it should be clear which MSP is the best for your tanning salon business. Of course, you’ll still have to pay some credit card processing fees. But you got them as low as possible.
Even better, you still have another strategy to employ. And this is what will get you free credit card processing…
Did you know you can offer tanning booth clients discounts for paying in cash?
Thanks to the Dodd-Frank Act, cash discount programs are legal. And they can help you get free credit card processing.
So, how does it work?
At NadaPayments, our cash discount program would give your tanning booth clients up to 3.95% off for paying in cash. They can still use a credit card, as our program works with most MSPs. However, they’ll have to pay the non-discounted price, which accounts for credit card processing fees. This ensures your revenue doesn’t take a hit from credit card processing fees.
As you can see, a cash discount program still offers your tanning booth clients the convenience of using their preferred payment. But they can also save money by paying with cash. Even better, you can guarantee you take home 100% of your tanning booth revenue.
Interested in a cash discount program? At NadaPayments, we can help tanning salon owners get the best credit card processing. Contact us at +1 (929) 293-1800 or click the link below.