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Poll: Do the techs in your salon accept tips?
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Just converted to a "No Gratuity" policy!
08-05-2012, 11:36 PM
Post: #1
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Just converted to a "No Gratuity" policy!
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I just thought I would put this information out there in case anyone finds it useful. Smile As of August 1st I no longer accept tips from my clients. In preparation, I started telling people about it as they came in for about a month - I didn't post signs as I wanted to have open discussions with everyone as I went. This way I could get a feel for the response, and could answer any questions.

I haven't adjusted most of my prices since I first started three years ago, so I went back and updated the info on my service cost spreadsheets and adjusted all my prices upward. Most prices I raised between 9-14%, a few went up as much as 20%, because I found that the product costs and length of services warranted the increase (mainly the gel polish mani & my basic pedi).

This is just the highlights of the benefits, but will give an idea of what I said to clients:

Benefits to client:
-No uncertainty of whether or not to tip (a salon owner) or how MUCH to tip! Many people have expressed discomfort either before or after I told them about the policy change - and for the majority, this was a good customer service move!
-They get full loyalty points - my system won't give points for tips.
-Fixed cost, what you see is what you get.

Benefits to salon:
-No uncertainty, I can look at my calendar and know what I will be earning each day/week. (This is something that I didn't really think about beforehand, and I was greatly surprised at the positive mental shift I experienced in my first week of the change!)
-All clients pay the same for every service - in my view clients who tip more are essentially paying a higher cost for the same product, so I was happy to even the field.
-If I hire an employee, all wages will be paid on the commission schedule. In WA we have to guarantee minimum wage (it's just over $9/hr), but we can't count their tips as part of the minimum wage! Also, as an employer I would have to match SS wages on their tips (7.65%), pay insurance premiums on tips (6%), and possibly credit card fees on tips (2.25%) on money that NEVER CAME IN TO THE BUSINESS, and can't be counted for the wage requirement!

So far the response has been very good, and I think it will be a positive change for everyone.

Candice
Nail Tech/Owner
http://www.PanacheNailStudio.com
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08-06-2012, 07:11 AM
Post: #2
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RE: Just converted to a "No Gratuity" policy!
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I've had no tipping policy for years and I LOVE it!!
I think the benefits are even greater then you explained. This article sums it up nicely:
http://www.behindthechair.com/displayart...spx?ID=442

Having an european background, where our professional belongs to "professional industry" and not a service industry, hence no tipping (you don't tip professional/therapist)- it was a natural move.
I set my prices not having to hope I get a tip, just like any other professional industry.
Also my employees get either hourly or flat rate (kind of like a comission)- whichever is higher.
Also, the situation is easier when it comes to an audit too. There is no worries when it comes to proving what was tip and what wasn't (as they assess you based on the TOTAL amount you made- sales taxes AND income tax)

Overall I had an awesome response from clients. They love the idea that there is "no prossure", no emberassing moment at the check out (do they tip the receptionist or go back to see me..?). Most of my clients said that they would rather pay a little extra for the service to avoid the dillema.





(08-05-2012 11:36 PM)CandiceAE Wrote:  I just thought I would put this information out there in case anyone finds it useful. Smile As of August 1st I no longer accept tips from my clients. In preparation, I started telling people about it as they came in for about a month - I didn't post signs as I wanted to have open discussions with everyone as I went. This way I could get a feel for the response, and could answer any questions.

I haven't adjusted most of my prices since I first started three years ago, so I went back and updated the info on my service cost spreadsheets and adjusted all my prices upward. Most prices I raised between 9-14%, a few went up as much as 20%, because I found that the product costs and length of services warranted the increase (mainly the gel polish mani & my basic pedi).

This is just the highlights of the benefits, but will give an idea of what I said to clients:

Benefits to client:
-No uncertainty of whether or not to tip (a salon owner) or how MUCH to tip! Many people have expressed discomfort either before or after I told them about the policy change - and for the majority, this was a good customer service move!
-They get full loyalty points - my system won't give points for tips.
-Fixed cost, what you see is what you get.

Benefits to salon:
-No uncertainty, I can look at my calendar and know what I will be earning each day/week. (This is something that I didn't really think about beforehand, and I was greatly surprised at the positive mental shift I experienced in my first week of the change!)
-All clients pay the same for every service - in my view clients who tip more are essentially paying a higher cost for the same product, so I was happy to even the field.
-If I hire an employee, all wages will be paid on the commission schedule. In WA we have to guarantee minimum wage (it's just over $9/hr), but we can't count their tips as part of the minimum wage! Also, as an employer I would have to match SS wages on their tips (7.65%), pay insurance premiums on tips (6%), and possibly credit card fees on tips (2.25%) on money that NEVER CAME IN TO THE BUSINESS, and can't be counted for the wage requirement!

So far the response has been very good, and I think it will be a positive change for everyone.

Anna
website: http://www.polished.ca
blog: http://www.polished4pros.blogspot.com/
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08-06-2012, 11:05 PM
Post: #3
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RE: Just converted to a "No Gratuity" policy!
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0
(08-05-2012 11:36 PM)CandiceAE Wrote:  I just thought I would put this information out there in case anyone finds it useful. Smile As of August 1st I no longer accept tips from my clients. In preparation, I started telling people about it as they came in for about a month - I didn't post signs as I wanted to have open discussions with everyone as I went. This way I could get a feel for the response, and could answer any questions.

I haven't adjusted most of my prices since I first started three years ago, so I went back and updated the info on my service cost spreadsheets and adjusted all my prices upward. Most prices I raised between 9-14%, a few went up as much as 20%, because I found that the product costs and length of services warranted the increase (mainly the gel polish mani & my basic pedi).

This is just the highlights of the benefits, but will give an idea of what I said to clients:

Benefits to client:
-No uncertainty of whether or not to tip (a salon owner) or how MUCH to tip! Many people have expressed discomfort either before or after I told them about the policy change - and for the majority, this was a good customer service move!
-They get full loyalty points - my system won't give points for tips.
-Fixed cost, what you see is what you get.

Benefits to salon:
-No uncertainty, I can look at my calendar and know what I will be earning each day/week. (This is something that I didn't really think about beforehand, and I was greatly surprised at the positive mental shift I experienced in my first week of the change!)
-All clients pay the same for every service - in my view clients who tip more are essentially paying a higher cost for the same product, so I was happy to even the field.
-If I hire an employee, all wages will be paid on the commission schedule. In WA we have to guarantee minimum wage (it's just over $9/hr), but we can't count their tips as part of the minimum wage! Also, as an employer I would have to match SS wages on their tips (7.65%), pay insurance premiums on tips (6%), and possibly credit card fees on tips (2.25%) on money that NEVER CAME IN TO THE BUSINESS, and can't be counted for the wage requirement!

So far the response has been very good, and I think it will be a positive change for everyone.


Ironically, I was just at your site before coming to BT forums tonight and saw your 'policy change'. I was excited, thrilled even as I have often thought about doing this myself. I don't mind tipping where I know the employee, server or service provider is 'working' for tips mostly. My daughter in fact is a bartender/server in a restaurant and she makes $2 bucks an hour and hopes her tips make up the difference (min wage here in TN is 7.25 per hour). But do feel that I control my menu service fees and that should be the expected amount from my customer.

Just curious, ever had someone insist you take a tip?

Anna
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08-06-2012, 11:12 PM
Post: #4
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RE: Just converted to a "No Gratuity" policy!
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0
Not yet - but I've only had the policy for a week! I don't anticipate anyone wanting to though, as the response so far has been appreciative except one person who commented that the new price "already has the tip added in". She happens to get the one service where I raised my price by 20% - gel polish manicure. I had originally priced the GP in comparison to a spa manicure, but in reality the cost is the same as doing an acrylic or gel fill, and it books the same amount of time!

Candice
Nail Tech/Owner
http://www.PanacheNailStudio.com
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08-06-2012, 11:29 PM
Post: #5
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RE: Just converted to a "No Gratuity" policy!
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(08-06-2012 11:12 PM)CandiceAE Wrote:  Not yet - but I've only had the policy for a week! I don't anticipate anyone wanting to though, as the response so far has been appreciative except one person who commented that the new price "already has the tip added in". She happens to get the one service where I raised my price by 20% - gel polish manicure. I had originally priced the GP in comparison to a spa manicure, but in reality the cost is the same as doing an acrylic or gel fill, and it books the same amount of time!



As we would say here: '.....bless her heart' Big Grin

Anna
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08-07-2012, 04:46 PM
Post: #6
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RE: Just converted to a "No Gratuity" policy!
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Haha... Love that!

Candice
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08-08-2012, 09:30 PM
Post: #7
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RE: Just converted to a "No Gratuity" policy!
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This is a really interesting topic. I think it really depends on the type of business you run. To me, my price is for the nail service. If I just sat at my station and did nails or pedicures. And if all my clients came to me with polish in their hand ready to go it would feel weird getting a tip.

But I do a lot extra for my clients. I personally greet all my own clients. I always get them a beverage. If it's cold out, I take their jacket and hang it up for them when they arrive. I give advice and help them pick out a color. If they're getting a pedicure I offer a neck wrap, roll their pants up, help them get settled. I serve them too.

I guess my prices are a bit of a dance. "I charge this because I know you'll give me that." But I'm okay with that. And I don't think my clients think less of me because they're tipping me. They are being generous and I accept it, and really appreciate it. I love reading the little notes they write on the envelopes.

And I have to say, I rent space in a hair salon with 25 hairdressers, who are all employees. I can't even fathom the outrage if the salon owner came in and said 'we're raising prices and you can no longer accept tips' I think it's really going to be a tough sell for staff.

I completely respect where everyone is coming from. I just wanted to share my thoughts.

http://www.JesseDavidNailDesign.com
Wilmington, DE
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08-08-2012, 09:48 PM
Post: #8
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RE: Just converted to a "No Gratuity" policy!
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I do get your point about receiving tips, and I don't believe there's anything "wrong" about getting or giving tips. Big Grin

That said, I also personally greet guests, offer coffee/tea/cocoa/water and snacks, help with coats as needed, help with color choices, custom blend colors when needed. During pedicures they get a neck wrap and I customize services as needed to meet specific needs. Nothing about the level of service changed just because I no longer have to go out of my way to earn a tip. Big Grin

None of this, or the fact that we serve them came into my thinking on this change. Smile I love it that we are in a service industry and are in a position to pamper our clients and allow them to enjoy being taken care of for a change!

The fact is, I know what my overhead is. I know how long it takes to do each service, and what my costs are per service. I know roughly what my advertising and equipment costs are. That being the case, why would I leave anywhere from 13-20% of my income per service to chance?

Candice
Nail Tech/Owner
http://www.PanacheNailStudio.com
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08-08-2012, 10:40 PM
Post: #9
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RE: Just converted to a "No Gratuity" policy!
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That is a good point. It's definitely something to think about. Thank you for sharing.

Anna LaJourdie, I liked the article you posted as well.

http://www.JesseDavidNailDesign.com
Wilmington, DE
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08-11-2012, 04:10 PM
Post: #10
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RE: Just converted to a "No Gratuity" policy!
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Wooohooo, what a topic!! Let me tell ya hun, I think it depends on who your customer base is. In my area if I raised my prices that much, they would dump me like a hot potato. Wouldn't matter, one bit, if I did away with the tip policy. Since I have been in business I've never had a tip policy, didn't think it necessary to have one. If people tip, that is their option, it isn't expected. What I find funny is the ones with the most money don't tip and the ones who work hard for what money they make tip the most. How's that for logic?? ;-)
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08-11-2012, 07:34 PM
Post: #11
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RE: Just converted to a "No Gratuity" policy!
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I think your right, it would depend on the client base. I haven't lost anyone yet, and everyone I told last month has rebooked, and two weeks in the response has been very positive! Even I am amazed at how happy people have been at the end - several asked to add a tip or tried to hand me cash this week and when I smiled and said "no tips!" they really seemed to love it.

If tips are accepted, no policy is necessary - I used to tell people that tips are always appreciated, never required and that worked well. Oddly enough, it was mostly my 15-20% tippers who were asking for the no tipping policy and I've been fortunate because the only ones who didn't tip or tipped little were the people that money is more of an issue for or those who believe you shouldn't tip a salon owner.

Candice
Nail Tech/Owner
http://www.PanacheNailStudio.com
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08-11-2012, 10:29 PM
Post: #12
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RE: Just converted to a "No Gratuity" policy!
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So your customer's asked for a no tip policy?
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08-13-2012, 10:49 AM
Post: #13
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RE: Just converted to a "No Gratuity" policy!
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Yes, several of my regulars have mentioned it to me over the last year. There were a few others who didn't bring it up that I mentioned it to so that I could get a sense of their take on it too.

Candice
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http://www.PanacheNailStudio.com
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08-14-2012, 11:00 PM
Post: #14
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RE: Just converted to a "No Gratuity" policy!
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Interesting, in all the years I've been in the biz, I've never had a client ask for a no tip policy.

Well, hope it all works out well for ya! ;-)
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08-31-2012, 06:50 PM
Post: #15
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RE: Just converted to a "No Gratuity" policy!
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I am fortunate enough to live in an area with very generous tippers. I actually think I would lose income if I went to a non tipping policy. Not to mention to have to explain this to new clients that call when I tell them a basic manicure would cost $35 because the tip is included would not be worth my time. It is already hard enough to compete price wise with low cost nail salons in the area on price, my prices being much higher, along with quality being much higher that I just don't think this would be a smart business move at all for my salon. You are also assuming that the person wanted or felt you should receive a tip which makes some people upset. Not that you don't deserve a tip, but it's like eating at a restaurant that includes gratuity, I personally don't like that and would rather it be up to my discretion what I feel is an appropriate tip. I don't have many non tippers and the ones that are non tippers don't get super expensive services. I have so many generous clients that they more than make up for the non tippers. So personally I don't think it would be a good move for me. But I'm glad it seems to be working for you.

Gina, nail tech. NC
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08-31-2012, 07:16 PM (This post was last modified: 08-31-2012 08:06 PM by CandiceAE.)
Post: #16
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RE: Just converted to a "No Gratuity" policy!
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I actually had many good tippers too, and you're right, I will have a slight drop in income as many people are paying a little less per service now, and they're getting more loyalty points than before. Here's a common misconception - I know for a fact exactly what my % average was for tips and I did not use that when I changed my pricing. I used actual cost and profit needed to stay open. This was not about increasing my income, it was about customer service for my salon based on what I saw was wanted. The fact that I no longer leave 13-18% of my income to chance is a bonus on top of the positive change for my clients.

I don't say that the tip is included because it's not. There is no tip. The cost of each service is based on how long it takes (variable for overhead and my time), the complexity, and cost of product/supplies. So, no time is spent explaining.

I don't compete on price - I have the highest prices in my area, and there are only two techs in my little town other than the walk in shops. I had three new people this week for various services, when they scheduled and asked my price I simply told them the price. Then, when they were in my chair as I went over the various loyalty programs and other unique features of my shop (I have a host of things I go over with them during the service once the client consult is done) - during that time I let them know about the no tipping policy. The response all three times was over the top positive. I think we tend to overestimate how much people enjoy tipping. Wink

Maybe this isn't for everybody. It certainly will never be right for someone who doesn't see the value. But in my case, I have at least one client every day who tells me how much they love the new policy. Go figure.

Candice
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http://www.PanacheNailStudio.com
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08-31-2012, 07:39 PM
Post: #17
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RE: Just converted to a "No Gratuity" policy!
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My husband goes to an old school barbershop where they still do $10 men's haircuts. He tries to give then twelve and they won't take it. They say "nope, $10".

Anna
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08-31-2012, 08:09 PM
Post: #18
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RE: Just converted to a "No Gratuity" policy!
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Wow, $10! My husband pays $12, and we give $15 and I thought we had the lowest out there. Smile We go to someone who has a salon on her home so she can be home for her kids - low prices. She actually finally raised them after I nagged her for a year!

We forget too, that many countries do not tip. In some places nail and beauty professionals are actually considered professionals, and don't get tips even if waiters do! That actually may be why people asked me about this - I have a LOT of retired clients who travel all over, so they've been to countries where it's not customary to tip.

Candice
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08-31-2012, 08:45 PM
Post: #19
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RE: Just converted to a "No Gratuity" policy!
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I used to work for a day spa chain in the Puget Sound area that had a no tipping policy. I only worked there for five months when it became evident to me that their pay rates did not even come close to making up for it. They have since changed their policy to allow for tipping. They claimed it was due to customer demand, but I have heard from other past employees that they just couldn't keep anyone on staff for very long otherwise. I was booked at least 90% every day that I worked there, and I just wasn't bringing home enough to be working that hard. The salon I work in now allows tipping and is just as busy.
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08-31-2012, 08:52 PM
Post: #20
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RE: Just converted to a "No Gratuity" policy!
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That is unfortunate that they structured it poorly. In a no-tipping salon it's imperative that the techs be paid a higher percentage to make up for the lack of a tip. When I briefly considered hiring an employee I calculated it would take an extra 8% in commission to equal the pay they would have received with a tip - I actually ran the numbers using my exact tip percentage and made sure that at every level the tech would be getting a slightly higher hourly rate without the tip. Maybe that's not the norm...

Candice
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08-31-2012, 08:57 PM (This post was last modified: 08-31-2012 09:04 PM by crweixelman.)
Post: #21
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RE: Just converted to a "No Gratuity" policy!
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That said, if I owned my own place and was not planning on ever hiring any other techs, I might consider it.
They had a different pay rate there. You had your non-booked rate, which was minimum wage, and your booked rate, which was roughly twice minimum wage. It worked out well for you if you sat around half the day (compared to being.on flat commission) but there was definitely a point at which it just wasn't enough. I reached that point within the first two months. Part of the problem I think was that their prices were not any higher than other comparable salons/spas.

I have heard that in addition to allowing tips they have also switched to paying commission as well. If I didn't like where I am now I would definitely consider working there again because I did like the setup there a lot.
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08-31-2012, 10:45 PM
Post: #22
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RE: Just converted to a "No Gratuity" policy!
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Actually, if you get your own place and ARE going to hire employees you should definitely consider it... an employer pays out around 19% of tips in taxes, unemployment insurance and credit card fees - and doesn't get to count it as part of their wage guarantee. Ouch. Better to just pay people what they're worth and pay taxes and fees only on money that is actually INCOME to the business.

Candice
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http://www.PanacheNailStudio.com
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08-31-2012, 11:38 PM
Post: #23
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RE: Just converted to a "No Gratuity" policy!
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I just think that it would be difficult to get/keep good techs that way, even if you offer higher commission. No tipping policies are not all that popular with employees. It's not just the overall numbers either. A lot of techs really like taking home cash every day.
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09-01-2012, 12:03 AM
Post: #24
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RE: Just converted to a "No Gratuity" policy!
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Wellllll... I find that it's difficult to get a good tech regardless of whether they get tips or not. They either only want to do particular services (the easy ones) or they want all the bennies of being an employee, but want the privileges of being an owner. Probably the really good ones who would show up on time for an interview, not look at their cell phone during it, etc. don't want to be employees anyway - they want to be self-employed. That's ok. Yes, everyone likes cash, many like it off the books and not paying taxes on them, but that's a no go for me too. The IRS will never find fault with my books. Someone working full time at a fairly relaxed pace could easily make 1,000/wk in my shop if they were 85% booked and scheduling loosely like I do - where you actually get to breathe during your work day and not get burned out and over used. That's double the national average pay for a nail tech in the US. I wasn't telling anyone that they should do what I've done (no tipping), I was simply sharing information for anyone who was interested in seeing another possibility of how things could be done, and to share how I went about it, and what the result was. Just like I'll tell anyone who asks what products I use, but I'm not going to tell you that you should use the same things.

Lucky for me, I am content to keep going solo, and I have the mindset that if I run into the right person for my shop I will take them on, and if I don't, that's okay too. I'm very protective of the environment of my shop - it's bright, relaxing, fun and intimate - people feel like their day got better just because they came in, and I love every day I spend there. In all likelihood if I get too busy or the retail side takes off too much for me to handle alone I will hire a shop assistant before I will go out of my way to hire another tech. I have a lot of structure in the under-pinnings of my business, but the reality is that my day to day at the shop is very relaxing and fun and if something is causing negative feelings I will do what I can to get rid of it. Tipping was one of those things that caused negative feelings amongst several of my better clients.

Candice
Nail Tech/Owner
http://www.PanacheNailStudio.com
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09-01-2012, 12:59 AM
Post: #25
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RE: Just converted to a "No Gratuity" policy!
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You're not alone there. The salon I work at now, I feel like they've had to really lower their standards in who they hire just to have enough warm bodies available to take appointments, and that fact shows in the online reviews lately. It's one of the reasons I have been considering going it alone. I hadn't really ever thought about adopting a no-tipping policy if I do that, but what you say makes a lot of sense. I can definitely see the benefits. I bet if you did it from the outset it would be even easier as you'd never have to worry about raising your prices or converting your clients to a new system.

I just thought of something though... If you are paying an employee more in order to make up for not being able to accept tips then wouldn't that cost you more than the taxes and cc fees you'd have had to pay out on their tips?
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