By Damien Feiklowicz, Sunless Inc.

“Give me a one-handed economist,” quipped President Harry Truman in frustration with his policy advisors who qualified their remarks, ‘on the one hand… but on the other hand…’ So, in the hopes of avoiding that stereotype when asked, “How do I grow my tanning business?’ an economist could offer one simple equation:

Price (P) x Quantity (Q) = Revenue (R)

OK, so starting off with a mathematical equation—albeit one deceptively simple like P x Q = R—probably persuaded half of the readers to turn the page already, but there is something to be said for self-selection. In this case, the fewer salons that learn how to play the pricing game makes it easier for those of you who are willing to put in the work without that complication.

Which brings up a crucial simplifying assumption, or, in the parlance of Give ‘Em Hell Harry, the one-handed approach to ‘solving’ that one crucial equation is limiting the variables—P and Q—to just one input. Specifically, many common efforts to grow the tanning business focus on adjusting P upwards as the only means to reaching the desired end of increasing R, because Q appears to be fixed. Put simply, salons try to increase the price of each tan—or transaction value per customer—by employing all sorts of different and complex schemes with the simple objective of growing revenue. Even promotional activities that temporarily lower prices are ultimately designed to attract customers—typically from a competing salon—and eventually raising the price again on subsequent visits or using that first visit to convert a new customer to an EFT membership.

Click here to read the entire article in the latest issue of Smart Tan Magazine online.