In a recent SmartTan.com poll, nearly half of indoor tanning businesses said their lowest-priced EFT memberships costs between $20 and $25 dollars per month. A vast majority, more than three-fourths of salons, said their lowest membership rate falls somewhere between $15 and $30.

Pricing is always a difficult decision – you don’t want to undervalue yourself, but you also need to be able to attract a steady supply of clients. It depends largely on your market, what the average person can afford, and what segment of clientele you’re trying to attract, but there are some general considerations and tactics to employ. If you’re not sure about your current pricing, start by answering these questions:

• What is the customer willing to pay for my product?
• What kind of customer do I want to target?
• How should I react to my competitor’s prices?
• Can I offer different levels of products or services at different price points?
• How can I adjust my prices?
• Have I given the customer a reason to pay more for my product?
• Can I base my price partly on intangible benefits (i.e. experience)?
• Should I bundle my products for a single price?
• Should I discount to get people to buy my product?
• How does the customer want to buy my product or service?

It’s important to not start off thinking about your competitors’ prices. While that’s obviously a factor, you need to first think about the value you provide regardless of outside influences, and how much customers will be willing to pay for it. Being the cheapest doesn’t necessarily mean you provide the best value. Even if you’re more expensive, if you provide added value because of better equipment, products, service, environment, extras, and overall customer experience, savvy customers will recognize it.

But while you don’t want to undervalue yourself, many salons opt for a low-priced entry-level membership to use for marketing purposes and to not be unfairly perceived as providing less value than the competition. They go this route typically with the goal of convincing customers to move into a higher-level EFT that provides better value, or making up for the low monthly rate with upgrade and product sales. One effective way to accomplish this, and get clients to choose a higher-priced membership after drawing them in with a low option, is using a decoy price.

Research shows that when people choose between two products, they’ll usually choose the cheaper one. But when they have three or more options, they’ll tend to select a middle option rather than the lowest. So, you can feel free to match the competitor’s low price, but make sure you have at least two higher-priced options, at least one of which provides far greater value. And if you have many membership options, position one of the middle choices as a far greater value than the level directly above it, thus drawing people most to that one. This way, you’ll position the competition as a cheap option and still get most clients to spend more money with you.