Is it time to take your memberships to the next level?

While plenty of tanning businesses are still thriving by focusing on driving the majority of their members to all-access memberships that showcase exceptional value, others are now starting to push the limits on membership pricing. Some of the major tanning franchises are now offering UV-only memberships that exceed $100 per month, and smaller, independent operators are also starting to migrate toward more premium pricing, including all-access options up to $150 and above.

As the tanning business model changed over the years, many operators began to focus their efforts primarily on their most expensive membership option. It became practical and profitable to try to push virtually everyone to all-access memberships that provide value that’s almost too good to be true. But equipment technology, operating costs, and consumer expectations continue to evolve. We’ve now reached a point where, if you have a stellar equipment selection, offering $79 or $89 all-access memberships might be selling yourself short.

Raising the Bar

These days, everything is getting more expensive, so it stands to reason that tanning should too. Your business expenses have certainly increased, and the cost of living is also on the rise for your customers. That could be viewed as a double-edged sword: Less disposable income could mean more hesitance to spend on luxuries like tanning, but people are also growing accustomed to seeing prices increase across the board.

Still, more than anything, new equipment technology has changed the possibilities for pricing. In the last few years, new, the technological advancements found in new, premium tanning equipment place it in a class of its own and easily justify an increased cost for access. Even without the latest tanning equipment, there are new ways to substantiate higher prices. More salons are also embracing higher-end spa and wellness services, which can greatly enhance the value of all-access memberships and perceptions of the quality of a business as a whole.

Whether you’re in a position to make a significant pricing adjustment or not, it’s a good time to take a comprehensive look at your membership structure, with particular consideration of the role of every level, and how each level might impact the success of the next. By elevating the cost of top-tier memberships, you can leave more room for a highly attractive and lucrative second tier. With an even more significant majority of your revenue coming from the upper levels, it’s then sensible to increase entry-level pricing as well. In turn, charging more for the base level only makes the middle tiers with better equipment and more value that much more appealing. It all works together.

 Of course, If you’re going to charge more, you need to offer more, but that can be accomplished with minimal additions by condensing five or six levels of tanning into three or four. If you’re concerned that your loyal customers won’t be able to stomach such a drastic change, you might be right. But that’s easily remedied by “grandfathering them in,” letting them stay at the same price as long as their membership is active. That might sound like a major hassle, but it also comes with a great benefit: There’s really no better strategy for membership retention. Members are going to be far less likely to cancel when they know they’ll have to pay more if they want to come back. And today’s salon management technology makes the price variations more manageable.

All In

An all-access membership that includes UV, spray tanning, and additional spa services is still the end-all-be-all sale for tanning business because it locks in maximum revenue. The ability to increase top-level tanning prices is predominantly based on your quality of equipment, and the same is true with all-access membership pricing. More salons are now embracing spa and wellness services that aren’t just the icing on the cake for an all-access membership, but highly valuable and marketable services in their own right.

With an equipment lineup headlined by a top-of-the-line KBL unit, a SmartSun Therapy SST28, and a well-rounded selection of additional wellness equipment, Mid-Ohio Mind, Body & Soul is charging $175 per month for its all-access membership.

“I’ve definitely converted some people that were coming in just for tanning. I’ll throw them in the SmartSun Therapy to get their thoughts, then they change from a Level 3 tanning membership ($74/month) to our biggest membership that allows them to do all of it ($175/month). A lot are doing that. They’ll ask a question about it one day and it sells itself,” says owner Kiley Harriman.

Meanwhile, Paradise Island Tan’s $150 “Platinum” membership is proof that it doesn’t take a massive investment in new tanning equipment to charge a premium all-access price. Spray tans, high-end wellness services, and a selection of well-kept but older tanning units in a luxurious, immaculately clean, service-focused environment has proven to be enough.

“The all-inclusive level is growing as people see the value of red light. Red light is taking off. Also, with four sprays a month, it’s a huge savings. I use that as enticement, and nobody really ends up doing all three,” says owner Hugh Colgrove, whose salon is  in Florida. “I still have older equipment, but it looks new, and my VersaSpa is spraying more than 3000 people a year. We’re spraying the [Jacksonville] Jaguars cheerleaders. When I first bought the place, we weren’t doing many spray tans. I focused on that, pushed it hard, and went from doing like 600 spray tans a year to maybe close to 4000 with an older machine.”

How much your services are truly worth in total is far from the only consideration. It’s also about how each level impacts the perceived value of the others. As an economics professor, in addition to operating his three Lectric Beach Wellness Club locations in Wisconsin, Dion Borkowicz understands this concept better than anyone. That’s why Lectric Beach has not one but two membership levels that combine tanning, spray and spa. In discussing his pricing strategy, he references a case study from a store that sells wine. When customers are offered a selection of wines that cost $10, $25, or $50, they’ll most often choose the $10 or $25 bottle. “But when they add a $200 bottle, now when that person comes in, you say, ‘We have this awesome wine for $200. They say, ‘No, that’s too expensive, I’ll go with the $50,” Borkowicz says.

“We have our price board in store that reads left to right, top down. Spa Plus is the top level with everything. We put that up there to get more people to get the second option. Plus, we have a few dozen Spa Plus members, and we didn’t really plan to sell a lot of it.”

Lectric Beach Wellness Club’s “Spa Plus” membership is $144.99 per month. That includes access to their hybrid equipment, a variety of premium KBL models, limited access to SmartSun Therapy, additional spa equipment, and spray tans. The “Spa Basic” level for $109.99 limits access to hybrid equipment and select spa services to once every 72 hours and does not include any SmartSun Therapy sessions.

Class of Its Own

In general, it stands to reason that as price increases, demand will decrease. So, when you increase membership prices, the objective is that the added profit margins will outweigh any dip in membership counts. But, in some cases, reducing demand for some equipment is actually necessary and intentional.

Being too busy is never the worst problem you can have, but your best equipment is why people sign up for the top level, and if that equipment is so busy that members constantly have to wait or settle for other equipment, it’s not going to be sustainable. So, rather than investing hundreds of thousands of dollars in new equipment to satisfy demand, you can limit it with a higher price. Recent advancements in tanning equipment technology have noticeably distinguished the latest equipment introductions from even other very impressive units. A certain number of customers will definitely pay a premium price for access to the best of the best, and others will opt for the next level down.

In a more creative fashion, that’s what Borkowicz is doing by limiting access to hybrid equipment to once every 72 hours. His pricing format allows him to maintain the $109.99 “Spa Basic” price without overburdening his top units. By classifying hybrid units as spa services, his most in-demand sunbeds aren’t included in any UV-only membership. Despite the limitations, he says that half of his members are now opting for the Spa Basic level.

“We don’t want any issues with people saying, ‘Hey, I pay for the highest level of tanning.’ No, that’s a spa bed. You can upgrade to Spa and UV access from $79 to $109, and on the days you’re not using the hybrid, you can come in and tan and spa. People have spa days and come in and do the Cocoon and P9S and spray tan on the way out,” he says.

More conventionally, the need to ensure that customers can access the equipment they’re paying for is part of the rationale for increasing the price of the top membership level for UV only. Then the top level also comes with the benefit of being less busy and more available. You can tell these high-value customers that you’re offering them the best price for the best equipment you can while also ensuring that everyone who pays for it can access it consistently. And if your top level of UV-only is still too busy at over $100, well, that’s a pretty good problem to have.

Mid-Ohio Mind, Body & Soul’s top tanning membership is $139. Even with no state-of-the-art units, Paradise Island’s top UV-only level is $94.95. Like Lectric Beach’s “Spa Plus” membership, these price points are as much about how they impact perceptions of the other levels as they are about drawing customers to that particular level. People are more likely to see that price and notice how much more value they can get for an all-access membership, or the more cost-conscious consumer will see the next level down that much better of a deal in comparison.

Middle Ground

If your goal is to increase margins and thus limit demand at the all-access and top-UV levels, you’ll definitely want to have a quality assortment of equipment at the next level down. Practically speaking, that’s where you really want the majority of your members to end up. Even if your new pricing schedule limits the number of members at your all-access and top tanning level, if the majority of your members are settling at the next level down, your average membership should be way up.

Paradise Island’s middle tiers are their bread and butter, with options at $54.95 and $65.95. Colgrove knows that he’s going to have to upgrade some equipment sooner than later, but for now, his current selection is providing a substantial ROI at those rates. He says around 75 percent of his members are currently at the $54.95 level.

“I always have new bulbs, I keep up the equipment, the place is nice, and my people are good. I’m selling a service,” he says. “If you’re going to try to run the place without personality, if you’re just cookie-cutter, you need the fancy beds. I’m compensating for that with other things but also knowing that I will have to invest.”

Mind, Body & Soul’s middle tiers are all the way up at $99 and $109. Again, all the levels work in conjunction. Those levels might sound expensive, but next to their higher tiers, they’re significantly less.

Borkowicz’s unique approach has made Lectric Beach’s “Spa Basic” their most popular level at $109.99. The top level for UV only at Lectric Beach is $79.99. but remember, that doesn’t include access to their KBL P9S or other hybrid equipment. Their next level down is still $59.99. In total, Lectric Beach is perhaps the quintessential example of what we’re trying to convey here because his equipment lineup is absolutely stacked in the middle levels, with KBL 6800s, 5600s, 4800s and pureEnergy standups. Lectric Beach exemplifies the idea that the latest and greatest tanning equipment can be worth far more than tanning businesses typically charged just a few years ago, and the type of equipment Borkowicz now has in his middle levels is still worthy of what has conventionally been top-tier pricing.

 Up the Ante

With operational costs ever-increasing, it’s likely also time to reconsider the bare minimum you’re willing to accept for monthly tanning. You may find that it’s worth it to keep a low entry-level price but make the middle levels so much more valuable that most people will gravitate up. If you do that, you might consider reserving all additional membership benefits, such as product discounts, for higher levels. But, all things considered, it might be better to abandon traditional Level 1 tanning completely.

You hate to see any paying customer go, but is $19.99 per month really worth it? How many of them will stick with you for slightly better equipment for $39.99? If you double the price, you only need to have half as many members at the level. If you’re like Paradise Island and much of your value proposition is based on service and environment, $10 or $20 per month likely won’t be a deal breaker for most customers.

While you’d surely like to be able to offer something for everyone, the reality is you’re running a business, and you have bills to pay. It stands to reason that your lowest-paying members are also spending the least on products and extras. Your costs are on the rise, including payroll, and your staff’s time is valuable. Are you paying more for staffing or detracting from the attention you can give more valuable questions to hold onto your least profitable members?

If you’re in a position to reduce your number of levels, moving some of your Level 2 units to Level 1 is an easy way to justify an increase. If your base level equipment is better than the competition and you’re providing a better overall experience, you’ll likely get a decent percentage of those who leave back somewhere down the line. That’s what salons around the country so often report when a new gym comes in offering dirt-cheap tanning. Of course, you can also allow current members to maintain their current price.

While Paradise Island maintains a $30 entry-level, at Mind, Body & Soul, the lowest tanning membership available is $56.

Lectric Beach’s entry-level tanning is $44.99. Not so long ago it was $19.99. But as Borkowicz began amassing one of the most impressive equipment selections of any salon in the country, he changed the entire nature of the business.

“Ten years ago, we were promoting in our windows ‘Tanning as low as $19.99.’ Then the whole logic switched. We disregarded that whole thing and started changing equipment,” Borkowicz says.

“We basically ‘fired’ our $19.99 clients, saying go to a gym if that’s what you want. Our accounts are less than they were a decade ago, but we’re making a lot more per person. We can have fewer people working and they’re making more money per hour. We use less electricity and need fewer lamp changes. There are more tours because you have to explain the equipment, but once they get in there, they’re addicted. They won’t go anywhere else because they don’t have this equipment.”

Embrace the Possibilities

The world of tanning is one that defies a one-size-fits-all approach to success. While these three businesses are presented in the same context within this article, their diverse positions and strategies highlight the versatility within the industry.

Each establishment has carved its own path to prosperity, demonstrating that there are multiple avenues to achieve success. Their ability to thrive with membership pricing that would have been considered exorbitant in the recent past underscores the evolving landscape of the tanning industry. This exemplifies the vast potential that exists for any tanning business.

Ultimately, the key takeaway is to not undervalue your services. If all these salons have been able to find their own ways to maintain customer satisfaction with rates reaching $150 per month, then so can you.