A Penny Saved is a Penny Earned
I was a typical kid growing up in a middle class town
in Illinois and I guess I would say with middle class values.
So what does this have to do with tanning? Well, I can
remember my dad pointing out a penny lying in the parking lot
one crisp spring afternoon while we were walking into the
sporting goods store to pick out a new baseball glove for the
upcoming season. And I can still recall my response, “Ah
yeah…SO?”
Wrong answer for a nine year old who was just about to
have dad drop $25 on a brand new Tom Seaver autographed
Rawlings baseball glove. Hey, $25 was a lot of money back in
the day. Let’s just say that my flippant comment provided me
an opportunity to more fully understand the value of a dollar
even though I was only talking about a stinkin’ penny! So I
sat through a mini lecture on how ten pennies is a dime, ten
dimes turns into a dollar…blah, blah, blah. The whole time
while I’m trying to show my most sincere and interested facial
expressions I’m really thinking, “So what your really trying
to tell me is that this glove is gonna cost you twenty-five
hundred pennies?”
Anyway, on to the point of the article. Many salons
have now adopted some sort of membership offering and are
finding out that over the course of a year they are actually
showing better year end revenues. However, it’s important not
to let increased revenues cause you to become complacent on
the expense side of the equation. There is a significant
ingredient that salon owners are missing regarding the most
cost effective way to process their Membership EFT’s each
month. Traditionally when you mention EFT (Electronic Funds
Transfer) people automatically think of debit/credit cards,
but actually using ACH (Automated Clearing House) via checking
accounts is far less expensive.
The cost of ACH transactions is low compared with that
of other payment options. While pricing varies widely, each
ACH transaction is typically priced well under one dollar, and
more typically in the 30- to 50-cent range. Credit card fees
are based on a percentage of the purchase, usually 2-4 percent
or more, so for expensive transactions the savings can be
dramatic. For purposes of this article I’m basing my
calculations on 500 memberships at $30 per month. I am also
using the current processing rates our customers are paying at
Helios for our integrated credit card and check processing for
EFT’s in order to show the significant difference between the
two processes.
For credit cards our customers are paying a 2.13%
discount rate and a $.20 transaction fee. So in this scenario
on a $30 membership it would cost a salon owner $.84 per
transaction - $.64 for the discount rate and $.20 for the
transaction fee.
On the other hand, our customers who are using a check
ACH are charged on a sliding scale for their fee schedule so
the more transactions they have the lower their per item cost
becomes. Again in this scenario a salon with 500 memberships
would be charged a total of $.34 per transaction without any
other fees.
Using this example as a comparison to process EFT’s, a
salon would save $.50 on every transaction or $250 a month and
$3000 a year if they were to use the ACH process with checking
accounts instead of credit cards. When you further consider
the fact that debit card use has surpassed credit card use the
last couple of years it really makes sense to consider the ACH
offering. If you are debiting a customer’s checking account
anyway through a debit card why not request a voided check
from them instead and save yourself $.50 each month? Try
offering them a free upgrade to bring in a check and see just
how motivated they can be to save YOU money each month!
Click on this link www.gohelios.com/math
to find out exactly how much less expensive doing your EFT’s
via ACH will mean to your bottom line. Not rocket science,
even a nine year old can do the math on this one…PEACE!
http://www.gohelios.com/
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