Can Your Salon/Spa Go NO TIPPING?
Is it time to become a no-tipping salon/spa?
It's totally understandable if your knee-jerk response is, “NO WAY would I ever eliminate tipping.”
But if you're still reading, then you're probably intrigued by the idea of going no tipping. So maybe, just maybe, you’re open enough to learn what it takes to become a no-tipping salon/spa.
FACT: Without question, any salon, spa, barbershop, etc., can go no-tipping — and not blow up your business in the process.
Is tipping “professional”? That’s a decision you must make to define your company’s image and brand. Personally, I feel the industry can do massively better without tips. Why? Because not only has tip reporting and credit card processing become increasingly difficult to manage — it’s become an entitlement. Like a pebble in your shoe, tipping has become an irritation.
So, if you’re tired of dealing with tip reporting, paying taxes on tip income, paying credit card processing fees on tips, and distributing cash tips (that are still taxable income to employees) … it may be time to go no tipping.
The three absolute critical components of a successful no-tipping policy are leadership, communication, and culture.
Even with the best intentions, without engaged leadership, full transparency, and a well-defined culture, a no-tipping transition can be disruptive. And if executed poorly, it can and will cause turnover.
To maintain fairness, salons/spas that succeed in going no-tipping must revamp their pricing and compensation. Why? Because asking service providers to give up substantial tip income for professionalism is a BIG ASK.
Here is our six-point “must do” list to become a no-tipping salon/spa:
- Completely rethink service pricing. As mentioned earlier, expecting service providers to give up substantial tip income for professionalism is a BIG ASK. Tips cannot be eliminated without a significant price increase to offset the loss of tip income.
- A BIG jump in service prices: Be prepared to implement new service prices that are 20% – 40%+ higher.
- Don’t freak out: The biggest fear for both owners and service providers is losing clients. Remember, when clients tip, they’re already paying or exceeding your new “no tipping” pricing.
- Communicating your “no-tipping policy” to clients: Scripting is crucial. Clients must be informed that the service price now reflects what they were paying when tipping separately.
- Live your “no tipping” policy: The IRS sees tipping as a fact of life at salons and spas. So much so, the IRS may question the absence of reported tip income on both company and employee tax returns.
- Stay the course: Yes, some employees will miss that wad of cash in their pocket at the end of the day. Others may have to be reminded that their pay rate was adjusted to offset the elimination of tips.
Here’s our challenge to you: The industry’s understanding of “charging what you’re worth” and how to properly price services to cover expenses and create profit needs to be addressed.
No-tipping salons/spas stand out from the crowd. They make a statement about professionalism with a BIG exclamation mark.
Not until the industry as a whole pulls the curtain back on the fundamental challenges of tipping in salons/spas can it be ready for an honest discussion on whether tipping is professional or not.
It will not be an easy discussion — which is why it hasn’t happened.