Tipping can be awkward, especially in salons and spas. Try googling “tipping at salons and spas” and you’ll see thousands of different articles about who to tip, when to tip, and how much to tip depending on all sorts of variables. It’s a dizzying maze of rules that few people can agree upon, leaving a large part of your business to the unpredictable.
There is a growing movement among salons and spas to ditch tips in favor of increased service pricing and better wages for their employees. Here are some things to consider if a no-tipping policy is right for your salon or spa.
Eliminating Gratuity Treats You Like A Professional
Unskilled service providers like waiters and bellhops traditionally rely on tips to supplement their minimum wage income. But you and your employees are professionals that went to school, studied hard and received a degree. So why are you accepting tips like a service provider? Studies show that treating beauty and wellness professionals like service providers decreases motivation, increases turnover rates and makes qualified new graduates hard to find.
Remember, you are the professional! Setting service prices that reflect your employees’ worth and don’t require additional compensation enables you to raise employees’ salaries to meet their average income with tips. This gives your employees reliable income and reduced stress, while allowing you to easily meet the ever-increasing minimum wage requirements. Employees at many “no-tipping” salons also report that they are actually much happier and feel more respected when they don’t have to rely on tips.
No-Tipping Policies Make Things Easy For Employees And Clients
By eliminating the risk of not being tipped or being tipped too little, a no-tipping policy attracts employees who want reliable income. For example, if your location attracts clients that stiff their service providers because they are unlikely to return (i.e. tourist and vacation locations), going tipless can keep your business competitive when attracting talent. This policy also helps clients relax, knowing exactly what they will pay when they book their appointment and eliminating the guessing game once and for all.
Of course, owners will be quick to point out that a no-tipping policy may affect the way some employee’s perform their services. While this may be true for some, going tipless is intended for professional employees who should be held to a higher standard. If an employee is slacking because they are only motivated by tips, not the beauty or wellness profession, it may be time to let that employee go.
Going Tipless Reduces Fees And Simplifies Legal Compliance
Credit Card Fees. Under current regulations, salons and spas pay processing fees when tips are added to credit card payments. Depending on state law, these fees may not be deducted from your employees’ tips, leaving owners holding the bag.
Minimum Wage. Minimum wage is going up in states all across the country and depending on state law, you may or may not be able to take tips into account when determining what to pay your employees. Paying your employees an increased salary based from included service charge can reduce confusion about your compliance with these laws.
Taxes. The IRS requires that your employees report their total tips and you are responsible for paying the employer’s portion (and collecting the employee’s portion) of the Social Security, Medicare and Federal Income taxes due from these tips. This is an auditing nightmare! A no-tipping policy means you don’t have to worry about whether or not your employees are reporting their tips properly.
Is “No Tipping” Right For Your Salon Or Spa?
While there are a lot of advantages to eliminating gratuity from your salon or spa, tipping is still the norm. Make sure you consider your specific clientele and location when thinking about this new model. Switching to an included service charge may turn off some of your clientele if you are known for your low prices or if you do not advertise your policy correctly. Try polling your current clients or look for feedback from review sites of salons or spas that have a no-tipping policy for more insight.
Also, make sure that your software can accommodate this new policy by removing tip lines and notifying clients of an included service charge on receipts. Your software should also allow you to run custom reports regarding your services and client behavior so you can assess what policy is best for your clientele.
About the Author
Matt is VP of Sales at ProSolutions Software. With over 20 years experience in the beauty industry, Matt teaches classes to salon and spa owners on business topics including branding, management, marketing and advertising.