Increasing the prices in a tattoo shop - is it really unavoidable?
Each company, including tattoo studios, operates according to a specific economic model. The profit is calculated by subtracting all fixed and varying costs from the income.
Fixed costs include those that don't depend on the sales volume: fixed part of employees' compensation (without the bonus part), rent, utility bills, alarms, CRM system, taxes, and fixed costs for advertising, SEO promotion, etc.
Variable costs are costs that depend directly on the number of sales. Variable expenses include the cost of purchasing consumables for the provision of services, the premium part of your tattoo artists' salaries (the so-called percent) seasonal marketing promotions etc.
As fixed and variable costs continue to increase over time, tattoo shops have two ways of maintaining profits: raising the price of customer services or lowering the costs, e.g. by switching from expensive materials to cheaper ones, or lowering employee wages.
The second method is the direct path to going out of business, as your customers are sure to notice that the service and work quality has deteriorated, meaning they will be looking for a different studio and eventually head over to the competition.
One important aspect to consider when setting new prices is that when your clients come to the studio, they expect to receive the service at a certain price they know in advance. If the price list changes suddenly overnight without explanation or warning, you risk putting your customers in an uncomfortable position. Therefore, it is essential to properly build communication and warn customers about potential price changes in advance.