Marketing Plan Pricing Approach

Marketing Plan - Main Pricing Approach

Cost-Based Pricing

Shanti Spa will apply a 40% mark-up, from cost, on all services which will in turn allow for an average 29 % profit margin.

Profit Margin Calculator Results

For the services below the average gross margin is 28.57%. This represents an average selling price of $55.14.

Results Summary

Product

Name Wholesale

Cost Markup

percent Selling

price Gross Margin

$ Gross Margin

%

Ananda Pedi $48.84 40.00% $68.38 $19.54 28.57%

Ananda Mani $50.11 40.00% $70.15 $20.04 28.57%

Paraffin Wraps $35.12 40.00% $49.17 $14.05 28.57%

CdMP Facial $22.60 40.00% $31.64 $9.04 28.57%

Holistic Facial $43.84 40.00% $61.38 $17.54 28.57%

Facial Glow $42.42 40.00% $59.39 $16.97 28.57%

Body Scrub $34.37 40.00% $48.12 $13.75 28.57%

Algae Wrap $55.16 40.00% $77.22 $22.06 28.57%

Waterfall Thal. $25.53 40.00% $35.74 $10.21 28.57%

Ritual Massage $35.87 40.00% $50.22 $14.35 28.57%

Product Averages: $39.39 40.00% $55.14 $15.76 28.57%

Value-Based Pricing

In accordance with the principles of value-based pricing, and keeping in line with our mission, vision and values, Shanti Spa has solicited the expert opinion of respected spa consultant Douglas Preston when pricing our services. He had the following to say:

"The perceived value of a spa treatment is very high and a spa visit is an important part of an upscale resort experience."

"Brainstorm to come up with a list of benefits that you can use in your marketing campaign. Focus on the emotional impact of your product and service. Think about what your customers (or potential customers) value. Do they attach importance to great customer service, customized treatments, and personalized, human touch? How about value and saving money? Perhaps your customers prefer small, independent professionals over large companies and retail chains."

Shanti Spa Clients Value More for More Experiences Including:

- Exclusivity

- More for more service offerings

- Impeccable services

- Privacy

- Prestige

- High Quality Products

Target Market Application:

Karzi McCallum is 50 years old and a self-proclaimed connoisseur of the luxury spa market. This client has sampled the finest in luxury spas form around the world and had the following to say when asked how she feels about service prices.

"To be honest I could care less if the mark-up is 10% or 100%; as long as I'm getting the relaxing pampering experience I'm not going to care about the charge to my card when I leave. Its like that saying 'the end justifies the means', if you pamper me, I will pay'

Conclusion:

After consulting with various luxury spa-goers as well as our own spa-consultant, Shanti Spa has determined that a 150% mark-up will suffice to represent the value-based pricing category.

Based on this pricing format, Shanti Spa's services would be priced as follows:

Profit Margin Calculator Results

For the products below your average gross margin is 60.00%. This represents an average selling price of $98.47.

Results Summary

Product

Name Wholesale

Cost Markup

percent Selling

price Gross Margin

$ Gross Margin

%

Ananda Pedi $48.84 150.00% $122.10 $73.26 60.00%

Ananda Mani $50.11 150.00% $125.28 $75.17 60.00%