How do places like Snip Avenue make money, given they charge ~$3.80 for a haircut? - Seedly
 

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Asked by Anonymous

Asked 2w ago

How do places like Snip Avenue make money, given they charge ~$3.80 for a haircut?

What's their business model?

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Junus Eu
Junus Eu
Top Contributor

Top Contributor (Dec)

Level 9. God of Wisdom
Answered 2w ago

Revenue:

  1. Upsell for other services once seated. Captive audience

  2. Further mark-up on products

  3. More volume despite lower margins - I usually see queues at the Bedok outlet

Costs:

  1. By lowering price, customer acquisition cost at $3.90 is likely much cheaper compared to paying for FB and Google ads that might not give a good ROI

  2. Rental locations tend to be in the heartlands - lower cost compared to central area

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Kenneth Lou
Kenneth Lou

2w ago

Hahaha wah sounds like an investor here.
Junus Eu
Junus Eu

2w ago

😱

They do sell a 'subscription' service, in which you pay $38 for 10 + 2 haircuts.

And I guess charging at a low price means more customers too (Especially NSFs who dont want to fail their hair check when they book in)

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Hui Wai Kit
Hui Wai Kit
Level 5. Genius
Answered 2w ago

I believe the 3.80 haircut's used as a loss-leader to get customers into the store before they try to sell them the higher margin products/services. Rental in the heartlands' also cheap so less overhead cost as well, thus enabling the business model.

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Ng Wei En
Ng Wei En
Level 5. Genius
Updated 1w ago

If you have frequented enough places that promote haircut at $3.80 or $5 you will notice that most of these salons will try to engage in the following tactics to earn more money from you.

  1. Upsell - they will sell you packages like $38 for 10 haircuts or $50 for 10 haircuts. Because at any point in time, there are always "unredeemed" haircuts which means that these hair salons can capitalise on future earnings in some sense.

  2. Cross-sell - they will sell you other services like hair colouring, wash and blow, hair scalp treatment, hair care products which can sometimes cost hundreds of dollars.

To tie everything together, when these hair salons lock you in for 10 haircuts, it provides them plenty of opportunities to up-sell and cross-sell you the abovementioned. The basic hair-cut is just a bait, the real money is made from the other haircare services and sale of hair care products.​​​

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JL
Jayden Lee
Level 4. Prodigy
Answered 1w ago

I did not look into this but for stores that charge really low for services, their business model revolves around getting large volume.

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There are various marketing strategies involved. For instance, they apply the concept on the law of large numbers . By lowering the price, they are able to attract more customers. Accordingly, they are able to generate more sales per hour.

Furthermore, they may sell you hair related products, where they mark-up the price to earn a profit from it.

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