The importance of contribution margins when setting a price for a haircut

My answer would be that I noticed that returned bills to the company I work for were being thrown in the trash, including the envelopes that had been sent to the customers to return their payments in. I asked why we weren’t taking those unused envelopes & recycling them to be used again. A study was done and it was discovered that we were losing in excess of 100k per six months for just one jurisdiction. The company initiated a process where the unused envelopes were taken out & sent back to the office that sends the bills out to be reused. Not only did my suggestion save the company more than a million dollars per year throughout the areas we serve, it also saved the landfills as this was prior to required recycling.

Have a great week & stay safe.

Lisa

Zeiser

RE: Week 7 Discussion 1 mkt402 disc 1

Good evening Professor and class,

This discussion is quite interesting as it is a topic I have been coordinating with a few restaurants as they begin to reopen, and even while they were doing carryout. A cost increase from the supplier can be for a variety of reasons. It could be relative to the cost of transportation, tariffs, labor, demand for the good, or simply the availability. Especially now during this pandemic, many suppliers have been short of supply for basic needs restaurants need in order to serve their customers. I had a conference call with a restaurant owner down in Florida who was struggling to maintain profits while suppliers kept up charging for basic supplies. The suppliers’ reply was that the demand was extremely high for these products and the price had to increase in order for the demand to be sufficiently resupplied by them. An excuse met with no real response. While the demand for those certain products is high, it does not deem those goods to be inflated during a pandemic. We sought out suppliers who had stock and were charging normal price, the only catch was the fuel surcharge of $5.00 which we were happy to pay as the supplier stated due to the many deliveries being conducted, this allowed their delivery vehicles to stay in operation. This supplier has since gained our business and overall trust due to their ethical and moral business practices.

Please feel free to share any comments.

Cothran

RE: Week 7 Discussion 2 mkt402 disc 2

The importance of contribution margins when setting a price for a haircut is time-related. As a hairstylist for over fifteen years, I have learned that not all haircuts are the same. Some haircuts take twenty minutes, while others may take an hour. If both are women’s haircuts priced the same, the one that is less time consuming is more profitable in that time, but not necessarily long term. There are not variable costs with haircuts in regards to money, but there is a variable cost in regards to time. Time is money.

When setting a price for a haircut, the factor that needs to be decided on is how much the stylist time is worth (experience and continued education). For example, if the stylist haircuts are $50, she can either do three haircuts in an hour or one. Either way, the stylist has decided she is worth $50 an hour and will meet that goal because there will be times she can only do one haircut, times she will do three, and times she will not be busy. The three in one hour make up for the time she was sitting.

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