The Cost of Your Reputation

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Cost of Reputation by Bob Giblett

As I write this, there are seven Web-stores in Sweden offering low-cost nail products. By low-cost I mean that they are selling gels and acrylics up to 50% less than the premium brands (ours included). Most of these Web-stores have appeared during the last year so we have yet to see if they will make enough money to survive—after all we are a country of only 9 million people and fewer consumers wear nail enhancements than in other countries.

Of course, you get what you pay for. Some of these shops are selling Chinese products and others seem to be buying their products from one of the companies in Germany who specialize in selling low-cost products for private labeling (putting your own label on). Of the products I have personally seen here in Sweden, none of them follow the correct labeling laws (European Regulation 1223/2009 states what information must be included). This is the legal responsibility of the importing distributor, so it would not be surprising to also find that in order to reduce costs, that the distributors have not checked that the manufacturers have undertaken Safety and Risk Assessments for their products and that the products are not potentially dangerous.

In any case, what I am hearing is that the quality is poor and it's mostly non-professionals and newly trained nail technicians who are buying these products. In other words, people who don't have the skills to determine what is or what is not a good quality product. I guess when they find the application difficult and the product lifts quickly, they must be blaming their skills rather than the products used.

It's the new nail techs who surprise me and it raises several questions:
* are schools educating them in the importance of using quality materials and tools, and the impact this can have on their future reputation?
* are the schools selling the benefits of their brand?
* don't the students value product support or feel any loyalty to buy product from their school?


Or is it that the industry has changed?
* has the rapid increase of low-cost salons in Sweden putting price-pressure on new nail techs to the extent that they feel the need to buy cheap material?
* or are they just more internet comfortable than previous generations and therefore more willing to shop online to get lower prices?

Perhaps the reasons are a combination of these, but it may also have more to do with their perception of value.

I am sure the same youngsters don't buy their clothes from a supermarket and they would probably never consider wearing make-up made in China or buying a cheap phone or MP3 player from an unknown brand. In these and many other buying decisions they make, they consider price, quality, product safety, customer service, their own personal image and personal satisfaction from buying a certain product. So perhaps the reason that they are buying low-cost nail products is that they are simply not equipped to make the right value-based decisions.

And yet it's strange that so many of them do make the right decision to be educated at the more professional schools (whose classes run for between 15 days to 25 days), rather than one of the newer "schools" who offer to train you as a nail technician in 2 days.

Perhaps the simplest answer is for the schools to inform them about the cost of the materials per service. When you break down the costs like this and compare between using cheap and premium products, the difference in price is so much less.

Calculating the cost of materials for each service, the cost will vary depending on:
* the service you do
* the type of material used
* the amount of material used
* the average nail plate sizes

So any answer is not going to be precise. But you can either obtain the costs from your supplier (if they have them) or you can make a simple estimate by simply writing down how many customers you serviced for each jar of gel or acrylic you use (you should also include the cost of nail prep, bonder, nail forms, tips and files).

We've measured the cost of service for all our gel and acrylic products, whether creating French with tips, French sculpted tip and natural nail overlay. Here is one example (this has also been verified by two of our distributors who calculated remarkably similar results):

Kudos Gels Service: French nails, sculpted tips
Material: Kudos gels
* Cost per service when using 13 gram gel jars: 24.6 Swedish Krona (approx. 2.72 Euro)
* Cost per service when using 39 gram gel jars: 21.3 Swedish Krona (approx. 2.36 Euro)

Of course, the cost of materials depends on the price in that country. In the U.S., prices are much lower because of the market size.

But what's important here is that the average price for a set of new French sculpted nails in Sweden is between 700 krona and 1200 krona. That means the material cost is between 3% and 1.5% of the service!

Low-Cost Gels Now let's make a similar comparison with low-cost products. Playing devil's advocate, let us assume that these cost 50% less than our Kudos gels and have identical coverage. This would give the following results:
* Cost per service when using 13 gram gel jars: 12.3 Krona
* Cost per service when using 39 gram gel jars: 10.7 Krona

In other words the difference in price is only 12.3 kr to 10.7 kr - that's only 1 Euro!!

For this small saving of just 1.5% to 0.7% of the price of their service, the nail techs risk:
* increased service times
* nails that yellow
* premature lifting
* increased possibility of damage in ordinary use


...and only to save 1 Euro per customer. That is the cost of a nail techs reputation.

Bob Giblett is the joint editor and publisher of ImagiNAILtion. Together with his wife Iryna, they work to improve and inspire the nail industry.