Title was: Inflation over the years: Pricing a business’s offerings
(But tipping suddenly became the topic. Inflation and prices are coming soon.)
I think it’s my Aspie/ASD side, but I’ve always liked to play with numbers. So, let’s have fun.
Before I start, I’ll note that, prior to the COVID-19 tipping fatigue, I’ve observed that typical cash tips for massage therapy have historically been 25-35% for the 90th percentile.
I’ve helped with some businesses, and I’ve noticed a few things over the years.
For this article, let’s come from the sector I’m most familiar with: The spa world, or massage specifically.
Tipping owners vs employees
First, tipping, a spa service or medical service, and now tip fatigue.
Business owners and tipping?
I find the concept of not tipping a business owner interesting and invalid. Yes, they are earning the profits, but they are also incurring the expenses. If it’s a sole proprietor small business, they probably don’t have the employees to bring in the income while spreading out the costs.
Expenses incurred by me alone as well as if I have employees:
I’m looking at a situation where a room/space is only used about 1/3rd of a seven day week.
- A phone line, I have that expense with 1 or 12 people doing the work.
- Additional expenses not shared: Internet, website, advertising, etc.
- Rent: each room can handle multiple people, plus common areas shared by everyone
- Utilities: Lets look at mid-small office: 144/240/480 sq feet
- 144 Shared common space in a pricey boutique facility
(Pricey May included WIFI & a front desk greeter)
- 240 Private lobby in an office building shared restrooms and hallways
- 480 Shared Private lobby, likely shared restrooms and hallways, best price per square foot.
- it could be shared with roommates or employees, but most likely it’s not. In fact, one of the two rooms may be used just as the “Business office” side so pricey
- Thus, I’m paying for 480 by myself, and with a roommate where each of us has our own room, that still leaves each of the two areas only used 30% of the available time.
- Any of these three options means I am paying three times per person versus hiring two other people.
Yes, owners “could” charge whatever they want, but the prices are actually in line with the competitive market that is based on tipping.
Conclusion: Tip the person doing the work, not the owner. If the person doing the work is the owner, tip them like you would anyone else that’s doing “The work”
Tipping over the years
This was initially going to be about inflation, but to accurately describe the context of my price changes, one must first consider the tipping portion.
I will concede that there are those that either do not tip, or only tip $5 on price totals of $50-150. For this section, I’m focusing on those who do more than a token tip; those who are full-on tippers.
When I first started, a good rule of thumb was up to the nearest or second nearest $20.
i.e.
When our hourly price was $65, we were regularly getting $80 {$15/23%}, with our ninety-minute at $95, they typically gave $120 {$25/26%+}
The next raise, a $75 hour, we got $100/33%, and the ninety-minute, at $105, we were getting either $120 or $140. I can’t say $15 is a token tip, so the range was $15/14% to $35/34%. I’d say 75% of the tippers were doing the $140 over the $120.
When I added those to the Credit card machine, I used 3 bases for the suggested tip. 25, 30, 35% Once you count the 3% cc fees, that essentially equated the typical cash tips people paid.
$65/95 2005-2008; $75/105 2009-2019; $85/115 2019 (Generally 26-34%)
I take that back; I checked the Wayback Machine, and I was $85- $ 110 for an hour/ninety-minute session in 2013. I just dropped back down in 2015 when I moved to Kansas City.
Caviet, in 2015, I moved to a new market and tried out flat-rate prices of $85, but no one understood that, so within 90 days I switched back to $75/105. Everyone kept shopping around saying $85 for an hour is a lot, and that was only about a 13%
That caviet says a lot. I moved from New Orleans to Kansas City. New Orleans has a big tipping culture, and it seems to have higher base prices for massage therapy. That is probably why I ended up at $75 for a full 10 years. Noting, the 65 was also in KC in 2005/2006
Fatigue
I hate the idea of raising rates to minimize the reliance on tips, but as with 2015, how can it be done? I know many do it, and I know for medical massages, its pretty much all flat rate if they want insurance to cover it.
How high would one raise it to offset that fatigue? The typical 25-34%? halfway between the token $5 of 2005, 15% low end, 25% mid range, and 34% upper range? 22/31% to not automatically add a 3% cc assumption? — 8+15+22+31=76/4=19%. what about that 75% pay the upper half? 8+15+22+25+31+34=135/6 22.5%
Fall 2025, assuming a rate of 72/107/155 half hour, hour, ninety, so at 22.5%:
- 107+24.075=131.07; I had friends* charging more than this in 2021 (4+ years ago)
- 155+34.88=189.88; I had friends* charging this (4+ years ago)
- 72+16.2=88.2
- My 2-hour session is 264 and hasn’t changed much. It was created as a premium service when people were abusing it while not tipping.
*Friends charging this, I don’t think as a flat rate service.
Caviet: as of January 2025, the price was $31 + $38 for each 25-minute segment up to 3; we just offered an $8 discount to keep the hour to $99
But again, that makes it pretty high when people are shopping around. My current flat rate medical massage is: $36.39 for each 15 minute segment.
That makes each service:
that’s wrong. My flat rate is 36.67 calculations need to be adjusted
- 145.56/hr; 9% discount to equal $131
- 218.34/ninety; 13% discount to equal 189.96 ()
- 72.78/half hour; Less than 1% difference; (5% to bring it down to
- $291.12; 9% discount brings it to $264.92; Being a premium service, I’d like to keep it closer to 277 or a 5% discount (Or none)
Two hour sessions
These are quite a booger to address. These are premium services. They are long, with no breaks, and the people buying them either can either afford them, and the associated fees, or shouldn’t be buying them because they cant afford them.
For the 2-hour session, these are closely aligned with each other. 131*2=262 & 190 + 72 = 261. That’s an -ISH per se. The 2-hour session is full with no breaks. The abuse that was occurring was that the person kept asking for two one-hour sessions, which at the time was 75, and expecting it to be 150, then not tipping.
The initial 2-hour price came to be because an hour at 50 minutes of hands-on time is 110 vs 100 minutes of hands-on time you’d get with two single hours. Yet, they are asking for two full hours, or 120 minutes, of hands-on time. That’s a premium service. Yes, with an hour, I am typically closer to 55 minutes of hands-on time, but there’s no guarantee.
So, 50 minutes is $1.50/ minute. Convert that to 120 minutes, and it $180. Add the typical premium tip of 34%, and you get $241.20.
Correction, I was $85/hour in 2014 when the abusive client came in. Thus, 50 minutes is $1.70/minute, and scaled up, that’s $204 for 120 minutes.
A low-end 20% tip, as is typically added on restaurant bills with parties of 6 or more, is $244.80. NOTING: Most massage tippers with me tipped more than the typical restaurant tip. i.e., the 25-34% range
That $245 2 hour premium price has stayed steady since 2014. Granted, I did lower my prices by $10 & $5 $85 >> 75/hr & $110 >> 105 for the ninety.
Diverging into the inflation post a little, using today’s prices, the 2 hour session should be $308.00; the $107 fifty minute hour being $2.14/minute scaled up to 120 minutes, makes the 2 hour price be $256.80 and adding the 20% tip for being a flat rate premium service, we’re at $308.16.
Point to consider, using my flat rate service card, eight units at $36.39, we’re at 291.12 for 113+ minutes. Thus, scaling up, I guarantee 120 minutes, which scaled up is $309.15. That 309.15 is right in range with the $308.00 the 2-hour should be. Granted, that $291.12 is also valid up to 127 minutes. Unfortunately, most medical plans consider more than 4 units–one hour–to be a luxury, and thus, don’t cover it.
More 2-hour points to ponder: Considering the $38 25-minute segments + $31 base
120 minutes is 4.8 25-minute segments. or $182.4 add $31, and we’re at $213.40.
Add:
- 20% > $256.08
- 24% > $264.62
- 34% > $285.96 (Premium)
All still short of the $308 potentially suggested price until you consider that it’s a premium service, and the $31 base is good for up to 3 segments. Thus, 213.40 is really $244.4.
Add:
- 20% > $293.28
- 25% > $305.50
- 34% > $327.50
- 26% > $307.94
Actual Inflation from its inception:
- $264 in 2014 (September)
- $359.32 in 2025 (August: Today is October 4)
Yes, that’s considering September 2014 vs January where it would be $364.64
2 hour vs 1 hour conclusion
- $308/2 = $154….
- 10% off for non-premium = $138.6 (about $107 + 29% tip; a typical cash is $140 or 31% tip )
- 308/4 = $77 i.e. half hour segments.
- $359.32/2 = $179.66
The $36.39 rate:
- $36.39; 15 minutes
- $72.78; 30 minutes
- $109.17; 45 minutes (Typical hour is 50-55 minutes hands-on)
- $145.56; 60 minutes (Typical hour is 50-55 minutes hands-on);
10% cash discount = 130.5 or 21.5% tip based on $107 hour
- $181.95; 75 minutes (Typical ninety minute is 75-80 minutes hands-on)
- Split difference: 200.19; 10% cash discount = $180 or 24% tip based on $145 ninety
- $218.43; 90 minutes (Typical ninety minute is 75-80 minutes hands-on);
20% cash discount = $174.4
17% cash discount =$181.3 or 25% tip
15% cash discount = $185.3 or 28% tip
10% cash discount = $195.2
- $254.73; 105 minutes
- $291.12; 120 minutes (This is a premium service; Insurance doesn’t even offer it)
9% cash discount = $264.92 (Actual price)
5.8% premium service fee = $308