My Salon Software Business Insight: Implications of the Vat Increase

Implications of the Vat increase from 15 - 15.5% on 01 May 2025.

From 01 May 2025 you will be paying an extra 0.5 % Vat on everything you pay to run your business. In addition, your clients will be expected to pay an extra 0.5% for the services and products they buy from you.

The increased cost of the 0.5% is easy to adjust. For those salons and spas using My Salon Software the changeover in the calculation on your costs will be done by us, by increasing the Vat value on your system.

As the salon owner you have the option of keeping your charges to your clients as they are and absorbing the 0.5% in reduced profit or adjusting your selling prices to collect the extra 0.5% Vat. 

On your retail products the suppliers will probably provide you with updated price lists reflecting your new cost prices for both professional and retail products including suggested selling prices. 

As pointed out by long-time client Stephanie Teal, owner of Red Lipstick in Cape Town this could present an administrative nightmare.

For example, for a service that currently cost your clients R300.00 at the current Vat of 15% you would now need to charge clients R301.30 after the increase. Considering that all changes in both cost and recommended selling prices have to be done manually, line by line, this could provide a challenge… or maybe it actually presents an opportunity.

It has always been best practice to 'round up' prices to avoid having to keep a lot of change in your till. For example, when a product has a recommended selling price of R113 round up to R115 or even R120  -  always to the nearest R5 or R10. Never price this to includes cents e.g. R159.95, round up to R160.00

In these times it is even better to have a 'price adjustment' due to the change in Vat of R20, R50 or R100 on your services knowing that this increase will absorb the increase in Vat at the same time not forcing you to start handling small change. Clients are aware of the increase in Vat and will accept a small 'price adjustment' just to keep things simple.

For the sake of correct messaging for youe clients refer to this increase as a PRICE ADJUSTMENT  and not a PRICE INCREASE.

Contact us:

Visit us on: www.mysalonsoftwareint.co.za

Email: info@mysalonsoftware.co.za

Email: terry@mysalonsoftware.co.za  | Tel: 083 650 0952

Email: sune@mysalonsoftware.co.za  | Tel: 083 484 2960

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