Speaker 1: This is AC N A podcast.
Speaker 1: Hey, welcome back to Money Talks. I'm your host, Andrea Heng.
Speaker 1: Now on this series, this or that which you've been following.
Speaker 1: I'm sure my guest weighs the pros and cons of
Speaker 1: two options. Now, here's a familiar scenario for some including myself. Ok,
Speaker 1: you've bought a voucher to a new spa or a
Speaker 1: salon and you're looking forward to a relaxing time.
Speaker 1: A courteous receptionist greets you and guides you to a
Speaker 1: treatment chair or room and hands you over to a
Speaker 1: smiling therapist. Picture this as you close your eyes and
Speaker 1: start to unwind the therapist explains the service you are
Speaker 1: about to receive and then comes the sales pitch. Would
Speaker 1: you like to purchase a package?
Speaker 1: She says a one off massage of facial treatment is
Speaker 1: not going to deliver overnight results. Sound familiar. Plus she
Speaker 1: says you'll get a better deal in the long run
Speaker 1: and guess what? The selling does not stop there because
Speaker 1: even after fobbing off the therapist, you still have to
Speaker 1: deal with the receptionist who is now going through her
Speaker 1: sales pitch and it's a package to cater to every budget.
Speaker 1: This package model is practiced by most wellness and beauty
Speaker 1: establishments with the promise of being more cost effective than
Speaker 1: buying single purchases or a la carte. What I want
Speaker 1: to know is do packages always make better financial sense
Speaker 1: or should people be careful and stick to pay per
Speaker 1: visit in case the business shuts to help me solve this.
Speaker 1: I now have Xiao Kalo. Kalo is the managing editor
Speaker 1: of personal finance website. The simple sum.
Speaker 1: Hey Kay, welcome to Money Talk. Thank you for having me. Alright.
Speaker 1: So Kaylon, have you bought a beauty package before? I
Speaker 1: would say as 60% or maybe a higher percentage of
Speaker 1: women in Singapore would answer. Yes, it's a very resounding. Yes. Ok.
Speaker 1: So what services were these for? I've mainly done massage packages.
Speaker 1: Thankfully it's just kept like that. But of course I
Speaker 1: have many friends who have done new packages, waxing packages. Ok.
Speaker 1: Ok. I was one of those IP L packages IP
Speaker 1: L packages, hair salon packages even, right? As long as
Speaker 1: it has to do with a woman's appearance, you can
Speaker 1: probably find a package for it somewhere for sure. You'd
Speaker 1: be hard pressed to find none in my opinion. And
Speaker 1: IP L in case you didn't know it's intense pulse light.
Speaker 1: So it's a form of hair removal treatment that women
Speaker 1: but also men sign up for and they tend to
Speaker 1: tell you oh, you need a minimum of six sessions
Speaker 1: for the
Speaker 1: effect and all that stuff. But we'll get into that later.
Speaker 1: I want to ask you. Now, Kaylon, did you regret
Speaker 1: any of these package purchases? So, not so much for
Speaker 1: the salon ones. I have thankfully been very diligent and
Speaker 1: I completed all of it. Ok. However, that's not the
Speaker 1: case when it comes to my class pass packages, my
Speaker 1: class pass credits rather. Ok. So this is the exercise
Speaker 1: and Wellness app that we're talking about. Right. Yes, I'm
Speaker 1: sure like
Speaker 1: most Singaporeans would be familiar with class pass by now.
Speaker 1: So how they work is that you buy a certain
Speaker 1: amount of credits every month and you have to use
Speaker 1: them up within the month. There is a plethora of
Speaker 1: services that you can use from going to the gym
Speaker 1: to exercise classes and lately even massage packages or facials.
Speaker 1: I've seen haircuts on that app as well. Right? Ok.
Speaker 1: That one, aside when it came to your massage package,
Speaker 1: were you pressured in any way to buy it? Not
Speaker 1: gonna lie. The
Speaker 1: town was attractive, I think with anything that you buy,
Speaker 1: there are several things that you should necessarily think about
Speaker 1: before you do it. So that includes firstly how frequently
Speaker 1: you can envision yourself going for the service, right? That's
Speaker 1: one and the other one that sometimes in the heat
Speaker 1: of the moment we forget is how convenient the location
Speaker 1: actually is. Yeah, that's a huge one. So another incident
Speaker 1: recently I was tempted to buy a package for was
Speaker 1: actually for a Pilates Reformer class. So, if you have
Speaker 1: ever done Pilates Reformer classes,
Speaker 1: do you know how expensive they are? They are very expensive.
Speaker 1: The industry standard is about 40 to $50 without signing
Speaker 1: any package. And even if you sign a package, if
Speaker 1: it's not a special discount, the cheapest I've ever seen
Speaker 1: maybe 30 so recently I've chanced upon a social media
Speaker 1: ad that actually said that, oh, you could get 15
Speaker 1: classes for $299. That's not too bad. Yeah, that drops
Speaker 1: each class to $20 which is unheard of in Pilates. Yeah,
Speaker 1: exactly. If you are in the practice, you know, and
Speaker 1: so it's very tempting. But then in the terms and
Speaker 1: conditions are firstly, you have to finish it within the month,
Speaker 1: 15 classes in a month. Ok. Strictly speaking, still possible
Speaker 1: you even get a day's rest in between. So you
Speaker 1: can like do two days and one day. Very optimistic. Yeah.
Speaker 1: But then the other thing was the location. So the
Speaker 1: location of this particular studio was not near any M
Speaker 1: RT station or even a bus stop. So it would
Speaker 1: take
Speaker 1: extra effort to go all the way there. So even
Speaker 1: if I wanted to, it didn't seem to make a
Speaker 1: lot of sense. The likelihood that I was not going
Speaker 1: to finish my package would be very, very high. You
Speaker 1: are a very practical woman so safe to say you
Speaker 1: did not sign up for this reform package, even though
Speaker 1: it was a very, very good deal. If you think
Speaker 1: about it mathematically, it makes so much sense. $20. It does,
Speaker 1: it does. Even if you were super disciplined, you're like, ok,
Speaker 1: I'm super charged to lose weight to get into exercise.
Speaker 1: This is going to be my kickstart.
Speaker 1: It's just, there were so many other elements that discouraged
Speaker 1: you from signing up in the end. It was more
Speaker 1: of being practical that it would result in myself not
Speaker 1: being able to go for the classes. And I think
Speaker 1: that would be a thing that you should really think
Speaker 1: about when you are signing up for a package, your
Speaker 1: commitment level. Yeah. So we are talking about this or that.
Speaker 1: Do we sign up for single or should we sign
Speaker 1: up for a package? Because it makes more sense. So
Speaker 1: strictly speaking, I advocate for paper use. Ok, especially when
Speaker 1: you first start. Yeah, so there are several reasons behind
Speaker 1: this. So that lovely scenario that you painted at the
Speaker 1: start that many people are quite familiar with the scenario changes.
Speaker 1: Once you sign a package sometimes, yeah, sometimes even the
Speaker 1: service changes you sign up. That's what I mean. That's
Speaker 1: what I'm getting into. There have been stories where, ok,
Speaker 1: you get this wonderful experience when you first go and
Speaker 1: the second time you go, sure they still give you
Speaker 1: the facial but somehow it's not as soothing, not as
Speaker 1: comfortable anymore. Even the bed is, the room is not
Speaker 1: what I paid for.
Speaker 1: Yeah. So that would be one thing to consider. And
Speaker 1: that's something that you will only find out if you
Speaker 1: actually visit the place a bit more. I think the
Speaker 1: second thing also that you will only find out more
Speaker 1: after experiencing it more would be how easy it is
Speaker 1: to book the place as well. So, I've had friends
Speaker 1: who have had packages and every single time they call it, oh,
Speaker 1: I'm full, I'm full and it's impossible to finish using
Speaker 1: the packages
Speaker 1: because of this as well, right? Which is something that
Speaker 1: you won't know if you sign up for a package upfront, right?
Speaker 1: I did notice that as well when I did have
Speaker 1: a package, but I didn't put the two and two together.
Speaker 1: So beauty establishments usually cite cost as the main reason
Speaker 1: for pushing packages to us as customers, right? They claim
Speaker 1: it's much cheaper per session compared to a
Speaker 1: per visit. Is that always the case? How does the
Speaker 1: math add up here? The math is not wrong. Ok,
Speaker 1: definitely it's not wrong, but that's the problem. It's not
Speaker 1: just about the math a lot of the time. So
Speaker 1: the three things that I mentioned just now. So firstly, location,
Speaker 1: how often you are exactly going to use it. And
Speaker 1: the third one being that whether the service hold up
Speaker 1: over time
Speaker 1: and these I think are just as important if not
Speaker 1: more important than the cost alone. It's a bit of
Speaker 1: a paradox though, not knowing, especially the quality bit that
Speaker 1: you mentioned, right? The quality of the treatment you won't
Speaker 1: know until you sign up. You can always go back
Speaker 1: for a 2nd, 3rd visit and pay per use. So
Speaker 1: I don't think that any salon is going to tell
Speaker 1: you that. Oh, we are not going to entertain you
Speaker 1: if you don't sign up a package. That's true. That's true.
Speaker 1: And you, and you pay more per visit if you
Speaker 1: don't sign up a package.
Speaker 1: So there's no reason for it. Firstly, you are more
Speaker 1: realistic about how often you can go back. And also
Speaker 1: you get a better idea of the type of therapists
Speaker 1: that they have there. So, not all salons. Can you
Speaker 1: always get the same therapist or spas? Can you get
Speaker 1: the same therapist as well? And you might want to
Speaker 1: feel your way around and see if the different people
Speaker 1: that you can alternate to make your package usable within
Speaker 1: whatever time period that you have to finish it by. Yeah,
Speaker 1: that's true. That's true.
Speaker 2: Hey, everyone. My name is Steven Xia and I'm host
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Speaker 2: market in Singapore? If you want the views behind the news,
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Speaker 1: Ok. So a problem with buying these packages is that
Speaker 1: the amount is not usually small. I mean, we're talking
Speaker 1: about four figures running in the four figures upwards. I
Speaker 1: remember paying thousands for an IP L package. That was
Speaker 1: very painful. Did you finish using it? I did thankfully,
Speaker 1: I did, but it took a painful two years to finish.
Speaker 1: I finished it. I finished it. Ok. So aside from
Speaker 1: struggling to use up the services, like you said it,
Speaker 1: one of the key things to remember when you're signing
Speaker 1: up for packages, right? There's also the danger of the
Speaker 1: establishment closing down. Now, we've seen so many reports of
Speaker 1: spas and beauty parlors shutting down leaving these customers in
Speaker 1: the lurch. The Consumers Association of Singapore case reported that
Speaker 1: consumers lost $285,000 last year alone in
Speaker 1: repayments due to business closure. So do you think then
Speaker 1: that the package model needs to change? So I'm not
Speaker 1: too sure whether needing to change will be a thing.
Speaker 1: So actually has this thing called case trust Mark. If
Speaker 1: you sign up with a package with a salon or
Speaker 1: spa that actually has a case trust mark, they are
Speaker 1: obligated to buy insurance for you for it. What that
Speaker 1: means is that if that establishment
Speaker 1: shut down, the insurance will actually make payouts to you.
Speaker 1: So your advice is if you do decide to sign
Speaker 1: up for a package at a beauty parlor or a spa,
Speaker 1: look for the case trust mark, that's one way to
Speaker 1: safeguard your money. And interestingly enough from 2017 to 2022
Speaker 1: there's actually 100 and 69,000 worth of insurance payouts that
Speaker 1: have been unclaimed by people because I don't think a
Speaker 1: lot of people in Singapore know about this. Wow,
Speaker 1: unclaimed 100 and $69,000. It's a lot of money. Yeah.
Speaker 1: So I think it's one of the efforts that case
Speaker 1: has made within the industry to give it a better reputation,
Speaker 1: especially in the aftermath of lots of salons closing down
Speaker 1: and people being left in the lurch. So in order
Speaker 1: to be case trust accredited, you do have to provide
Speaker 1: this service. So one thing that you can do is
Speaker 1: to look up for the case trust accreditation.
Speaker 1: So you are more assured of where your money is
Speaker 1: going or rather that your money is coming back. Should
Speaker 1: the salon or the spa shut down? Ok. Let it
Speaker 1: be known. You are hearing it here on money talks. Ok.
Speaker 1: Look for the case Trust accreditation and that's how you're
Speaker 1: going to safeguard or ensure that the money you've lost
Speaker 1: to a spa closure comes back to you.
Speaker 1: Ok. So when it comes to stuff like the gym
Speaker 1: or a yoga studio, it does make sense to buy packages, right?
Speaker 1: Because so in my case, I've just recently signed up
Speaker 1: for a Pilates package, I've also signed up for a
Speaker 1: yoga package and I like what some of these studios
Speaker 1: have done so far. There's a lot of flexibility. So
Speaker 1: they offer different categories, different tiers of pricing per class
Speaker 1: because it helps you decide what your commitment level is
Speaker 1: going
Speaker 1: to be, which is one of the things that we
Speaker 1: talked about. So, is it a question then of identifying
Speaker 1: your lifestyle habits and then deciding the best payment method? Yeah.
Speaker 1: So it's a mixture of a couple of things if
Speaker 1: this is the first time you are signing a package
Speaker 1: and there are options to actually go smaller. I would
Speaker 1: recommend doing that first. No one starts off with bad intentions,
Speaker 1: especially at the start of the year when it comes
Speaker 1: to fitness stats have shown that in January, the gyms
Speaker 1: are full always and they are always full on Mondays too. Yeah,
Speaker 1: but by February it starts emptying out
Speaker 1: but don't tell everyone secret.
Speaker 1: But I mean, that is the reality. So while wanting
Speaker 1: to commit to something is great, I think being realistic
Speaker 1: or testing out in smaller batches would be to your advantage.
Speaker 1: So I would say sign up for a smaller package.
Speaker 1: First and if you really enjoy, see yourself enjoying the groove,
Speaker 1: enjoying the facilities, then you commit to a bigger package.
Speaker 1: Yeah, I think that's fantastic advice and that's exactly what
Speaker 1: I did with my yoga package recently. I went for
Speaker 1: a five class pack because I'm new to the studio.
Speaker 1: I don't know if I like the studio. I don't
Speaker 1: know if I like the location, the teachers, the practitioners
Speaker 1: and the facilities and whatnot. So that's really great advice.
Speaker 1: So we're seeing some companies whose business model is pay
Speaker 1: per visit. The other way is also you can book
Speaker 1: a home therapist and pay per use. So do you
Speaker 1: see this as a trend that's happening? It definitely is
Speaker 1: a pin point for some consumers to have to commit
Speaker 1: to a package. So this becomes attractive. It's a market gap.
Speaker 1: So these businesses in my opinion have been really smart
Speaker 1: to be able to find,
Speaker 1: find something to cater to this particular market segment and
Speaker 1: off it. Yeah, that it's a smart move on their part.
Speaker 1: After that, if the customer decides to sign on for
Speaker 1: a package, then it's an organic decision that ok, I
Speaker 1: like the service. I like the company that's doing this.
Speaker 1: They've not pushed me, why not support them and I'll
Speaker 1: continue to use their services. It builds customer loyalty in
Speaker 1: a very organic way, doesn't it?
Speaker 1: Yes, especially if it's very convenient for them as well. Yeah,
Speaker 1: I wouldn't mind a home therapist, maybe I should try
Speaker 1: that myself. One last question for you. Any advice on
Speaker 1: how to approach budgeting and keeping spending in check when
Speaker 1: you're considering these packages? That's a great question. So I
Speaker 1: think the first thing that you need to do is
Speaker 1: to really ensure that space in your budget for it.
Speaker 1: Your basic needs need to be met first. I don't
Speaker 1: think it makes sense
Speaker 1: going into debt just because you need to look good. Yeah,
Speaker 1: the whole treat yourself thing has its limits. Yeah, it
Speaker 1: should definitely not result in you going to debt or
Speaker 1: even compromising your financial future. So I think the most
Speaker 1: important thing first is to know what you're working your
Speaker 1: goals towards and then planning accordingly. And for most Singaporeans,
Speaker 1: I would say we will have enough to then comfortably
Speaker 1: have that extra.
Speaker 1: Then it becomes about prioritizing how you're going to spend
Speaker 1: the extra for some people that might be gym memberships
Speaker 1: for some people that might be beauty treatments. I think
Speaker 1: there's no right or wrong answer. As long as you're
Speaker 1: not compromising your financial future, I think that's good
Speaker 1: and then coming back to the packages because this is
Speaker 1: this or that after all, I would say that it's
Speaker 1: better to pay a bit more each time now than
Speaker 1: to sign away a huge amount and end up not
Speaker 1: using it. The reality is that a lot of people
Speaker 1: do sign up for packages and end up not using it.
Speaker 1: Finder did say that Americans spend $397 million on unused
Speaker 1: gym members.
Speaker 1: Oh, wow. So that's the money that's wasted. Yeah. So
Speaker 1: that translates to about 67% of full memberships that people
Speaker 1: sign and never utilize at all. Yeah, I do think
Speaker 1: that we are a bit better in this part of
Speaker 1: the world because our parents taught us well to not
Speaker 1: waste money. Fingers crossed. Yeah, but the reality is that
Speaker 1: there are quite a number of people who have packages
Speaker 1: that they don't complete.
Speaker 1: So rather than putting yourself in such a situation, do
Speaker 1: look at the location of the place, how realistically you're
Speaker 1: going to use it and whether the service ends up
Speaker 1: being what you like it to be,
Speaker 1: it's more important to pay per use until you can
Speaker 1: figure those things out and then sign up for the packages.
Speaker 1: But gradually start with something small, know that you can commit.
Speaker 1: And if you really like it, then sign on longer,
Speaker 1: that is sage advice and certainly something that I would
Speaker 1: personally subscribe to. So that promotional price on a beauty
Speaker 1: package may seem alluring at first. But do consider if
Speaker 1: you would
Speaker 1: actually use all the services or if the upfront payment
Speaker 1: is something you are comfortable with. I will gladly pay
Speaker 1: a few $100 for treatment at a place that I
Speaker 1: completely trust or have gone to for many, many years.
Speaker 1: But I'm also mindful of the basics of financial common sense.
Speaker 1: Don't over commit. Don't overstretch where you cannot reach. Thanks
Speaker 1: Ken for helping us weigh the options on this or that.
Speaker 1: And thanks to you, our listener, if you've enjoyed this
Speaker 1: episode of Money Talks, there is more content for you
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Speaker 1: The team behind Money Talks is Joanne Chan, Jacqueline Chan
Speaker 1: Christina Roberts and I'm Andrea. He.