Latest / Small Business Success with Fexingo: Local Companies, Main Street Stories, and Community Commerce / How a Local Barber Used a No-Show Fee to Beat the Gig Apps
Transcript
- Lucas: If you run a service business that takes appointments, I want you to guess a number. What percentage of booked slots do you think just… vanish? No call, no show, no revenue. Luna: I'd guess somewhere around fifteen percent for most places. Maybe higher for restaurants. Lucas: You're in the ballpark. But for a lot of small shops that rely on booking apps — the ones that let clients grab a slot with one tap and no commitment — the number runs closer to thirty percent. And that's where today's story starts. Luna: Which is exactly the kind of problem that sounds small on paper but can actually kill a business. A chair that's empty for thirty minutes is just lost money you can never get back. Lucas: Exactly. Today we're looking at a two-chair barbershop in Portland called Rose City Barber Co. Owner Mia Chen opened it in 2019, right before the pandemic, and like almost everybody she leaned hard into online booking once things reopened. But she quickly realized the apps were a double-edged sword. Luna: How so? Lucas: On one hand, they drove new clients through the door — people who found her on Google or Yelp and booked instantly. On the other hand, those same clients had zero skin in the game. They'd book three barbershops for the same afternoon and pick whichever texted first. And Mia was stuck holding the bag. Luna: So what did she do? I've seen some shops try deposit fees, but they worry it'll scare away walk-ins. Lucas: She tested a few things. First, she tried sending reminder texts — that helped a little, but no-shows still hovered around twenty percent. Then she tried overbooking by ten percent, which is what airlines do, but that just meant some days she had two clients show up for the same slot and someone had to wait. Bad experience all around. Luna: So she needed something that changed the behavior, not just a band-aid. Lucas: Right. And this is where I think the episode gets really useful for anyone listening who runs a service business. Mia introduced what she calls a 'commitment fee.' A ten dollar nonrefundable charge at the time of booking, applied to the final bill if the client shows up. If they cancel with more than four hours notice, they get it back. If they no-show, she keeps it. Luna: And I'm guessing she didn't just spring that on her regulars overnight. Lucas: She didn't. She rolled it out over a month. First, she sent an email to her loyalty list explaining why — that empty chairs meant she couldn't offer the same availability, and that the fee would actually let her keep prices stable. Then she offered a workaround: anyone with a punch card — buy nine cuts, get the tenth free — could book without the fee. That way, her most loyal clients felt rewarded, not penalized. Luna: That's smart. It turns a potentially negative policy into a loyalty perk. 'You're special, so you don't have to pay this.' Lucas: Exactly. The psychology is really clever. For new clients, ten bucks is just the cost of doing business — they're already spending forty or fifty on a haircut. For regulars, it's a little badge of honor. But here's the part I love: the numbers. In the three months after she implemented the fee, no-shows dropped from roughly thirty percent to under five percent. And her average spend per client actually went up by eighteen percent. Luna: Wait — how does a booking fee increase the average spend? I'd think it might make people spend less, since they're already out ten bucks. Lucas: That's what I thought too. But Mia noticed something interesting. Clients who had prepaid felt more invested in the experience. They showed up on time, they were more relaxed, and they were more likely to add on services — a beard trim, a hot towel, a product purchase. The theory is that the sunk cost made them value the appointment more, so they wanted to maximize it. Luna: There's actually some behavioral economics research on that. It's called the 'endowment effect' — once you own something, you value it more. By paying ten bucks, the client psychologically 'owns' that slot. Lucas: That's exactly the framework. And Mia didn't need a PhD to figure it out. She just saw that her regulars were treating appointments like reservations at a nice restaurant — and the new clients were treating them like a free Uber ride. The fee forced alignment. Luna: We have to keep this show free and accessible — that's part of why we do it. And if conversations like this have helped you think about your own business in a new way, the way we keep it ad-free is through listener support. You can find us at buy me a coffee dot com slash fexingo. Seriously, it's what keeps these episodes coming. Lucas: Yeah, and we really appreciate everyone who chips in. Okay, back to Rose City. One more detail I want to highlight: what Mia did with the extra revenue from the no-show fees. Luna: She didn't just pocket it, I'm guessing. Lucas: She didn't. She set up a fund that covers a free Sunday clinic once a month for unhoused neighbors. Walk-ins only, no questions asked, no fee. She uses the no-show money to pay her barbers their regular hourly rate for that shift. So the policy not only fixed her business problem, it let her do something genuinely good for the community. Luna: That's a beautiful loop. The bad behavior funds the good behavior. And it probably builds even more loyalty among her regulars who see that sign in the window. Lucas: Exactly. And it's not just a feel-good story. It's a business decision that reinforces her brand. She's the barber who cares. And in a world where every service is being commoditized by apps, that kind of differentiation matters. Luna: So what's the takeaway for a listener who runs, say, a nail salon or a tutoring center or a pet grooming business? Can they just copy this? Lucas: I think the principle transfers, but the specifics have to fit your clientele. Mia's fee is ten dollars because a haircut costs forty-five. If you're a tutor charging a hundred an hour, you might need a higher fee to be meaningful. If you're a dog walker charging thirty, maybe five bucks. The key is to make it enough that it stings a little, but not so much that it feels like a penalty for everyone. Luna: And the loyalty card carve-out is also crucial. You don't want to alienate the people who keep your lights on. Reward them first. Lucas: Right. Mia actually increased her loyalty program enrollment by forty percent after the change, because suddenly having that card had a tangible financial benefit. It wasn't just a 'thank you' — it was a ten-dollar savings every time. Luna: So the fee itself becomes a marketing tool, not just a revenue tool. Lucas: Exactly. And the last thing I'll say is this: Mia told me that before the fee, she used to dread Mondays. She'd look at her booking calendar and see five slots filled, but she knew statistically one or two would ghost. She'd over-prepare product, over-schedule her barber, and still end up with dead time. After the fee, she started looking forward to Mondays again. Luna: That's the part you can't put on a spreadsheet. The mental load of running a small business is huge, and anything that reduces that chaos is worth its weight in gold. Lucas: Absolutely. So if you're listening and you've been hesitant to charge a booking fee because you're afraid of losing customers, Mia's experience suggests the opposite is true. You might lose a few who were never going to be reliable anyway, and you'll gain a healthier, more loyal base. And maybe a way to give back, too. Luna: That's a good note to end on. Next episode, we're looking at a local bakery that used a 'pay what you can' model to actually increase its average transaction. See you then. Lucas: See you then.