Learn How To Price for Salon Profit

Did you currently own or are thinking of opening a hair salon, but are completely lost as to how to gain a profit? This part of entrepreneurship is daunting and overwhelming to us creative people. We just want to do hair that we love to do and make a little extra money. Seems easy, right?


Operating a hair salon is EXPENSIVE! There's color inventory, product inventory, taxes, payroll, payroll taxes, rent, utilities, marketing ads, salon software, credit card fees, attorney retainers, accountant fees, insurances, small business loan, and the list goes on.

This is why the debate of commission vs booth renting is high these days in our industry. The old 50% commission pay out for a Stylist just doesn't cut it anymore as products and color pricing soars. This is where you MUST be creative and strategic with your salon budgeting plan to roll over a profit. The general profitable margins for a hair salon range from 8%-17%, so on a $100 service, after commission, product usage (cost of goods sold), you're looking at about an average of $12 profit ... WHAT?!?!

But how? What's the magic formula you say? There isn't a "magic formula" per se, but there is a way to become a profitable salon business and the first and foremost formula that must take place is the BELIEF SYSTEM WITHIN YOURSELF as an entrepreneur. Yes, you read that correctly. If you do not believe in the product you are putting out there, clients; no matter what they are paying, will not find the value in your pricing. So, let's start from there ....

Where are you in your career? What education have you taken to back your pricing? What experience does you and/or your team have to create a valuable price for you and your clients? You may WANT to charge more, but the gritty question you must ask yourself is "is my work worth that price?" Now, that can be a tricky question at times because insert now "the ego stylist" that over charges and thinks they are "the shit" and then enter "the humble/scared stylist" who is exceptional, but doesn't find themselves worthy ... this is why we are in this CONSTANT debate of pricing and what we deem worthy, which HIGHLY effects our profits!

Profits should and never be placed on emotion! Just because you may or may not have and ego or a humble mindset, your pricing should not reflect that.

How you set your pricing is to figure how much you want to make. Work backwards from there. For each service, calculate the cost of that service (cost of goods sold), calculate what it costs for an assistant's hourly rate into the timing of what this service takes, subtract commission out of the service as well.

Example: $50 Haircut (45 min service)

- $20 (40% commission)

- $5 (Cost of shampoo/conditioner/styling products

- 7.5 (Payroll of an assistant to shampoo @10/hr)

= $17.50 (Salon's earnings)

You can take the "Salon's Earnings" and mulitple that by the amount of hours you want to work in a day, then days per week to calculate your projected weekly sales, then monthly, then yearly. Please keep in mind this is a very loose example. The $17.50 is NOT the salon's profit because you have to consider taxes, rent, insurance, and all of those fun fees I mentioned earlier.

Keep in mind also when pricing the clientele you want to attract. Are you high end with higher pricing; this will mean you will need to bump up the salon's amenities and create an upscale salon culture or do you want a more happy medium with lower pricing and lower expectations from the client? My "lower exceptions" this DOES NOT mean to oversell and under deliver, this just simply means a client will not expect a glass of wine and or a latte at their appointment. But at a high end salon with higher pricing, client's will want those extra special goodies for their experience that they are paying extra for.

So, there's a lot to think about here when it comes to pricing. Take your time. Create an image in your mind FIRST of the salon you envision. Paint the picture. Then, decide a fair price to start with and increase YEARLY, yes ... YEARLY!

Best of luck and you will do GREAT!!


The #BranchBossBabes