After unexpectedly losing massive amounts of revenue in 2020 due to the pandemic shut down, salon owners are analyzing their businesses for cost savings and new streams of revenue.
One simple solution for significant savings lies in new color technology. Vish Hair Color Management Software uses state-of-the-art Bluetooth scales to create data for owners to correctly set color prices, reduce inventory costs and help their colorists work more efficiently.
Tim Howard, Chief Innovation Officer at Vish says, “Weigh your product on our premium Bluetooth scale every time, and Vish automatically records all formulas, updating them with precise amounts.”
How Vish Works
With insight into company-wide usage, waste, profitability and performance, salon owners are finding extra profit to invest in their businesses, and stylists can see where they rank in usage and waste, which Howard says is extremely motivating.
“Gone are the days where salons should absorb product costs and erode the profitability of their services,” he says. “Charge customers exactly what gets used and control labor and commission costs.”
The first month is usually a learning curve, but Howard says salons see savings almost immediately.
“I did a data review for one salon that started at an average color cost of $7.60 per application,” he says. “Two months later, the salon was down to $6 per application.”
The salon saved $1.60 per application. With 1,500 applications, that generated $2,500 in savings.
The salon also generated $6,200 in new revenue by charging clients for the color used.
“This was an 18-chair salon that was on our biggest plan,” Howard says. “If you average their savings and earnings out over a year, that’s a positive impact of $96k — Vish more than paid for itself.”
Owners can then take that revenue and pay for employee education, new salon equipment, an expansion, or any other needed improvements. Some owners are even stepping out from behind the chair to focus on working on their business rather than in it.
Learning the Ropes
But first, you have to get your team on board. While Vish is simple to use, Howard says getting stylists to use it consistently is the biggest challenge. “It’s a new process, and some stylists are reluctant to be held accountable,” he says. “But if you get through the first 30 days and record the new formulas, you’ve got it. Vish is also counting inventory while you work—so no more manual counting.”
The automated inventory saves time and money for owners.
Luke Huffstutter, owner of Annastasia Salon, with two locations in Portland, OR, has been using Vish for almost a year, but rolled it out slowly to his team.
“It’s true that as a group stylists hate new technology and change, but we do an enormous amount of color services — it can take us six hours to do a color order,” he says. “Some of our team resisted and some loved it instantly, but we are showing each and every one of them the positive impact it can have on them and their business.”
Once stylists understand how working efficiently benefits the salon, they embrace the new technology.
“My favorite part is that my leadership team can have such clear conversations around color now while coaching our staff more effectively than ever,” he says. “They can see how much they were supposed to charge a ticket versus what they actually charged, and we can access real data about each color service, where before we just had to trust.”
Eliminate Waste, See Savings
Howard says it’s not uncommon for a salon to see 30-percent color waste when they first start using Vish. But after a few months of refining formulas, that waste comes down and there’s a reduction in inventory cost.
“We typically see a 25-percent reduction in cost of orders after a few months,” he says. “The magic really happens after that first customer you mixed in August comes back in September and the formula and price have been adjusted.”
He adds, “I just met with a salon recently that was wasting $2.50 per balayage. Their cost went down to $7.50 from $10.
Once new color formulas are established, product benchmarks can be set based on how much product the salon should be using.
“We convert grams and ounces into a dollar amount,” Howard says. “This gives a budget for the application. Every time someone goes over, the cost is pushed onto the customer.”
While examining his data, Huffstutter calculated the salon was losing money on its vibrant color services, because the direct-dye service requires up to 100 grams of color compared with a traditional color service that uses 40 grams. “I should have known that, but I’m not a colorist,” he says. “Now we are pricing fashion color accordingly and making a profit.”
Darrell Barrett, owner of Darrell Barrett Salon in Hunt Valley, MD, reduced weekly inventory orders by more than a third, saving $12,000 in the first eight months he used Vish. And his average color usage per service went down to $4 from $8.
“After the first four months, after seeing our new numbers, I was able to cut inventory in half,” he says. “I asked Vish for an analysis on my color every three to four months, which they created for me. I needed to get my minimum down because I was sitting on extra inventory, and this helped me do that—and see seasonal trends.”
At Barrett’s salon, the goal for stylists is to “scrape the bowl.”
“We have incorporated color weighing and formulas into our KPI meetings every two weeks,” he says. “Our re-weigh goal is 90% or above, and we’ve done it. The team is consistently getting to the scale and re-weighing their formulas.”
Waste at Darrell Barrett Salon went from 30 percent to 13 percent, but Barrett already has his eye on a new goal. “We now want to get it between 5 and 10 percent,” he says.
The best part? Barrett gets to reward his team for their consistency. He recently added an IRA with 3-percent matching as part of his employee benefits due to the savings he has seen from Vish.
Treat Your Color Like Retail
In addition to savings from properly measuring out color, salons can also bring in additional revenue by passing on the color cost to clients.
“Typically, you get a return on investment on retail, but not from color—it’s built into the service,” Howard says. “We disagree with that. You invested $5k in color, you should get that back.”
One salon Howard works with dispensed $2,400 in hair color over a month. The owner charged $4,029 back to customers, covering her inventory and gaining an additional $1,629 in revenue.
“Instead of arbitrarily charging an extra $5, introduce product charges based on frequency of visits and thickness of hair,” Howard says. “Also be mindful of manufacturer price increases. Vish automatically keeps an eye on those and adjusts accordingly.”
Leah Leeds, owner of The Glossary Salon in Overland Park, Kansas, raised her profit margin by about 12 percent in the past year by using Vish.
“Before Vish, we had a set price for every service,” she says. “People would book an appointment and we would have no idea what kind of hair they had. We had different stylists charging different amounts—there was no rhyme or reason for anything.”
As she was re-vamping her menu to be more consistent and fit current color trends, Leeds saw an opportunity to bring on Vish and start charging clients an hourly rate plus a color charge.
“A client may come in for a four-hour service and use $35 worth of color,” she says. “They’ll be charged for that.”
Leeds also marks up her color 50 percent, just like retail, and raises her product charges whenever the manufacturer does.
“Implementing these changes allowed me to step out from behind the chair and focus on running my business,” she says.
At Darrell Barrett Salon, there is an allotment of color that can be used each service. If the colorist goes over that, the guest pays.
“We have a note at our front desk that explains color is customized and a guest may see an additional charge based on her needs,” he says. “It’s a nominal charge, and for the most part, the client doesn’t notice.”
Ready to start seeing savings and extra revenue in your salon? Visit Vish to learn how.
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Originally posted on Modern Salon