You Don't Own a Salon. You Own A Business.
In his latest blog, Leon Alexander Ph.D., challenges industry conventional thinking to help owners add more to their bottom lines.
Is Your Service Pricing Holding You Back from Profitability?
Are you making a profit on each of your salon and spa services, or are there some that are costing you? Coach Jen LeBlanc shows you how to calculate your break-even point.
by Jen LeBlanc, 124 Coaching and Consulting
October 10, 2024
124GO Coaching
3 min to read
As salon and spa owners, most of us went into business because we love this industry, and we love all things beauty. Most of us were successful hairdressers or estheticians that ended up opening a salon or spa and have acquired needed business and leadership skills along the way.
For years actual business education has been very hard to come by, so we found ourselves creating service menus based upon what our neighbors charged and what we “thought” sounded like a fair price. The problem with that methodology is that every company is truly different, and although demographics should play a part in menu pricing, figuring out your profitability metrics and your break-even point should be where you start.
Most salons and spas that we coach are shocked when we introduce a pricing calculator and show them how many of the services, they provide are actually costing them money. Imagine what profitability could look like if your services were appropriately priced - based upon what your company needs to make per hour, per chair, per station.
So where do you start?
Take all monthly expenses EXCEPT retail costs
Divide that by the average number of hours sold per month (take a 3-month average, 6 is better)
This equals the amount you need per hour to break even
Divide that by the inverse of your profit margin. (For example: if you want a 15% profit margin, divide the number above by .85).
This equals what you need per hour including profit.
As you complete these calculations, keep this in mind. The first step in managing your finances will often start with managing your expenses. Is your spending in line with industry benchmarks? Is there some room for savings? Or as my mom used to say, do you have "champagne tastes on a beer budget"?
Yet correct pricing is an integral part of the equation to your business success, you can only cut expenses so much. Don't let fear keep you from making the decisions and the actions we need to take.
About the Author: Jen LeBlanc is a 15-year salon industry veteran who serves as the Operations Officer at both Salon Rootz and Endz Salon Studios, located in Medina, Ohio. Salon Rootz is an 11-time SALON TODAY 200 honoree and a 10-time STAMP honoree. Jen has a passion as well as an infectious drive, to help the salon industry with innovations for growth and profitability. Using her background in marketing, e-commerce, SEO, web creation, graphic design, and her heart for the salon industry - Jen looks to elevate others. Jen is also a lifelong learner, a pursuit that has led her to join the 124Go Coaching and Consulting team. With 124Go, Jen has a greater opportunity to inspire and create strategies that will help you, your team, and your company achieve new milestones. Together, we get growing!
Subscribe to Our Newsletter
More Salon Management
Are Your Stylists Doing Free Hair on Your Time? Introducing the 'Win-Win' Staff Services Playbook
In her latest blog, Amy Pal helps you develop your own clear guidelines around complimentary free employee services.
Caring for Your Caregivers at the Front Desk
From managing air traffic on busy days to handling frustrated guests' complaints, your front desk team often serves as the salon's emotional shock absorber. From a customer service lesson from the DMV to a list of strategies for caring for your front line, our experts offer ideas for alleviating stress, celebrating wins, and setting goals.
by Stacey Soble
What's Really Happening with Salon Retail and How to Reclaim Your Revenue
According to the KIM Report, top-line salon revenue appears steady or slightly up, but that growth is driven primarily by service price increases. Beneath the surface, retail performance and client visit frequency (appointment drift) are under real pressure. In his latest blog, Alain Audet offers strategies for keeping your salon's retail sales strong.
Trimming Your Tax Bill by Putting Family on the Payroll
Putting your family to work in the salon offers some real tax benefits, but you have you have to play by the rules of the tax code to claim them. Azarvand Tax Law's Leticia Skrabut, Esq., shows you how.
The Art of the WOW Experience
Discover how to create a true “WOW experience” for every client by first building a culture where your team feels engaged, empowered, and inspired. Drawing on Calvin Stovall’s Iconic Framework, this blog explores how salon, spa, and clinic leaders can strengthen culture, elevate customer experience, and build a business that stands out for the long term.
Sponsored by Phorest Salon Software
Why Wellness Belongs on Your Salon's Growth Plan
The wellness industry is growing fast, and salons and barbershops already are an important part of it. In her first blog, Tracy Rado shares where the wellness dollars are heading, and how salons can grow with this movement.
Why Your Revenue Looks Good But Your Business Feels Stressed and What to Do About It
While salon sales are increasing, owners often feel they're working harder for the same or less profit. Leverage Q2 data from The KIM Report, Alain Audet reveals some of the structural changes that are dampening your growth and why your region and your salon size matters.
Why Your Holiday Season is Won in September
Weaknesses in your business are amplified during the Holiday Season. Spark Pro Global's Lucy Randall shows you five things to do now to have the strongest holiday season yet.
Appearance Standards are the New Dress Code
In Kati Whitledge's latest blog, she shares how salons have moved away from dress codes and embraced appearance standards. But by removing strict dress codes, some businesses may have unintentionally lowered their appearance standards. Whitledge helps you explain to your team why an appearance standard is important and how to smoothly implement a new appearance policy.
Working Through the Gray Areas of the Small Business Health Care Tax Credit
The Small Business Health Care Tax Credit is a non-refundable tax credit for for-profit businesses that provides a financial incentive for eligible employers who offer health insurance coverage to their employees. Leticia Skrabut, Esq., walks you through how to claim that credit.
5 Things Every New Stylist Should Learn Early
Developing strong work habits early in one's career supports long-term success in the salon industry. Jesse Linares offers new stylists his top five tips.
The Four Numbers Every Salon Owner Should Know
Most salon owners have no idea what these numbers are. You can hit record sales and still have a profit problem. The difference comes down to four numbers almost nobody was taught to track.
Sponsored by Strata Salon Systems™
Your Salon Can't Survive Without You. That's the Problem.
A five-area audit every owner-dependent salon needs to run. You built something that looks successful. Now find out if it can survive without you.
Sponsored by Strata Salon Systems™
Waiting for the Right Time Is a Decision. Here's What It's Costing You.
Every month you put off fixing the problem, it gets bigger, more expensive, and harder to solve.
Sponsored by Strata Salon Systems™
A Partner in Business and in Life
At Janet St. Paul Studio for Hair and Beauty, Director of Operations Natasha McMillen helps bring her wife Janet St. Paul's vision to life, elevating every system from education to operations.
by Stacey Soble
Back to Business with the Pinstripe Trend
Expand your color service menu with the Pinstripe technique. Brooks and Brooks' Marlon Hawkins walks you through the technique.
by Stacey Soble