Is Your Hair and Beauty Salon Profitable? If Not, It May Be Time to Rethink Your Pricing Strategy

If you are a hair and beauty salon owner with a full team of staff, constantly advertising online for new customers, and always offering promotional discounts, you might be wondering why there is never any money left in the bank at the end of the month.

The answer is often painfully simple…..you are not pricing your services correctly based on your actual overheads.

Many salon owners severely underestimate the true cost of providing their services. They remember to factor in the cost of color tubes or wax, but they forget the silent killers:

• unbillable labour time,
• rent,
• electricity,
• superannuation,
• marketing,
• and the cost of the chair sitting empty.

As a result, they end up undercharging and actually losing money on every client that walks through the door.

It is time to take control of your business, stop working for free, and start working smarter.

Calculate Your True Cost of Doing Business

To know if you are profitable, you have to know what it costs just to keep the lights on. This includes all of your fixed and variable costs.

• Fixed costs are the expenses that don’t change from month to month, like your commercial lease or software subscriptions.

• Variable costs fluctuate based on how busy you are, such as professional stock, retail products, and wages.

The Reality Check: Imagine a busy hair salon in Brisbane. The owner charges $250 for a half-head of foils. But when they finally sit down and calculate the cost of the colour used, the 3 hours of staff wages plus superannuation, the electricity running the blow dryer, and their weekly rent divided by the hour, that service actually costs the business $240 to perform. They made $10 for three hours of work. If you don’t know your true costs, you are operating blindly.

Factor in a Real Profit Margin

Breaking even is not the goal of running a business. Once you know your true cost of doing business, you need to add a dedicated profit margin to your prices. This is the actual cash you take home to build your wealth, reinvest in the business, or finally take a holiday.

The Danger of the Discount Trap

It’s important to remember that you do not have to offer discounts to get clients through the door. In fact, offering too many discounts actually devalues your brand and makes it incredibly difficult to implement price adjustments in the future.

Instead of slashing prices, focus on offering your clients undeniable value for their money. This could mean offering thorough, complimentary consultations, creating a luxury in-salon experience, or bundling services in a way that protects your bottom line.

Turn Your Salon Into a Profitable Business

If you’re not sure how to price your services correctly, you are not alone! This is exactly why you need Insightful Sums.

Insightful Sums is a dedicated SaaS platform built specifically for the Australian hair and beauty industry. We are not a booking software, we are not an accounting software, and we don’t try to integrate into other platforms.

We do one thing, and we do it perfectly: we replace your messy, confusing spreadsheets.

With core features covering service pricing, staff targets, and retail product calculations, you don’t need to be a mathematician to figure out your business. You simply input your specific details, and Insightful Sums does the heavy lifting.

The moment you hit enter, you get an instant “Aha!” moment! You will see immediately whether you are making a profit or a loss on your individual services, allowing you to charge the prices specific to your unique circumstances.

By investing just a small amount of time to set up your profile, you can gain all the insights you need to ensure every service contributes to your bank account.

Frequently asked questions