How to Work Out What to Charge in Your Salon by Joe Cignetti

1. Know Your Business Costs (Your Break-Even Point)

Before setting prices, you need to know how much it costs to keep your salon open.

• Fixed Costs (Overheads): These don’t change with the number of clients. Examples:
  • Rent/lease
  • Utilities (electricity, water, gas, internet)
  • Wages/salaries for receptionists or admin staff
  • Insurance
  • Software subscriptions (booking system, accounting)
  • Marketing/advertising
  • Cleaning and laundry
• Variable Costs: These rise with more clients. Examples:
  • Colour products, shampoos, treatments, foils, gloves
  • Refreshments (coffee, tea, biscuits)
  • Towels or disposables

Add these together to know your monthly running costs.

 

2. Work Out Your Revenue Capacity

This tells you how much income your salon could generate at full efficiency.

• Available Service Hours: How many hours are you (and your team) available to see clients?
  • Example: 3 stylists × 35 hours/week = 105 bookable hours/week.
• Multiply by the average number of weeks open per month (usually ~4.33).

This is your maximum billable time.

 

3. Calculate Your Hourly Cost to Operate

Now divide your monthly overheads by your total billable hours.

• Example:
  • Monthly overhead = $20,000
  • Billable hours = 450
  • Cost to operate = $44/hour (before profit).

 

4. Calculate Each Service Cost

Each service uses two things: time and products.

• Example (Full Head Foils, 2 hours):
  • 2 hours × $44/hour = $88
  • Product cost = $25
  • Total base cost = $113

 

5. Add Profit Margin

Your salon isn’t just about breaking even — you need profit to:

• Reinvest in training, new equipment, and marketing
• Cover sick leave/holidays
• Pay yourself properly as an owner
• Build a buffer for quiet weeks

Industry standard profit margins:

• 20–40% for most services
• Higher (50–70%) for short, product-light services (like fringe trims, blow-drys, men’s cuts)
• Lower (15–20%) for long, product-heavy services (like balayage, keratin smoothing)

Example:

• Base cost (Full Head Foils) = $113
• Add 30% profit margin = $147
  Round up to $149–$155

 

6. Factor in Stylist Levels

Clients expect different pricing depending on stylist experience. Common structures:

• Junior Stylist: Lower pricing (entry-level, building speed/skill).
• Senior Stylist: Standard pricing.
• Creative Director / Master Stylist: Premium pricing.

Same service, different price point. Example:

• Women’s Cut:
  • Junior = $55
  • Senior = $75
  • Director = $95

This gives clients choice and helps staff growth.

 

7. Check Your Market Position

Pricing isn’t just about costs — it’s about branding.

• Budget/Value Salon: High volume, lower prices, fast service.
• Mid-Range Salon: Balanced price + service + experience.
• Premium/High-End Salon: Higher prices, luxury environment, highly trained staff, elite products.

Decide where you want your salon to sit.

 

8. Use Packages & Upselling

• Create service bundles (e.g., “Cut + Colour + Treatment” package priced slightly lower than booking separately).
• Upsell add-ons (toner, deep conditioning, gloss finish).
• Offer memberships (weekly blow-dry club, seasonal colour packages).
• Retail products can add 10–20% extra revenue if promoted properly.

 

9. Psychological Pricing

• Avoid flat “round numbers” (instead of $100, make it $99 or $105).
• Price “hero services” strategically (e.g., slightly lower blow-dry price to get clients in the door, then upsell).
• Use tiered menus (good, better, best packages).

 

10. Review & Adjust Regularly

• Product costs and wages increase — so must your prices.
• Review every 6–12 months (many salons increase annually by 3–8%).
• Communicate price increases positively (position them as investing in quality products, training, and customer experience).

 

Formula to Remember:
(Hourly Cost × Service Time) + Product Cost + Profit Margin = Service Price