Data provided here comes from our team of experts who have been working on business plan for a barbershop salon. Furthermore, an industry specialist has reviewed and approved the final article.
Is running a barbershop salon a profitable venture, and what is the typical monthly income in this industry?Let's check together.
Revenue metrics of a barbershop salon
How does a barbershop salon makes money?
A barbershop makes money by providing haircuts and other grooming services to customers.
What do barbershop salons sell?
Barbershop salons primarily sell a range of grooming and haircare services tailored to men's hairstyling and facial grooming needs. These services often include haircuts, beard trims, shaves, and hairstyling using various techniques and tools like clippers, scissors, and razors.
Barbershops may also offer additional treatments such as hot towel treatments, facial massages, and hair treatments aimed at enhancing the overall grooming experience and promoting healthy hair.
In addition to services, some barbershops may sell grooming products like hair styling products (such as pomades, gels, and waxes), beard oils, aftershaves, and other related accessories.
The atmosphere in a barbershop is typically relaxed and social, providing a space for customers to not only get their grooming needs met but also engage in conversations and connect with others in the community, making it a unique and traditional male-oriented grooming establishment.
What about the prices?
A typical barbershop salon offers a range of services at various prices.
These services include haircuts, beard trims, shaves, and sometimes grooming packages. Haircut prices can vary depending on factors such as the complexity of the cut, the stylist's experience, and the location of the salon.
On average, basic haircuts might start around $15 to $25, while more intricate styles or specialty cuts could go up to $40 or more. Beard trims are often priced separately and may range from $5 to $15.
Shaves, especially hot towel shaves, might cost around $20 to $40. Some barbershops also offer grooming packages that combine several services at a discounted rate, which could range from $40 to $80 or more.
Additionally, some salons might provide add-on services like styling, hair treatments, or eyebrow grooming, each with their own respective costs.
| Service | Price Range ($) |
|---|---|
| Basic Haircut | $15 - $40 |
| Intricate/Style Haircut | $40 and above |
| Beard Trim | $5 - $15 |
| Hot Towel Shave | $20 - $40 |
| Grooming Package | $40 - $80+ |
| Add-on Services | Varies |
Who are the customers of a barbershop salon?
A barbershop salon can cater to a variety of customers, ranging from young children to senior citizens.
Which segments?
We've been working on many business plans for this sector. Here are the usual customer categories.
| Customer segment | Description | Preferences | How to find them |
|---|---|---|---|
| Young Professionals | Busy individuals in their 20s and 30s looking for stylish and trendy haircuts. | Modern hairstyles, beard grooming, convenient scheduling. | Social media advertising, local networking events. |
| Seniors | Elderly customers seeking traditional grooming services and a relaxed atmosphere. | Classic haircuts, shaves, friendly staff. | Community newsletters, local senior centers. |
| Students | High school and college students wanting affordable haircuts and fun styles. | Budget-friendly options, trendy cuts, student discounts. | College campus events, student-oriented platforms. |
| Parents and Kids | Families seeking a family-friendly environment for haircuts. | Kids' haircuts, family packages, entertainment for kids. | Local parenting groups, school partnerships. |
| Entrepreneurs | Business owners and professionals valuing well-groomed appearances. | Executive grooming, premium services, tailored consultations. | Chamber of Commerce meetings, business networking events. |
How much they spend?
In the detailed analysis of our business model, we observe that customers generally spend between $25 to $50 for each visit to a barbershop salon. These figures may fluctuate based on a variety of factors such as the range of services availed, whether it's a basic haircut, a more intricate styling, additional treatments, or the purchase of hair care products.
Customer habits reveal that the average frequency at which clients return for services at a barbershop salon spans from 1 to 4 times per month, often depending on personal grooming preferences, the growth rate of their hair, or the maintenance of their style. It's also notable that some customers prefer regular appointments to maintain a particularly neat appearance, while others return only when they deem it necessary, often waiting for several weeks.
Considering the variables mentioned, we can calculate the estimated lifetime value of a typical barbershop customer. Assuming an average client-barbershop relationship lasts around 5 years, and factoring in the frequency of visits along with expenditure, the lifetime value would hover from $1,500 (1x25x12x5) to $12,000 (4x50x12x5).
With these projections, we could reasonably estimate that each customer would potentially contribute approximately $6,750 in revenue to the barbershop over the span of their patronage. This figure balances out various customer behaviors and spending capacities.
(Disclaimer: the figures outlined above serve as generalized estimates and might not reflect the precise dynamics of your individual business scenario.)
Which type(s) of customer(s) to target?
It's something to have in mind when you're writing the business plan for your barbershop salon.
The most profitable customers for a barbershop salon are typically those in the 25-40 age range, as they often require frequent haircuts and grooming services.
This demographic tends to have stable incomes and a greater willingness to spend on personal appearance.
To target and attract them, focus on marketing efforts through social media platforms and targeted online advertising, showcasing modern and trendy haircut styles that appeal to their age group. Offer promotions, loyalty programs, or package deals to entice them to choose your salon over competitors.
To retain these customers, ensure consistent high-quality service, create a welcoming and comfortable atmosphere, and provide personalized recommendations for hair care products or services to maintain their style. Additionally, keep communication channels open through email or text reminders for appointments and special offers to keep them engaged and loyal to your barbershop.
What is the average revenue of a barbershop?
The average monthly revenue for a barbershop can typically range from $2,000 to $20,000. This can vary significantly based on several factors such as location, services offered, and the client base. Let's analyze this in more detail.
You can also estimate your potential revenue using different assumptions with our financial plan for a barbershop.
Case 1: a simple barbershop in a small town
Average monthly revenue: $2,000
This type of barbershop operates in a small town and caters to regular local clients, providing basic haircuts and grooming services without the frills of upscale salons. The setup is often modest, and the prices are reasonable to reflect the local demographic and competition.
Given its location and limited market, it might serve up to 150 clients per month, charging an average of $13 per service. Without additional offerings like premium hair treatments or products, the barbershop's monthly revenue would likely be around $2,000.
Case 2: a trendy barbershop in an urban area
Average monthly revenue: $10,000
This barbershop is situated in a bustling city neighborhood, attracting clients who value a good haircut and grooming experience in a stylish setting. The barbershop might be known for its quality service, skilled barbers, and perhaps a signature service that isn't offered anywhere else in the area.
In addition to standard services, this urban barbershop might sell grooming products, offer more luxurious hair treatments, or even house additional amenities such as a coffee bar. With a more comprehensive service menu, the shop can charge more, for instance, $40 on average per visit.
Given the enhanced client experience and a customer base of around 250 people per month, this barbershop could generate around $10,000 in monthly revenue.
Case 3: a high-end luxury barbershop salon
Average monthly revenue: $20,000
Now, this is a barbershop that redefines grooming by offering a luxury experience. Located in a posh urban locale, perhaps in a business district or upscale shopping area, this establishment attracts elite clients willing to pay premium prices for exceptional service.
This barbershop wouldn’t just offer haircuts but a whole array of services like high-end shaving, beard styling, hair treatments, and more. It might also sell expensive grooming products and perhaps even offer members-only services for its exclusive clientele.
The atmosphere is more spa than barbershop, with services perhaps starting at $100. With a dedicated base of elite customers and assuming it serves 200 clients per month, this luxurious place could easily make $20,000 in revenue each month.
As evident, the location, services, and client base play significant roles in determining a barbershop's revenue. It’s essential to account for these, along with operational costs, while planning for a sustainable business model.
The profitability metrics of a barbershop salon
What are the expenses of a barbershop salon?
A barbershop salon's expenses typically consist of barbering equipment, rent or lease payments for the salon, staff wages, and marketing.
| Category | Examples of Expenses | Average Monthly Cost (Range in $) | Tips to Reduce Expenses |
|---|---|---|---|
| Rent | Lease or rent for the salon space | $1,500 - $4,000 | Consider a smaller space or sharing the space with other professionals to reduce rent costs. |
| Utilities | Electricity, water, gas, internet | $200 - $500 | Invest in energy-efficient appliances and fixtures to lower utility bills. |
| Salon Supplies | Shampoo, conditioner, hair products, towels, capes, combs, scissors, razors, etc. | $500 - $1,000 | Buy supplies in bulk to get discounts, and monitor inventory to avoid overstocking. |
| Employee Wages | Salaries, commissions, benefits | $2,000 - $8,000 (varies with the number of employees) | Optimize staff scheduling and consider performance-based incentives. |
| Marketing | Advertising, promotions, online presence | $300 - $1,000 | Utilize low-cost digital marketing strategies and encourage word-of-mouth referrals. |
| Licenses and Permits | Business licenses, health permits, cosmetology licenses | $50 - $200 | Stay compliant with regulations to avoid fines and penalties. |
| Insurance | Liability insurance, property insurance | $100 - $300 | Shop around for insurance providers to find the best rates. |
| Equipment Maintenance | Regular maintenance and repair of salon equipment | $100 - $300 | Implement a maintenance schedule to extend the lifespan of equipment. |
| Taxes | Income tax, sales tax, payroll tax | Varies based on revenue | Consult with a tax professional to optimize tax planning. |
| Miscellaneous | Cleaning supplies, office supplies, refreshments for clients | $100 - $300 | Buy generic or store-brand products for cleaning and office supplies. |
When is a a barbershop salon profitable?
The breakevenpoint
A barbershop becomes profitable when its total revenue exceeds its total fixed costs.
In simpler terms, it starts making a profit when the money it earns from haircuts, styling, shaves, and other services becomes greater than the expenses it incurs for rent, barber supplies, salaries, and other operating costs.
This means that the barbershop has reached a point where it covers all its fixed expenses and starts generating income; we call this the breakeven point.
Consider an example of a barbershop where the monthly fixed costs typically amount to approximately $10,000.
A rough estimate for the breakeven point of a barbershop would then be around $10,000 (since it's the total fixed cost to cover), or between 200 and 400 customers paying for services ranging from $25 to $50.
You have to know that this indicator can vary widely depending on factors such as location, size, service fees, operational costs, and competition. A large barbershop with several employees would obviously have a higher breakeven point than a small shop that does not need much revenue to cover their expenses.
Curious about the profitability of your barbershop? Try out our user-friendly financial plan crafted for barbershops. Simply input your own assumptions, and it will help you calculate the amount you need to earn in order to run a profitable business.
Biggest threats to profitability
The biggest threats to profitability for a barbershop salon include fierce competition from other nearby salons, fluctuations in customer demand, and economic downturns that reduce disposable income, leading to fewer people seeking grooming services.
Rising operating costs, such as rent, utilities, and barber salaries, can also squeeze profits, especially if pricing cannot be adjusted accordingly.
Additionally, the reliance on skilled barbers can be a vulnerability if key staff members leave or if it's challenging to find and retain talented barbers.
Seasonal variations in business, like slower summer months or holiday rushes, can impact cash flow and profitability.
Lastly, poor customer service, negative reviews, or a lack of effective marketing can lead to a decline in clientele and revenue, further threatening profitability for the barbershop salon.
These threats are often included in the SWOT analysis for a barbershop salon.
What are the margins of a barbershop?
Gross margins and net margins are crucial indicators of a barbershop's financial health, reflecting its profitability and efficiency in managing expenses.
The gross margin represents the difference between the revenue earned from cutting and styling hair, selling hair products, and other services, and the direct costs of delivering these services, like hair care supplies, utilities, and barbers' wages.
Essentially, it’s the profit made after subtracting the costs specifically associated with the barbershop's operations—not considering broader business expenses.
Net margin goes a step further by factoring in all operating expenses, such as administrative costs, marketing, rent, and taxes, offering a comprehensive view of the business's overall profitability.
Gross margins
Barbershops generally operate on average gross margins of 50% to 70%.
For instance, if a barbershop earns $20,000 in a month, the gross profit at a 60% margin would be 60% x $20,000 = $12,000.
Here's a practical example:
Consider a barbershop serving 200 customers per month, with each customer billed an average of $50, making the total revenue $10,000.
The shop experiences direct costs for barber salaries, utilities, and hair supplies. If these expenses total $4,000, the barbershop’s gross profit is $10,000 - $4,000 = $6,000.
Thus, the gross margin here is $6,000 / $10,000 = 60%.
Net margins
Typical net margins for barbershops range from 8% to 25%.
Using the same example, if a barbershop brings in $10,000 per month, the net profit, considering an average net margin of 15%, would be 15% of $10,000, equating to $1,500.
Let’s delve into the specifics:
From the initial $10,000 revenue, we subtract the direct costs ($4,000), leaving us with a gross profit of $6,000.
However, the barbershop also has indirect operating expenses, including rent, marketing, administrative costs, and taxes. Suppose these additional expenses amount to $3,500.
After accounting for these costs, the net profit stands at $6,000 - $3,500 = $2,500.
So, in this scenario, the net margin is $2,500 / $10,000 = 25%.
It’s imperative for barbershop owners to realize that the net margin offers a more in-depth insight into the business’s true profitability, as it encompasses the entire cost structure. Monitoring net margin can help in strategic planning and generating a sustainable financial model for the barbershop.
At the end, how much can you make as a barbershop owner?
Now you understand that the net margin is the indicator to look at to know whether your barbershop is profitable. Basically, it tells you how much is left after you have paid for all the expenses.
How much you will make will, of course, depend on how well you execute.
Struggling barbershop owner
Makes $500 per month
If you start a small barbershop, making choices such as investing in low-cost chairs, minimal décor, limited services, and ignoring customer service quality, your total revenue might not exceed $2,500.
Moreover, if you do not manage your expenses effectively, there's little chance that your net margin (profitability) will go above 20%.
In simpler terms, this means that your monthly earnings would be limited to a maximum of $500 (20% of $2,500).
So, as a barbershop owner, this is the worst-case scenario for your income.
Average barbershop owner
Makes $3,000 per month
Suppose you decide to run a standard barbershop with decent equipment. Your barbershop operates full-time, and you offer various services like advanced haircuts, shaves, and product sales (shampoos, creams, etc.).
You're making some efforts. Your total revenue can reach up to $12,000.
By effectively managing your expenses (rent, utilities, supplies, and staff salaries), you can aim for a reasonable net margin, possibly around 25%.
In this situation, your monthly earnings would be approximately $3,000 (25% of $12,000).
Exceptional barbershop owner
Makes $15,000 per month
You are dedicated to delivering an outstanding experience, with top-tier interior design, highly skilled staff, diversified services (like massages and complex grooming treatments), and maybe even a line of branded products.
You understand the importance of customer satisfaction and have built a loyal customer base through quality service and engagement. With such an elite barbershop, the total revenue could reach $50,000 or more.
Additionally, you're skilled at managing expenses and optimizing your supply chain, keeping costs low while maintaining high standards. This approach leads to a net margin of around 30%.
In this scenario, the monthly earnings for the outstanding barbershop owner would amount to approximately $15,000 (30% of $50,000).
May this success be yours! Remember, reaching the level of an exceptional barbershop owner starts with a well-thought-out business plan and relentless dedication to your craft and customers.