Data provided here comes from our team of experts who have been working on business plan for a beauty salon. Furthermore, an industry specialist has reviewed and approved the final article.
What is the average profitability of a beauty salon, and what income can one expect from such a business?Let's check together.
Revenue metrics of a beauty salon
How does a beauty salon makes money?
A beauty salon makes money by providing services such as haircuts, styling, coloring, and other beauty treatments.
What do beauty salons sell?
Beauty salons offer a range of services and products aimed at enhancing an individual's appearance and promoting relaxation and self-care.
These establishments primarily sell services such as haircuts, hairstyling, hair coloring, and hair treatments, catering to various preferences and trends.
Additionally, they provide skincare treatments like facials, exfoliation, and moisturizing to rejuvenate and maintain healthy skin. Nail care services, including manicures and pedicures, are also commonly offered, focusing on grooming and decorating nails.
Many beauty salons provide makeup application services for special occasions or everyday looks, using a variety of cosmetics to enhance features.
Some salons extend their offerings to body treatments such as massages, waxing, and threading for hair removal and relaxation.
Beyond services, beauty salons may retail beauty products such as haircare items, skin care creams, lotions, nail polishes, and makeup products, allowing customers to continue their self-care routines at home using recommended or preferred brands.
What about the prices?
A beauty salon offers a variety of services and products at different price ranges. Basic services like haircuts and styling typically range from $20 to $60, while more specialized treatments such as coloring or highlights might cost between $50 and $150.
For those seeking nail services, a basic manicure could be around $15 to $30, whereas a full set of acrylic or gel nails may fall in the range of $30 to $70. Skincare treatments like facials might cost between $50 and $120, depending on the type and duration.
Makeup applications for special occasions could be priced around $30 to $70, with bridal makeup packages reaching up to $150 or more. Hair removal services such as waxing might range from $10 for smaller areas to $50 for larger ones.
Additionally, beauty salons often sell hair and skincare products, with shampoos, conditioners, and styling products ranging from $10 to $30, and higher-end or specialty items potentially going up to $50 or more.
| Service/Product | Price Range ($) |
|---|---|
| Haircut & Styling | $20 - $60 |
| Coloring/Highlights | $50 - $150 |
| Manicure | $15 - $30 |
| Acrylic/Gel Nails | $30 - $70 |
| Facials | $50 - $120 |
| Makeup Application | $30 - $70 |
| Bridal Makeup | $150 and up |
| Waxing | $10 - $50 |
| Hair & Skincare Products | $10 - $50+ |
Who are the customers of a beauty salon?
A beauty salon typically caters to a variety of customers, ranging from those looking for a simple trim to those wanting a full makeover.
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 |
|---|---|---|---|
| Newcomers | First-time customers exploring salon services | Open to trying various treatments, seeking guidance | Social media ads, local events |
| Regulars | Frequent visitors who have established preferences | Loyal to specific services, enjoy personalized experiences | Salon membership, email newsletters |
| Luxury Seekers | Customers looking for premium and high-end services | Desire exclusive treatments, top-notch products | Collaboration with luxury hotels, upscale magazines |
| Busy Professionals | Individuals with limited time seeking efficient services | Prefer quick yet effective treatments | Nearby office promotions, express service options |
| Event Goers | Customers preparing for special occasions | Need make-up, hair styling, and other event-ready services | Partnerships with event planners, bridal boutiques |
How much they spend?
When considering the average revenue generated by a customer at a beauty salon, we observe that clients typically spend between $50 to $200 per visit. These expenses cover a range of services from basic grooming routines to more luxurious spa treatments.
Customer habits highlight that salon visits vary, with average frequency ranging from once a month to once every three months, depending on individual care routines, the need for professional services, and personal grooming standards.
Given these factors, the estimated lifetime value of an average beauty salon customer, calculated over the course of a year, would be from $200 (4x50) to $2400 (12x200), considering those who opt for frequent basic services to those indulging in high-end treatments more regularly.
With a nuanced understanding of these variables, we can approximate that a single customer would contribute around $1300 in revenue to a beauty salon annually.
(Disclaimer: the figures provided above are estimates and may not precisely reflect your specific business circumstances. Factors such as location, clientele, and service quality can significantly impact these numbers.)
Which type(s) of customer(s) to target?
It's something to have in mind when you're writing the business plan for your beauty salon venture.
The most profitable customers for a beauty salon are typically those who fall into the category of "high-frequency clients with a variety of services."
These customers are profitable because they visit the salon frequently for a range of services like haircuts, styling, coloring, manicures, pedicures, facials, and more, increasing their overall spending.
To target and attract them, the salon should offer enticing package deals or loyalty programs that reward consistent patronage, run promotions to encourage trying new services, and maintain a strong online and social media presence to showcase their expertise and creativity.
To retain these profitable customers, excellent customer service is key – ensuring their preferences and needs are met, sending appointment reminders, and providing a comfortable and enjoyable salon experience.
Offering personalized recommendations for services and products can also enhance retention by making clients feel valued and appreciated for their continued business.
What is the average revenue of a beauty salon?
The average monthly revenue for a beauty salon can range widely, typically between $3,000 and $50,000, depending on various factors such as location, services offered, and the size of the establishment. We will examine different scenarios to provide a clearer perspective.
You can also estimate your own revenue by considering these scenarios and adapting them to your specific situation, perhaps by using a financial plan tailored for a beauty salon.
Case 1: A cozy, modest beauty salon in a small town
Average monthly revenue: $3,000
This kind of beauty salon is usually a small-scale operation, possibly run by the owner, and may have only one or two additional staff members. The services are basic, including haircuts, simple styling, and perhaps manicures or pedicures.
Due to its location away from urban centers and limited services, it might attract a smaller clientele primarily through word-of-mouth within the community. With more affordable prices, such as $30 for a haircut or $20 for other services, the customer base is likely regular but limited.
Assuming it serves about 100 customers per month, this beauty salon would generate approximately $3,000 in monthly revenue, depending on the specific mix of services provided.
Case 2: An upscale beauty salon in an urban area
Average monthly revenue: $25,000
This type of salon is situated in a city, where the demand for beauty services is higher. It's an upscale establishment that offers a wide range of services, including hair styling, makeup, sophisticated nail services, facials, and maybe even massages.
With its urban location, chic ambiance, and extensive service list, it attracts a more considerable number of clients willing to pay premium prices. Services here might range from $50 for a haircut, $70 for specialized treatments, and more for comprehensive beauty packages.
If such a salon serves 500 customers a month, with each client availing an average service charge of $50, it would result in a monthly revenue of $25,000.
Case 3: A high-end, luxurious beauty spa and salon
Average monthly revenue: $50,000
This salon represents the pinnacle of luxury in beauty service, situated in a prime location, and attracting an affluent clientele. The establishment not only offers a full spectrum of beauty services but also advanced spa treatments, wellness packages, and perhaps even a boutique with beauty products.
Such salons are likely to be an attraction for those willing to indulge and pay top dollar for exclusive treatments, often by appointment only. They may also be frequented by celebrities, influencers, and individuals from high society.
With a broad range of services priced at a premium (e.g., $100 for a haircut, $150 for special treatments, etc.), and assuming it serves up to 500 clients per month, this type of establishment can expect to generate monthly revenues of $50,000 or even more, depending on the season or hosted events.
It's important to note that these scenarios are simplifications and that actual revenues can vary based on a multitude of factors, including salon management, marketing strategies, and broader economic conditions.
The profitability metrics of a beauty salon
What are the expenses of a beauty salon?
Operating a beauty salon entails expenses such as beauty products, salon equipment, rent or lease payments, staff wages, and marketing.
| Category | Examples of Expenses | Average Monthly Cost (Range in $) | Tips to Reduce Expenses |
|---|---|---|---|
| Rent and Utilities | Lease or rent for the salon space, electricity, water, gas, internet | $1,500 - $3,000 | Consider sharing space with other businesses, negotiate rent, and optimize energy usage. |
| Salon Supplies | Hair products, skincare products, nail polish, towels, cleaning supplies | $500 - $1,000 | Buy in bulk, seek discounts from suppliers, and minimize waste. |
| Salon Equipment | Chairs, mirrors, hair dryers, styling tools, furniture | $1,000 - $2,000 | Buy quality equipment that lasts longer, consider leasing or financing options. |
| Employee Wages | Salaries or hourly wages for stylists, receptionists, and other staff | $2,000 - $6,000 per employee | Optimize staff schedules, offer performance incentives, and cross-train employees. |
| Marketing and Advertising | Advertising campaigns, flyers, social media ads, website maintenance | $500 - $1,500 | Focus on cost-effective marketing strategies, like social media and word-of-mouth referrals. |
| Insurance | Liability insurance, property insurance, workers' compensation | $100 - $500 | Shop around for insurance providers, bundle policies for discounts. |
| Taxes and Licensing | Business licenses, income taxes, sales taxes | $200 - $500 | Ensure compliance with tax regulations, seek professional advice for deductions. |
| Maintenance and Repairs | Repairs for salon equipment and building maintenance | $100 - $300 | Maintain equipment regularly to prevent major repairs, shop around for repair services. |
| Training and Education | Continuing education for stylists and staff | $200 - $500 | Look for online courses and free workshops, invest in skill development. |
| Miscellaneous | Office supplies, miscellaneous expenses | $100 - $300 | Track expenses carefully, cut unnecessary costs, and prioritize spending. |
When is a a beauty salon profitable?
The breakevenpoint
A beauty salon 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 services such as haircuts, coloring, skincare, and other treatments becomes greater than the expenses it incurs for rent, beauty supplies, salaries, and other operating costs.
This means that the beauty salon has reached a point where it covers all its fixed expenses and starts generating income, we call it the breakeven point.
Consider an example of a beauty salon where the monthly fixed costs typically amount to approximately $10,000.
A rough estimate for the breakeven point of a beauty salon, would then be around $10,000 (since it's the total fixed cost to cover), or servicing between 100 and 250 clients monthly, assuming the average service cost is between $40 and $100.
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, high-end beauty salon would obviously have a higher breakeven point than a small salon that does not need much revenue to cover their expenses.
Curious about the profitability of your beauty salon? Try out our user-friendly financial plan crafted for beauty salons. 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 beauty salon are typically high operating costs, including rent, utilities, and product expenses, which can eat into the earnings.
Additionally, fierce competition within the beauty industry can make it challenging to attract and retain customers, potentially leading to fluctuating revenue.
Seasonal fluctuations and economic downturns can also impact customer spending on beauty services, affecting the salon's bottom line.
Lastly, staff turnover and the cost of training new employees can be a significant drain on profitability, as experienced and skilled stylists are essential for client satisfaction and repeat business.
These threats are often included in the SWOT analysis for a beauty salon.
What are the margins of a beauty salon?
Gross margins and net margins are critical financial metrics used to gauge the profitability of a beauty salon business.
The gross margin represents the difference between the revenue garnered from salon services and products and the direct costs tied to rendering those services.
Essentially, it's the profit remaining after subtracting costs directly linked to providing beauty services, including expenses for salon supplies, staff wages, and utility bills.
Net margin, conversely, accounts for all the expenses the beauty salon faces, inclusive of indirect costs such as administrative expenses, advertising, rent, and taxes.
Net margin delivers a more comprehensive insight into the salon's profitability, reflecting both direct and indirect costs.
Gross margins
Beauty salons usually observe an average gross margin in the range of 50% to 70%.
For instance, if your salon generates $20,000 per month, your gross profit could be roughly 60% x $20,000 = $12,000.
Here's an example for better understanding.
Consider a salon that serves 200 clients in a month, with each client contributing $100 to the revenue, making the total earnings $20,000.
However, the salon undergoes costs for beauty products, utilities, and staff salaries.
Supposing these costs total $8,000, the salon's gross profit calculates as $20,000 - $8,000 = $12,000.
Thus, the gross margin for the beauty salon would be $12,000 / $20,000 = 60%.
Net margins
Typically, beauty salons achieve an average net margin ranging from 25% to 45%.
In simpler terms, if your beauty salon earns $20,000 per month, your net income would be approximately $4,000, representing 20% of the total revenue.
We will use a consistent example for clarity.
Assuming our salon has 200 clients, with each contributing $100, the total revenue is $20,000.
The direct costs, as outlined before, come to $8,000.
On top of this, the salon bears several indirect costs, including promotional activities, insurance, administrative fees, taxes, and property rental. Presuming these additional expenses amount to $3,000.
After deducting both direct and indirect costs, the salon's net profit tallies at $20,000 - $8,000 - $3,000 = $9,000.
Consequently, the net margin for the salon stands at $9,000 divided by $20,000, equating to 45%.
As a salon proprietor, recognizing that the net margin (in contrast to the gross margin) offers you a superior perspective on the actual earnings of your beauty salon, as it encompasses all operational costs and expenditures.
At the end, how much can you make as a beauty salon owner?
As we delve into the financial aspect of owning a beauty salon, it's imperative to focus on the net margin to assess your business's profitability. This figure illustrates what portion of your earnings remains after covering all operating expenses.
Your actual earnings will largely hinge on the effectiveness of your business strategies and operational management.
Struggling beauty salon owner
Makes $800 per month
Starting with a small-scale beauty salon, you might opt for budget furnishings, limit your service offerings, employ less experienced staff, or choose a less than ideal location. These factors could restrict your total revenue to about $4,000 a month.
Given the competitive nature of the industry and without proper expense management, your net margin might struggle to exceed 20%.
Consequently, you're looking at maximum monthly earnings of around $800 (20% of $4,000), placing you in a challenging financial situation that might not sustain long-term business goals.
Average beauty salon owner
Makes $6,000 per month
If you're running a standard beauty salon with quality equipment, a range of services, decent working hours, and perhaps selling beauty products, you're stepping up your game. Under these conditions, your salon could generate up to $25,000 in monthly revenue.
Prudent management of your business expenses could push your net margin to a healthy 30%.
With this approach, you could be looking at earnings of around $6,000 per month (30% of $20,000), representing a stable and sustainable venture that rewards your hard work and investment.
Exceptional beauty salon owner
Makes $30,000 per month
When you commit wholeheartedly to your beauty salon, embracing premium service standards, an attractive ambience, highly skilled staff, diverse high-end beauty treatments, and a strategic location, your business thrives. You could be looking at monthly revenues of $80,000 or even higher.
Expert handling of expenses and leveraging beneficial supplier contracts and efficient resource management can boost your net margin to an impressive 40%.
In this optimal scenario, your monthly profits could soar to approximately $30,000 (40% of $75,000). This achievement reflects your dedication to excellence and smart business practices, setting a high standard in the beauty industry.
Realizing such success starts with a comprehensive and forward-thinking business plan for your beauty salon. We hope this inspires you to reach for the exceptional and make your entrepreneurial mark!