Data provided here comes from our team of experts who have been working on business plan for a tattoo shop business. Furthermore, an industry specialist has reviewed and approved the final article.
What is the average profitability of a tattoo shop business, and what income can one expect in this industry?Let's check together.
Revenue metrics of a tattoo shop business
How does a tattoo shop business makes money?
A tattoo shop makes money by charging customers for tattoo services.
What do tattoo shop businesses sell?
Tattoo shop businesses primarily offer tattooing services, where skilled tattoo artists use needles to inject ink into a client's skin, creating permanent designs, images, or text.
These designs can range from intricate artwork and symbols to personal messages or meaningful representations. Tattoo shops provide a safe and hygienic environment for the tattooing process, often utilizing disposable needles and following strict sanitation protocols to minimize health risks.
Alongside tattoo services, many shops also sell aftercare products such as healing ointments, moisturizers, and cleaning solutions to aid in the proper healing of freshly tattooed skin.
Some tattoo shops may also offer related merchandise like clothing, jewelry, and accessories featuring tattoo-inspired designs. The focus of these businesses is to provide a platform for individuals to express themselves through body art while ensuring a professional and comfortable experience.
What about the prices?
A tattoo shop offers a variety of services and products at different price points.
The cost of tattoos generally varies based on factors like size, complexity, and location on the body, with smaller designs starting around $50-$100 and larger, intricate pieces ranging from $200 to several thousand dollars.
Many shops also charge an hourly rate, typically around $100-$300, for custom work and larger projects. Basic piercings usually cost around $30-$70, while more specialized or complex piercings can range from $50 to $150.
Tattoo shops often sell aftercare products like tattoo ointments and lotions, which can be priced around $10-$30. In addition, they may offer merchandise such as T-shirts, prints, and jewelry, with prices spanning from $10 to $50 or more, depending on the item.
| Item | Price Range ($) |
|---|---|
| Small Tattoos | $50 - $100 |
| Large/Intricate Tattoos | $200 - several thousand |
| Hourly Rate for Custom Work | $100 - $300 |
| Basic Piercings | $30 - $70 |
| Specialized/Complex Piercings | $50 - $150 |
| Tattoo Aftercare Products | $10 - $30 |
| Merchandise (T-shirts, Prints, Jewelry) | $10 - $50+ |
Who are the customers of a tattoo shop business?
Tattoo shop businesses typically cater to a variety of customers, ranging from those looking for custom artwork to those seeking traditional designs.
Which segments?
We've prepared a lot of business plans for this type of project. Here are the common customer segments.
| Customer Segment | Description | Preferences | How to Find Them |
|---|---|---|---|
| Enthusiast Collectors | Tattoo enthusiasts who value intricate designs and meaningful art. | Detailed designs, custom work, artistic tattoos. | Attend tattoo conventions, engage on social media art platforms. |
| Spontaneous Adventurers | Individuals seeking impulsive and unique tattoos while traveling. | Small tattoos, spontaneous designs, travel-themed art. | Near tourist hotspots, travel blogs, social media travel groups. |
| Celebrity Followers | Fans of celebrities and influencers who set tattoo trends. | Trendy designs, celebrity-inspired tattoos. | Follow celebrity accounts, engage in pop culture forums. |
| Meaning Seekers | Customers interested in tattoos with deep personal meanings. | Symbols, quotes, memorial tattoos. | Engage in online support groups, word-of-mouth recommendations. |
| Artistic Expressionists | Artists and creatives looking to express themselves through tattoos. | Abstract designs, collaborations with tattoo artists. | Art schools, local galleries, creative workshops. |
How much they spend?
In our detailed analysis of the operational metrics, we've observed that clients usually spend between $50 to $200 per session in a standard tattoo shop. These figures fluctuate based on various factors such as the complexity of the design, the artist's experience, and whether they are opting for color or black and grey tattoos.
Research indicates that the average number of sessions a customer may need ranges from 1 to 6 sessions annually, considering factors like the continuation of intricate designs, touch-ups, or the desire for new tattoos. It's important to note that tattoo enthusiasts who go for extensive, intricate designs might visit more frequently, whereas others may be content with one or two smaller tattoos.
Given these factors, the estimated lifetime value of an average tattoo shop client can be calculated to be from $50 (1x50) to $1200 (6x200), over the course of a year.
With these considerations in mind, it seems reasonable to conclude that an average customer would contribute approximately $625 in annual revenue to a tattoo shop. This estimation takes into account both regular clients and those who opt for more elaborate and high-priced artwork.
(Disclaimer: the numbers specified above are approximations and may not precisely reflect your individual business circumstances. External market factors and regional preferences can also significantly impact these averages.)
Which type(s) of customer(s) to target?
It's something to have in mind when you're writing the business plan for your tattoo shop business.
The most profitable customers for a tattoo shop business typically fall into two main profiles: tattoo enthusiasts and loyal repeat customers.
Tattoo enthusiasts, often in their 20s to 40s, are passionate about tattoos and willing to invest in high-quality work, generating significant revenue through large, intricate pieces. Loyal repeat customers, spanning various age groups, contribute to profitability by returning for additional tattoos and referring friends and family.
To target and attract them, a shop can use social media and online marketing to showcase their artists' skills, engage with the tattoo community, and offer promotions to entice first-time clients.
To retain them, excellent customer service, consistent quality, and personalized loyalty programs, such as discounts for repeat visits or referral bonuses, can help foster lasting relationships, ensuring these profitable customers keep coming back and bringing in new business.
What is the average revenue of a tattoo shop?
The average monthly revenue for a tattoo shop can range significantly, typically falling between $5,000 and $25,000. This variance hinges on several factors such as location, the renown of the tattoo artists, and the scale of operations. Let's dissect these numbers more thoroughly.
You can also estimate potential earnings for your own tattoo parlor, adjusting for various factors, with a tailored financial plan for a tattoo business.
Case 1: A quaint tattoo shop in a small town
Average monthly revenue: $5,000
This type of tattoo shop operates on a smaller scale, possibly run by just one or two artists and catering to a local clientele. Being in a small town, the traffic of customers is relatively low, and the charges for tattoos would likely be more modest due to lower living costs in the area.
Such shops might not offer high-end services or intricate design work that requires more expensive equipment or highly experienced artists. Instead, they might rely on standard tattoo designs with little customization.
Assuming an average charge of $100 per tattoo session and around 50 sessions per month, the revenue for this kind of tattoo shop would be approximately $5,000.
Case 2: A trendy tattoo shop in an urban locale
Average monthly revenue: $15,000
Positioned in a bustling city area, this type of tattoo shop attracts a higher volume of customers. It is typically staffed by several artists, each with their own unique style, drawing in diverse clientele seeking custom artwork.
Unlike the small-town shop, an urban tattoo parlor often amplifies its revenue by offering a range of services including custom art consultations, premium designs, and a variety of stylistic techniques. The shop might also sell merchandise, like after-care products, branded apparel, or art prints.
With an increased average rate, say $200 per session, and the capability to handle around 75 sessions per month, this tattoo shop could pull in $15,000 monthly.
Case 3: A top-tier tattoo studio with renowned artists
Average monthly revenue: $50,000
This elite tattoo studio stands out with high-profile artists, possibly known in the tattoo community or even featured in media. It attracts clients seeking high-end, intricate custom designs, often willing to pay premium prices and even travel specifically for appointments.
Beyond the standard tattooing services, such a studio might collaborate with celebrities, host events, or participate in international tattoo conventions. They may offer exclusive merchandise and luxury after-care products, contributing to additional revenue streams.
Given the stature of the studio and artists, clients are likely to spend significantly for their tattoos. If the studio charges an average of $500 per session, managing around 100 sessions per month, it could generate an impressive $50,000 in monthly revenue.
It's evident that location, expertise, reputation, and additional offerings can vastly influence a tattoo shop's revenue. As such, the figures above can fluctuate based on these variables.
The profitability metrics of a tattoo shop business
What are the expenses of a tattoo shop business?
Tattoo shop business expenses include tattooing equipment and supplies, rent or lease fees for the studio, staff wages, and marketing.
| Category | Examples of Expenses | Average Monthly Cost (Range in $) | Tips to Reduce Expenses |
|---|---|---|---|
| Rent/Lease | Studio space rent or lease | $1,000 - $5,000 | Consider sharing space with another business or negotiating lower rent. |
| Utilities | Electricity, water, heating/cooling | $200 - $500 | Use energy-efficient lighting and equipment to reduce utility costs. |
| Insurance | Liability insurance | $100 - $300 | Shop around for insurance providers to find the best rates. |
| Tattoo Supplies | Ink, needles, gloves, aftercare products | $500 - $2,000 | Buy supplies in bulk to get discounts and minimize waste. |
| Salaries/Wages | Tattoo artists, receptionist, apprentices | $2,000 - $6,000 | Hire apprentices or part-time staff to manage costs. |
| Marketing/Advertising | Website, social media ads, flyers | $200 - $1,000 | Focus on local and online marketing with a clear brand identity. |
| Cleaning and Sanitization | Janitorial services, cleaning supplies | $100 - $300 | Regularly clean and sanitize to maintain a hygienic environment. |
| Licensing and Permits | Tattoo licenses, health permits | $50 - $300 | Ensure compliance to avoid fines and penalties. |
| Furniture and Equipment | Tattoo chairs, lighting, workstations | $500 - $2,000 | Buy quality equipment that lasts to avoid frequent replacements. |
| Interest and Loan Payments | Loan interest, equipment financing | $100 - $500 | Look for low-interest financing options and pay off loans as soon as possible. |
When is a a tattoo shop business profitable?
The breakevenpoint
A tattoo shop becomes profitable when its total revenue exceeds its total fixed and variable costs.
In simpler terms, it starts making a profit when the money it earns from providing tattoo services exceeds the expenses it incurs for rent, equipment, artist salaries, and other operating costs.
This means that the tattoo shop has reached a point where it not only covers all its expenses but also starts generating income. This pivotal moment is known as the breakeven point.
Consider an example of a tattoo shop where the monthly fixed costs typically amount to approximately $10,000. Additionally, variable costs such as ink, needles, and other supplies might amount to around $50 per tattoo service provided.
A rough estimate for the breakeven point of a tattoo shop, therefore, would then be around $10,000 (since it's the total fixed cost to cover), or providing between 100 and 250 tattoos a month, assuming the shop charges between $100 and $200 per tattoo, depending on the complexity, size, and design.
It's important to understand that this indicator can vary widely depending on several factors such as the shop's location, operational costs, the number of artists, and the competition in the area. A well-established tattoo shop in a bustling area would obviously have a higher breakeven point than a small shop in a more isolated location that doesn't require as much revenue to cover their expenses.
Curious about the profitability of your tattoo shop? Try out our user-friendly financial plan crafted specifically for tattoo businesses. 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 most significant threats to a tattoo shop's profitability often revolve around attracting and retaining clients, as a lack of customers can directly impact income.
Competition from other tattoo shops can also drive down prices and reduce profit margins.
Additionally, high operating costs, including rent, supplies, and utilities, can eat into the revenue earned from tattoo services.
Adherence to strict health regulations and legal requirements is crucial, as non-compliance can result in fines or even the closure of the shop.
Economic downturns can affect disposable income, leading to fewer people seeking tattoos.
Lastly, maintaining a good reputation is vital, as poor quality work or dissatisfied customers can deter potential clients and harm the shop's image.
These threats are often included in the SWOT analysis for a tattoo shop business.
What are the margins of a tattoo shop?
Gross margins and net margins are critical financial metrics used to gauge the profitability of a tattoo shop business.
The gross margin represents the difference between the revenue generated from tattoo services and possibly, merchandise sales, and the direct costs related to delivering those services.
Essentially, it's the profit remaining after deducting costs directly related to the tattoo services, such as ink, needles, gloves, and artist compensation.
The net margin, conversely, factors in all expenses the tattoo shop incurs, including indirect costs like administrative expenses, marketing, rent, and taxes.
Net margin offers a comprehensive view of the tattoo shop's profitability, encompassing both direct and indirect costs.
Gross margins
Tattoo shops generally have an average gross margin in the vicinity of 50% to 70%.
For instance, if your tattoo shop generates $15,000 per month, your gross profit would be approximately 60% x $15,000 = $9,000.
Let's illustrate this with an example.
Consider a tattoo shop with customers spending a total of $5,000 for their tattoos. The total revenue would be $5,000.
However, the shop encounters costs such as artist compensation, supplies like ink and needles, and utilities.
Assuming these costs amount to $2,000, the shop's gross profit would be $5,000 - $2,000 = $3,000.
Thus, the gross margin for the tattoo shop would be $3,000 / $5,000 = 60%.
Net margins
Tattoo shops typically see an average net margin in the range of 15% to 35%.
To simplify, if your tattoo shop brings in $15,000 per month, your net profit might be around $3,750, which is 25% of the total revenue.
We'll use the previous example for consistency.
If our tattoo shop has customers spending a total of $5,000 for their tattoos, with direct costs of $2,000.
Moreover, the shop has various indirect costs, including marketing, administrative costs, rent, and taxes. Let's say these additional expenses total $1,500.
After deducting both direct and indirect costs, the tattoo shop's net profit would be $5,000 - $2,000 - $1,500 = $1,500.
Therefore, the net margin for the tattoo shop would be $1,500 divided by $5,000, equating to 30%.
As a business owner, comprehending the net margin (as opposed to just the gross margin) is crucial, as it gives you a more accurate understanding of how much money your tattoo shop is genuinely earning, considering all operational costs and expenses.
At the end, how much can you make as a tattoo shop owner?
Now you understand that the net margin is the key figure that indicates whether your tattoo shop is profitable. Essentially, it reveals how much money remains after all expenses have been covered.
The amount you will make significantly depends on how effectively you manage your business operations.
Struggling Tattoo Shop Owner
Makes $800 per month
Starting a small tattoo parlor, you might opt for less experienced artists, minimal marketing, and a location with low foot traffic, limiting your total revenue to potentially just $4,000 a month.
If expenses are not kept under strict control, your net margin might not exceed 20%. These expenses include artist commissions, rent, utilities, and supplies.
Under these conditions, you'd be looking at maximum monthly earnings of about $800 (20% of $4,000).
As a tattoo shop owner, this represents the financial challenge you face in the initial stages or if the business isn't managed effectively.
Average Tattoo Shop Owner
Makes $7,500 per month
Imagine you own a well-run tattoo shop with skilled artists, good hygiene practices, decent marketing, and a steady clientele. Your shop operates six days a week, and you sell aftercare products alongside offering tattoo services.
With moderate effort, your total revenue could climb to about $25,000 per month.
If you manage expenses wisely, negotiating with suppliers for the best prices on ink and equipment, and controlling utility costs, you could achieve a net margin around 30%.
In this case, your monthly earnings would be around $7,500 (30% of $25,000).
Exceptional Tattoo Shop Owner
Makes $30,000 per month
You're dedicated to the craft and business of tattooing. You invest in highly skilled artists, extensive advertising, and a prime location. Your shop offers a unique experience, impeccable customer service, and maybe even features in industry magazines.
Through merchandising, collaborations with famous personalities, and high client demand, your revenue could soar to $100,000 monthly.
By meticulously managing overhead and reinvesting in your business for continuous growth, you maintain a net margin of about 40%.
With this approach, your monthly earnings could reach an impressive $40,000 (40% of $100,000).
We hope to see you thrive in this artistry and entrepreneurship! If you envision reaching the pinnacle of success in the tattoo industry, it all starts with a comprehensive business plan for your tattoo shop.