We truly believe that our clients need to understand what they are paying for when they visit the salon and why our services cost what they do. Let’s be honest, hair services can be expensive, some places more than others, and there are reasons for that. Here are the top 3 expenses for any business, not just salons:
- Commercial rent varies dramatically depending on location. A business downtown or in a trendy neighbourhood can be much more expensive than a residential or industrial area.
- Along with rent comes all the additional costs such as management fees, property taxes, operating costs and insurance. Cumulatively, these are about equal to the cost of the base rent.
- Wages, salaries & commissions; this is a hefty cost and, depending on the business, it can vary wildly. We have a combination of all three and the busier we are, the higher the expense. On average, about 50% of the service costs go to paying the stylists and support staff.
So, with our $80 per hour cost of services, it’s very easy to break it down. On average, $40.00 goes to wages, $10.00 pays for products, $30.00 goes to the salon. It costs more than $50.00 per hour just to pay the rent and other bills for the salon to stay open. Which means that we need to have a minimum of 2 clients in the chair, every single hour, of every single day that we are open before making any profit whatsoever.
Here is a break down of some of our fixed costs:
|RENT (2020 $26/sqft)||$3,194/month|
|BEVERAGES (coffee, wine etc.)||$150/month|
Here are a few variable costs:
|PAYROLL TAXES (EI, CPP etc.)||$5,000/month (+/-)|
|POS TERMINAL (per transaction)||2.75%|
|COLOUR||$4.50 – $4.65/oz|
|LIGHTENER||$1.90 – $2.20/oz|
|DEVELOPER||$0.40 – $0.50/oz|