The cost of starting a hair salon varies depending on its size, location, and number of employees, among other factors.
The average cost of operating a hair salon, however, is $14.000, according to our calculations. In our survey, the cheapest hairstylist was $3.000 and the most expensive was $75.000.
Although running a hair salon may appear beautiful, the reality is that it may be challenging and costly. Rent, utilities, inventory costs, advertising expenditures, employee health insurance, and other expenses must all be considered.
And those are just the out-of-pocket prices; there are also hidden fees. We’ve put together this list of true costs of running a hair salon to assist you understand what running a hair salon entails before you get started on this business venture.
Surprisingly, when asked which part of starting a hair business was the most expensive, rent was not at the top of the list. Renovations, supplies, and equipment are the most expensive items for most hairstylists.
Rent
You’ll almost certainly have to rent a space if you want to start a physical location and don’t currently own the land, or if you’re not a mobile hairstylist. Depending on the region, rent might range from $10 to $25 per square foot. You’ll have to pay a security deposit in addition to the monthly price.
Electricity bills
Hair salons have an average monthly electricity expense of $150. Some stylists pay as little as $30 per month, while others pay over $300.
Less than 1% of the hairstylists in our study use solar or green energy and pay no electricity bill. Solar panels can help you save money on your electric bill each month while also helping the environment, but they will cost you more up front, just like any other investment.
Another cost-cutting strategy is to use less power or natural light during the day and rely on artificial lighting more extensively at night.
Water bills
Our study participants reported that their water expense is included in their rent in 40% of cases. The average water expense for salon owners who pay their own bills is roughly $75, according to salon owners who pay their own bills. The cheapest water costs, which vary depending on location and salon size, are around $30, while the most expensive bills are around $150.
Equipment, tools & accessories
Hair salon equipment is pricey. Hair dryers and hood dryers, coloring and styling stations with chairs, scissors, and a variety of other instruments will be required. The average cost of equipment and tools is $5000, and the average cost of salon furnishings is between $4000 and $5000.
You can also acquire used equipment, which is less expensive. Some of our consumers said that they spent roughly $2000 on used equipment for their business. Isn’t that a great deal? There is, however, some danger involved. It depends on whether your used equipment is covered by a guarantee or not. If the latter is the case, you’ll need to set aside some funds in case your equipment needs to be repaired or replaced.
Professional products
Hair salons spend money on professional products like shampoo and conditioner on a monthly basis. They often range from $100 to $600 each month, although the majority of people spend an average of $300 per month on professional items.
Salaries
And don’t forget about salaries! If you don’t pay yourself anything, that’s an additional expense on top of everything else. You should also account for any employee salaries. In the United States, the typical compensation for a hairstylist is between $25,000 and $50,000 per year.
Salon software
Salon software can help you save both time and money. It will not only help you arrange appointments, but it will also help you reduce no-shows. Clients forgetting about their appointments causes hair salons to lose around 20% of their appointments. A salon software program sends automatic messages to clients to remind them of their appointments, lowering the no-show rate to practically 0%.
As far as salon software goes, we suggest Appointfix. It’s fantastic because it offers a free plan, which is ideal for hairstylists who are just getting started and don’t have many clientele. You can upgrade to a premium plan later if you feel you can afford it. You can download the Appointfix app and use it for free from the App Store or Google Play.
Insurance
It is critical to get insurance. You’ll want to cover both yourself and your business, so make sure you get a good hair salon insurance plan. Insurance often costs between $100 and $1000 per month, depending on your location, salon size, equipment, number of staff, and other considerations.
Advertising and marketing materials
Depending on how much money you want to put into marketing right away, you should purchase a website, an outside sign for your hair salon, and some professional-looking business cards. Investing in Instagram and Facebook ads to acquire new clients is a terrific idea if you can afford it.
If you’re on a tight budget, Wix allows you to make your own website for free. They feature a large number of modifiable hair salon templates that are simple to use. Using our free and printable hair salon loyalty card designs, you can easily print your own marketing materials and save money on design fees.
Repair and maintenance
Setting money aside in case you need something repaired or serviced is a good idea, especially if your equipment isn’t new or under warranty.
Certifications & salon licenses
To conduct their services, all stylists must have a license issued by the state in where their salon is located. Depending on where your salon is located, you may also require a salon license in order to legally operate your business. In some states, these can be rather costly.
What is the single most expensive item for a salon?
Recurring and Occasional Expenses are the two types of expenses that can be found in a salon. While it’s critical to keep an eye on a salon’s unexpected expenses, it’s not always possible to forecast what these costs will be or how they’ll effect your profit margins. Recurring expenses, on the other hand, may and should be tracked. They’re the typical monthly charges, so you’ll have a solid notion of how each regular item will affect your income, profits, and bottom line.
Let’s begin with a list of recurrent expenses. The charges that you can expect to pay on a regular basis, usually every month, are known as recurring expenses. These expenses are more manageable to budget for, especially if you use salon software to keep track of all of your business expenses in one spot.
Staff salaries and Wages
“What is the biggest expense in running a salon?” people frequently inquire. Salary is generally the answer. In the United States, the average stylist earns about $30,000 per year. If you have a large crew, this might soon add up. Keep an eye on your payroll expenses.
Payroll (social) Taxes
Depending on where your firm is located, these charges will vary. Make sure to conduct some research about what’s required in your location and set aside some money to pay these charges.
Rent
If you’re still choosing a salon business location, check out the average rent prices in your area online. These will be very dependent on the locale. Because businesses typically pay higher rent than residential homes, it’s critical to be aware and plan your salon’s budget with a cash amount in mind. If you can save money on rent, you’ll be able to add a lot more money to your bottom line by lowering your overhead costs.
Licenses and Permissions
Business licenses are required, although they differ by city, state, and province. Health and safety inspections and certificates will very certainly be required. You’ll be able to sell retail products related to your salon for free in certain places, but you’ll need to pay for a permission in others. To find out what’s required, go to your state’s website and your city’s website.
Training
You’ll probably want to invest in some more schooling, training, or professional development for each stylist at your company at some point. Salons frequently seek fresh training to keep up with the most recent beauty service trends or practices. The beauty market is constantly evolving, which means that firms must adapt as well. Education is crucial in this situation. A new training course or license will not be cheap, but if salon owners engage with each employee and chose wisely, the long-term rewards from education expenditures will significantly increase your salon’s revenue and monthly income. It’s also a terrific strategy to increase staff loyalty.
Salon Software and POS System
The cost of these devices varies according on your salon’s requirements. Determine the metrics you want to track (for example, do you want to know when your product supply needs to be reordered, when appointments are due, or how much income each stylist has produced so far)? Once you know this, you can search for something that meets your needs. A POS system is important for processing transactions, but remember that it might also need specific equipment (such as iPads, if it uses wifi), and receipt paper.
Utilities
Businesses must pay for utilities regardless of the services they provide or the industry in which they operate. Of course, salons require electricity, water, and heat. As a result, it’s a good idea to seek out local average charges for these services. To give you an idea, a salon’s average monthly power expense is roughly $150, while water rates range from $45 to $150 for the largest and busiest salons.
Internet
You’ll also need to factor in the expense of internet access and a phone line. Processing payments, maintaining your salon’s social media presence, and doing any online marketing all require a stable internet connection.
Back Bar Supplies
When you first open your salon, make sure you have plenty of beauty supplies and basic tools on hand for each staff. Remember to factor these business expenses into your monthly budget. Shampoos, sanitizers, conditioners, styling products, and other chemicals used during services are often found in a salon’s back bar (such as perm solution and hair color). If you own a nail salon, you’ll also need to budget for specific paints and manicure products.
Salon Product Inventory
This is your retail product supply, not the stock that your personnel use on clients. Because product sales account for a big portion of a salon’s earnings, it’s critical to have enough inventory on hand for your personnel to make add-on sales and recommendations.
Salon Equipment Leasing
Leasing is becoming one of the most popular methods of purchasing equipment. You’ll set up a predetermined monthly payment toward the cost of your equipment instead of paying in full or putting it on credit. Your business will normally have the option to pay off the final sum and purchase the equipment entirely at the conclusion of the leasing time, or to renew your lease with the most up-to-date equipment, reducing maintenance concerns and keeping your salon on the cutting edge of the beauty industry.
Online and Credit Card Processing Charges (Fees)
Credit card processing fees can vary a bit, depending on your provider. The average charge you’ll see is between 1.5 percent and 2.7 percent, but be cautious. Some businesses may charge as much as 3% or more. Make sure to complete your homework as a salon owner or manager. These seemingly insignificant adjustments might quickly deplete your revenue.
Insurance Costs
Business insurance isn’t the most expensive overhead item, but it’s critical. Insurance is not only a nice idea; it is also a legal requirement. Depending on your salon’s services and location, you can expect to pay anywhere from $500 to $700 per month for business insurance. Additional company services, like as health insurance for your staff, may also be available from companies. Although not all salons choose to provide this service, it is something to think about if you want to recruit and keep skilled employees. The cost of insurance will vary greatly based on where your company is located. Make sure to compare rates and do your homework to determine which suppliers meet your demands.
Salon Opening Costs
Hiring stylists and personnel, cleaning and renovating your new premises, and advertising charges for your new salon are all part of the start-up costs.
New Equipment Purchases
You’ll have to buy the equipment if you don’t want to lease it. The type of salon business will have a big impact on this. Is it solely a salon for hair? Do you offer nail care or any other specialist beauty services, such as tanning, waxing, or spa services, to your customers? These are all charges that can add up to the cost of your basic equipment. You may anticipate to spend at least $27,000 on basic equipment if you need to buy it. Chairs, shampoo stations, hood dryers, and hairstyling/cutting instruments are all included. You can always start smaller, adding more equipment as you need it.
Salon Fit-out
If you want to be competitive and earn more money, you’ll need a well-designed salon with unique decor. A salon, for example, is more likely to succeed if it feels open and friendly rather than cluttered and outmoded. When starting a new salon, it’s critical to budget for this. Also, consider allocating a portion of your monthly revenues to future enhancements or updates.
Signage
This is a significant issue. It’s not a significant financial investment; it’s just really important. This is an excellent opportunity to be inventive and shop around. If you shop around carefully, good signage can be surprisingly inexpensive. However, depending on your needs, a properly created sign can cost several hundred dollars.
Website
Nowadays, having an online presence is essential for salon business. Consider spending some money (or, at the very least, some time) on a salon website. This does not have to be expensive, though if you want to benefit from the “wow factor,” you can engage a professional site designer. It’s also fine to begin with something more basic, such as an internet template.
Miscellaneous Expenses
These are everything from the cash float in the till to any dollar amount that you need to spend on random emergencies. It’s a good idea to set aside at least $500 for unforeseen expenses.
What is the cost of salon equipment?
The cost of salon equipment varies based on the type of salon. The cost of a full hair salon bill is estimated to be around $27,000. This includes everything you’ll require, such as hair dryers, shampoo and coloring stations, scissors, clippers, and so on. Less equipment is required in a modest barbershop or nail salon.
What can a beauty salon do to conserve water?
Water is a finite resource, no matter where we live. “Fresh, clean water is something most of us take for granted in our daily lives,” says Tamara Jercha, founder of the National Association of Eco-Friendly Salons & Spas (NAEFSS).
Here are a few basic strategies to preserve water in your salon:
- All leaky fittings should be repaired. Each month, a steady drip might waste 150 to 300 gallons of water. A quick drop can waste 600-900 gallons of water each minute.
- While applying hair treatments, turn off the water.
- To save more than 7,500 gallons of water per year, replace 2.5 GPM showerheads with 1.75 GPM water-saving ones (based on an average seven-minute shower by four people).
- Ascertain that all employees are completely aware of the need of conserving water.
- Washing machines and dryers should be set to full load.
- Per kilogram, a full load uses less water and energy than a half load.
- To save water, pick water-efficient products such as washing machines, shower heads, toilets, and faucets where possible.
What can beauty salons do to save water?
Businesses pay for the water they consume, so incorporating water efficiency into your daily operations will save you money while also lowering your company’s environmental effect.
Begin by keeping track of your water usage and determining where you use the most. This allows you to concentrate your efforts on the areas where the most water is consumed, as well as track the reductions over time.
You may teach and encourage your employees to:
- Instead of shampooing twice, shampoo once.
- Between washes, turn off the faucet and report any leaks.
- Washing up/mopping floorsuse half buckets as standard
Use water reducing basins/shower heads
- Use low-flow aerators, which can save up to 10 litres per minute per tap per use.
- Shower heads that are designed to save water should be used. These can save up to 330 litres of water every day.
Towels
Eco-towels can be used. These can be created from a variety of materials, including bamboo pulp or wood pulp, which is typically discarded as a by-product. They are more absorbent than towels, biodegradable, and single-use, ensuring hygiene while requiring no detergents, water, or energy for cleaning.
Paper towels that have been separated can be composted or used in anaerobic digestion. Check with your waste contractor.
Elan Hair Design, a VIBES award winner, has eliminated washing machines and replaced them with compostable towels, as well as installing a water-saving system and low-flushing toilets, reducing its water consumption by more than 80%.
Cleaning
Adopting a cleaning system that uses microfibers to clean mechanically rather than with water will almost eliminate the need of detergents. There are a variety of products available for various tasks, such as floor cleaning, furniture cleaning, and so on.
Also, rather than employing disinfectants and antimicrobials, steam cleaners can be used to attain a high level of hygiene. These emit a modest jet of steam and need little energy. Hand-held units typically have a maximum power rating of roughly 1000 watts.
In a salon, what are utilities?
Electricity, water, and gas are just a few of the utilities that come with running a beauty salon. Because of the amount of energy they require, larger salons have higher operating costs. If your salon has fancy lighting or televisions to keep clients entertained, your expenditures will go up as well.
Step I: Calculate your overall budget (running costs) per month
This is the number that will tell you the monthly amount you need to earn so as to keep the lights on in your salon.
Product costs (beauty supplies) + Operating costs (rent, tax, utilities, insurance, and other regular expenses) + Employee salaries = Operating costs (rent, tax, utilities, insurance, and other regular expenses) + Employee salaries (payroll, bonus, commission)
Note:
- If you’re buying things for three months, make sure to multiply the total cost by three to get the monthly cost.
- Also, don’t forget to include the costs of salon marketing in this price formula! Although the marketing budget is entirely up to you, salon owners often spend between 37 and 40 percent of total sales on marketing initiatives.
Your salon costs should always be less than your revenue
This appears to be self-evident. However, even if you are convinced that the charges would bring you more returns on investment, it is easy to get carried away.
Make sure you keep track of all of your business expenses, including wages, supplies, rent, and even tea bags! If your costs begin to creep up too much, see where you need to make cuts to stay profitable before they start eating away at your profit.
- Staff salaries and related HR costs
- Rent, insurance, and other expenditures are fixed costs.
- Stock and marketing charges are examples of variable costs.
Calculate what percentage of your total costs each of these categories accounts for. Make sure the revenue your employees generate covers their salaries while still leaving you with a profit. Always keep your fixed costs as low as possible. Establish stock management practices to prevent over- or under-ordering.
Know how much you have to spend
You should know how much profit your salon made at the conclusion of each financial year.
You should be able to anticipate how much money you will make in the coming year based on this. You should know exactly how much money you need to spend each month once you’ve completed this prediction. Make careful to stick to this budget to the letter.
If you’re devoting additional dollars to certain areas, such as increased marketing, a new product line, or a new employee, make sure to track the return on investment.
Understand your salon business inside out
Do you know who of your stylists brings in the most revenue for your company? Or, alternatively, which retail products generate the most profit? Which days of the week or months of the year do you anticipate generating the majority of your revenue?
The financial plan for your salon should provide you with information like this.
Only by understanding what is and isn’t working to reach your financial goals will you be able to expand your business in the coming year.