Averages and Allowances Just Don't Cut It - SalonScale
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Averages and Allowances Just Don’t Cut It

By Ty Banks | 

The cost of doing business has always put tremendous stress on salon owners behind the chair. Especially with the increase in product costs and other business expenses. Salon Owners like you are doing everything they can to keep their lights on while still offering your clients the best possible services. How you price your services has a large impact on the health of your business, just as much as your expenses.

Salons are at the forefront of a trend-based business. This means that your back bar product usage is variable. Variable services need variable pricing. and that means you have to be ready to adapt to changing circumstances to best suit your client’s needs while finding a way to keep the lights on.

However, this flexibility and convenience for your clients come at an enormous cost for your back bar and your business.

Gone are the days of product allowances

Charging a generic fixed rate to cover your product expenses is a common mistake we see more and more of in the industry. Turning a blind eye and failing to accurately calculate your cost of color per client will have money walking out your door every day. Missing out on $10 per client can lose you $1,200 of revenue per month or $14,400 at the end of the year! Scale those statistics up to a team of stylists or franchised salons and we are talking tens of thousands of dollars lost. 

70% of services in salons have a product cost attached, so why not make sure that the number you’re charging actually covers your costs?

Why product allowances don’t cut it

Carrying a large overhead can be a massive cost for your business and a big stressor. When you hope to just have enough products, this can cause you to stock for the “just-in-case”. This often leaves products in your back bar collecting dust and money gone to waste. Your salon might already be charging an allowance or product fee on services for your clients. While this is a great step to covering your costs, you have to track to see if your product fee is ACTUALLY covering your expenses. Product costs are variable. This means that they are often subject to changes in demand or price increases. Product usage is also variable. So between usage and the cost and tying them all together with averages can lead to big leaks within your business.

SalonScale exposes the true cost of back bar products being used.

salon pricing and back bar product costs are variable

We understand that inflation has put a damper on not your spirits and your clients as well. Times are hard for everyone. As a stylist, you strive to make people feel their best and provide your clients with a great experience at a fair price. It can be hard not to get emotionally invested with everyone who sits in your chair. It’s vital to remember that you got into this hair game to make a profit. This is your career. By charging rates to your clients through emotion… the one who is going to get hurt is you. Emotionless pricing is not only fair, it’s what will keep you in business.

Remember, are you pricing for your clients or for your business?

Summary

When it comes to having a better understanding of your numbers, the sooner your variable costs are reflected, the better! We know that products are unlikely to become less expensive anytime soon. As prices continue to skyrocket, you need to have a game plan for keeping the cost of the product covered or you’re going to get left behind.

Whether you’re an independent stylist or a salon owner with a team of staff. You need units of measurement to understand these variable expenses. Or these small leaks will sink a great ship.

Ty Banks

Ty is a Content Specialist. He has a strong background in business operations and actions to make businesses more profitable.