How Much Do Salon Owners Make? Tips for You to Earn More

How much do salon owners make? This is a question that crossed your entrepreneur mind at least once.

Managing a salon requires a lot of attention. Issues can arise at any moment and need taking care of. It’s very important that at the end of the month there needs to be enough money in the bank to pay for all the staff’s salary.

To ensure the continuity of the business, more is needed than only having a balanced budget. Benefits, freedom, growth, security, and education are vital components. Managing all these aspects is not easy.

To assist new salon owners’, this article will address one issue. How much do salon owners make?

How Much Do Salon Owners Make?

In the United States, the beauty and spa industry encompasses more than 1.2 million salons and parlors. Together these businesses generate more than $57 billion each year. These statistics were published by the Professional Beauty Association (PBA) in 2019.

Salons offer a wide variety of personal care services. The services include hair care, massages, manicures, pedicures, and tanning services. It is no surprise that the amount a salon owner can make depends on many different factors.

These include the size of the business, the location, the economic situation, quality of management, and the kind of services offered.

The average income of a salon owner is between $45,000 and $48,000 a year. These figures are derived from Indeed and SimplyHired. Of these business owners, 81% consider that amount sufficient for covering the cost of living in their respective areas.

Two different types of beauty salons exist, namely the specialized and the full-service salons. The specialized salons usually focus on one or two types of treatment. They might, for example only offer manicures and pedicures, or focus on hair cutting and styling.

The full-service salon offers many different types of treatments. These services can include hair services, massages, and nail treatments. It seems logical that the more treatments a parlor offers, the more money its owner can make.

Salon Owner Salary Factors

Location of Hair Salon Business

For beauty parlors and other service-based businesses, the location of the salon is a very important factor. The location can determine up to 50% of the income when compared with the average. Good business management can get the best out of a location when it comes to salary.

Especially in a low-income area, it is to be expected that the income of the salon will be likewise lower. This may not improve with a higher quality of service.

This is because people from a lower-income area are not likely able to afford a more expensive, higher-quality treatment. The upside of working in a disadvantaged area is that most likely the costs of running the business will be lower. Still, the cost of bringing in materials and services from outside the area is consistent.

Hair Salon Business Management

The salon’s management will depend on a couple of factors. These are determined by the salon size and how much the owner gets paid.

Cleanliness and efficiency are factors that many employees and customers appreciate. When the salon is clean and effectively managed this will give the place a good name and this will make the business thrive.

These positive qualities do not come about by chance. They require dedicated quality management.

Depending on the size of the business it may call for a person in charge of cleaning to ensure that the salon looks attractive. To bring efficiency to the place, someone needs to take charge of implementing systems. If this is not accomplished confusion and frustration will ensue and the result may be that employees and customers walk away.

Staff Payment Scheme

Often a client returns to a beauty parlor or salon to ask for one specific stylist. That is an important way of binding customers to a business.

Showing appreciation for these skilled and dedicated workers is important for success. Paying a fair salary is vital for employee retention. Remember, these people bring in the money.

Payment systems and levels are determined differently in each salon. Four main payment structures for salon salaries are:

• Annual salary
• Commission-based
• Hourly rate
• Performance-based

Run Your Business Professionally

Opening a salon will cost, on average, $62,000. But variations in startup costs can be large, from $2,000 to $500,000. The cost depends on many factors, most importantly on the model that is chosen for the salon.

Even those that manage, but do not own the business need to know what it takes to run a beauty salon. This also means knowing the numbers.

For an average salon, the annual income depends on four factors:

• Average service ticket per visit. This is the average amount a client spends per visit.
• The percentage of what a client spends goes to the owner. How much is left after paying rent, products, and other expenses?
• Visit frequency. How often the average client comes for treatment.
• The number of clients. This depends on the number of clients that come regularly, the number of new clients, and the number lost (churn rate).

Without sales, no business survives. When profits need to improve, the first thing to look at is top-line revenue, sales in other words. This will benefit the salon, not only in the short term but also for building a stable business in the long run.

Even before opening a new salon, a marketing campaign should be created. This ensures that when the business finally opens, people will know the location and what it offers.

Shortly before opening the doors of the salon, start with taking appointments. A website is a practical means for promoting and scheduling appointments.

A walk-in policy is another alternative. In that case, online advertising will suffice, in combination with some other local media outlets.

How to Earn More as a Salon Owner

How much a salon owner makes does not only depend on the quality of service offered. After all, many excellent salons offer similar services.

Besides offering a good product, making more money takes smart marketing, sales, and good business management. It involves savviness to make a profit from existing and new clients. Keeping expenses within bounds ensures that the business stays profitable.

This section discusses how to do that. The main topics are how to increase sales, be more efficient, and getting more value out of your efforts. Improving these aspects will increase profitability and bring in more money.

Set S.M.A.R.T. Goals

S.M.A.R.T. stands for Specific, Measurable, Attainable, Relevant, and Timely.

Specific. Being specific means that all goals need to be defined as accurately as possible. A phrase like “I need to average three to four new clients each month and keep churn rate below 20%” is more specific than “I need 75 more clients over the next two years.”

Measurable. Measurability means that the goals must be defined as measurable numbers. Avoid vague targets.

Having a measurable target has the advantage that the path toward it is easier to define and track. A POS system is a great help, but measuring progress goes beyond that.

Attainable. Targets must be attainable. Working part-time in a small market is not likely to bring in 250 clients averaging $200 each visit.

Unrealistic goals will not bring the desired results and can only lead to disappointment. It is smarter to set small goals and increase them as needed. A realistic goal could be to increase an annual income of $30,000 to $60,000 over two years.

Relevant. There are two aspects to the relevance of set goals.  For example, a solitary business owner with a family, will not likely become famous overnight and run a salon with over 4,000 clients.

Thinking too small is also not going to reap success. Consider the following calculation.

Increasing the per visit sale from $5 to $10 sounds good. But with a clientele of 200, this will only bring in $1,400 annually ($5 * 200 clients * 7 visits a year * 20% commission). That implies a lot of work with little return.

Timely. Setting milestones is good, but they should be reached within a certain time.

The example that was used above shows how a milestone can be split up in shorter time frames. Add accountability to the reaching of the goals.

Sales Technique

Upsales and Cross-Sales

These two classic sales techniques are often used in the beauty industry. Upselling refers to a sales approach where the stylist recommends the client to buy an exclusive version of a service or product. Recommending a complementary product or service is called cross-selling.

These approaches are considered effective techniques when it comes to increasing transaction sizes. The concern is that can clients find these techniques annoying.

It takes a certain skill to use them right. But when employed effectively, they can increase sales. It’s not just about increased revenue, clients can benefit from your expert advice and recommendations.

Use Retail Sales

The sale of hair styling products amounts to 5-25% of salon sales. This may seem insignificant, but they are in fact much more profitable than the services that the salons provide.

The retail sale of hair, nail, and skincare products is therefore an important component of running a beauty salon. These products include hair gels, sprays, shampoos, and conditioners. For other salons, this can be nail polish, brushes, skin creams, etcetera.

Some of these products are also available in other shops. The advantage of salons is that they provide professional recommendations.

It is recommendable that the products that are on sale in the salon are also used in the treatments and services. This is the best way of promoting the product. Consult the local tax office for all the necessary paperwork.

Specials

Featuring specials is a nice way to make customers spend more money than they otherwise would. Special offers include discounts, promotions, and rewards systems.

A rewards system could be based on the number of services or the amount spent. After that, the client can get a free or discounted service or product. Another reward could be after a customer brings in an acquaintance or family member.

Giving discounts or free treatments may seem like a waste of money. In reality, a new or loyal customer will pay back that investment at least tenfold.

Improve Skills

Continue to learn new skills and techniques. Stay up to date with the current trends.

Do this as early on in your career as possible. People will know you follow trends and will turn to you to get the best and newest treatments.

A salon with employees would be wise to organize workshops or be willing to send out their people to courses and classes.

If an employer does not provide this training, a stylist should take charge of their own education. Open industry nights organized by other salons are great ways to improve skills. Do not hesitate to ask around and invite yourself.

Add Income Streams

Adding income streams can help to get in touch with potential customers. These streams can be offline or on the internet.

Subscriptions or services can bring in some direct income. These additional income streams can be profitable.

These additional sources can be very beneficial for a business. It helps to find new techniques to make money. The flow of money will make sure that owners and employees can continue to receive their payments.

Raise Prices Without Losing Clients

Most business owners would rather not do this, but raising prices is sometimes necessary. What is the right price for a service? It is a balance between charging what it’s worth and not scaring customers away.

Businesses like CPAs, attorneys, contractors, and product companies regularly raise their prices. For a small business like a personal care salon, this does not have to be any different. Most clients would not be surprised if the price of their treatment goes up.

Each year, inflation increases by around 3%. Keeping up with this inflation requires that the prices are increased from time to time.

Ending thoughts on how much do salon owners make

This article has provided many tips and ideas on how to make more money. There are many ways to increase sales and the right way depends on the specific business and its clients.

One of the factors discussed when it comes to setting goals was measurability. Always try to improve and measure progress. One of the ways to improve a salon is implementing a good booking system.

If you enjoyed reading this article about how much do salon owners make, you should also read this one about the salon cancellation policy.

We also wrote articles about similar subjects like how to get more clients in a salon, salon dimensions, salon insurance, salon lighting ideas, spa quotes, hairstylist quotes, and spa menu examples.