Counting the Cuts: Is Owning a Hair Salon Profitable?

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Opening a hair salon is every stylist’s dream! When you love what you do, you want to do it for yourself instead of for someone else, right? Although this is often true, it isn’t always the case. The truth is, owning your own hair salon business isnt easy nor is it always the best idea. This is why it’s important to evaluate the finances and profitability of owning a hair salon. The question is, is owning a hair salon profitable?

The simple answer is, yes. According to The Salon Business, an average hair salon business has an annual revenue of approximately $245,000 before expenditures. But, not all hair salon owners reach this point.

Making a profitable business out of a hair salon is possible, but it’s not easy. Doing business comes with a lot of unexpected overhead costs, and they can catch you by surprise if you aren’t ready for them.

This article will help you create a profitable hair salon of which you can be proud. You will learn more about different revenue streams, as well as new ways to maximize your income potential.

How Do Hair Salons Make Money?

hairdressers and barbers with their clients

Image by macrovector on Freepik

To answer the question “Is owning a hair salon profitable?”, you must start with the basics. How do hair salons make money? They can generate revenue through many income streams. Here’s just a handful of them.

Hair salon services

Of course, the key sources of revenue for salons are hair services. This would include haircuts, hair styling, hair coloring, and more. It’s important to find competitive prices while keeping high-quality services. This will help your business to find loyal clients who prefer you to other hair salons.

Retail product sales

It can also be quite common for hair salons to supplement their earnings by selling retail hair products like shampoos, conditioners, and other hair styling products. This can help provide your salon with another steady revenue stream while supplying your customers with the feeling of convenience and practicality.

Add-on services

Hair salons will often offer additional services to supplement their core services. These add-on services would include scalp massages, hair treatment services, hair extensions, and more. These add-ons can be great upselling opportunities to increase the average amount of money spent per client.

Memberships and packages

Many hair salon owners also choose to offer memberships or package deals to secure regular clients and steady streams of income. These deals allow clients to prepay a set fee for a specific number of services or visits, ensuring visits in the future

What Is the Average Hair Salon Revenue and Profit Margin?

The U.S. hair salon industry is booming with a total annual revenue of $63 billion. This number is tallied from 257,000 barbershops and salons across the country, each with an average annual revenue of nearly $245,000.

Remember, revenue is not profit. Revenue refers to the total amount of sales from the salon, which includes both products and services. Profit, on the other hand, refers to the final amount of money left after deducting all the expenses of running a hair salon. So, the answer to the question “Is owning a hair salon profitable?” depends on the profit margins and not revenue.

Potentially, you could have a profit margin of 8.2%, which is higher than the general business average. But once again, do keep in mind that these are just averages. In reality, there are a wide range of factors that can affect a salon’s revenue and profit. Salons may have lower or higher revenues and profits depending on how well the salon is managed.

This is where the next section comes in. If you’re wondering how to improve your profits, here are some tips to help you get ahead.

How Can You Improve Your Hair Salon’s Profit Margin?

Improving your hair salons profit margin is no easy task. It requires a strategic, well-thought-out approach with an effective hair salon marketing strategy and optimized expenses. Operating expenses are costly and can take as much as 80% of a salon’s revenue (according to the beauty education organization Salt Society). Hair salon opening costs can also be quite hefty, sometimes reaching over $60,000.

Needless to say, there are many expenses involved in owning a hair salon. So, how can you reduce these expenses and increase your hair salon’s profitability? Here are a couple of ideas to get you started.

Efficient staff scheduling

Managing your staffs schedule efficiently helps ensure that you have enough employees available during your hair salon’s peak hours. Proper scheduling minimizes idle time and maximizes your revenue-generating opportunities.

Marketing and promotion

Developing an in-depth marketing strategy can help your hair salon to find new clients and keep existing ones. You can do this by utilizing multiple online marketing channels, email campaigns, social media, and local advertising to promote your hair salon.

Upselling and cross-selling

You can also train your staff to offer/recommend additional products or services to clients. By upselling your customers, you can boost your overall revenue by increasing the average money spent by each customer.

Focus on retail sales

Also, try to emphasize your retail products by showcasing them to your clients and educating them on their benefits. You can also encourage your employees to do the same by offering them incentives to help drive retail sales.

Use an effective booking solution

Let’s talk hair salon business. Cash flow getting you down? Looking for ways to cut costs without cutting corners? Enter Trafft.

trafft salon appointment booking and management app

Trafft is like your savvy business partner, always ready to help you save. Here’s how.

1. Get efficient with time

We all know time is money. Trafft’s slick online booking system means you’re spending less time on the phone and more time doing what you do best. Efficiency at its finest.

2. Nix the no-shows

Missed appointments = missed money. That’s a downer. Trafft’s automated reminders reduce no-shows. Yep, we’re talking more clients in chairs and more dollars in your pocket.

3. Say hello to data

Making decisions on a hunch? Let’s level up. Trafft offers easy-to-understand data insights. Know your busy periods, staff performance, and much more. Take the guesswork out of running your business.

4. Reduce overheads

Who needs expensive hardware when you’ve got the cloud? Trafft’s all about flexibility. Manage your hair salon from your laptop, tablet, or phone. No pricey setup costs or maintenance.

5. Retention is key

Attracting new clients is great, but retaining them is gold. A smooth, user-friendly booking experience makes your clients stick around. And guess what? That’s cheaper than constantly finding new ones.

In short, Trafft is your hair salon’s new best friend. It’s not just about making your hair salon run smoother. It’s about making your hair salon more profitable.

So, what do you say? Ready to put more money in your pocket with Trafft?

Let’s turn your hair salon into the profit powerhouse you always dreamed it could be. Go on, give Trafft a whirl.

What Is the Hair Salon Industry’s Target Market?

Although hair salons are known for their diverse market, from older men to young women, each salon’s characteristics will define the majority of its customers. This means that identifying your target market is necessary if you want your hair salon to be profitable.

Although there is too wide of a market to list each specific demographic, there are certain common target segments within the hair salon industry. These would include

  • Women: Women are a significant target market for the hair salon industry. They often seek services such as haircuts, hairstyling, coloring, highlights, and other hair styling treatments and services.
  • Men: The salon industry has seen a growing trend of men seeking grooming services. Men’s haircuts, beard trims, shaves, and grooming treatments have become popular, leading hair salons to cater to this expanding market segment.
  • Young adults: Young adults, including college students and professionals in their 20s and 30s, often prioritize their appearance and grooming. They frequently visit hair salons for trendy haircuts, hair styling, and color experimentation.
  • Bridal and special occasions: Hair salons often target individuals preparing for special occasions, such as weddings, proms, parties, or various formal events.
  • Professionals: Business professionals, including executives, office workers, and those in client-facing roles, often prioritize a polished and well-groomed appearance. They seek services such as professional haircuts, styling, and grooming treatments to maintain a professional image.

Do You Have the Right Hair Salon Pricing Strategy?

pricing illustration

Image by vectorjuice on Freepik

In general, your hair salon pricing strategy, along with any discounts or promotions you offer, will depend greatly on your salon’s long-term goals and position in the market. It’s a crucial element of every hair salon business plan.

In general, most pricing strategies are malleable to the current demand for individual services and add-ons. This makes it difficult to plan a one-size-fits-all pricing strategy because you need to have the flexibility to offer discounts or raise prices on certain occasions.

To help you find a pricing strategy for your hair salon, here is an overview of the pricing strategies used in the beauty industry today.

Penetration pricing

Penetration pricing is a useful strategy for attracting more clients. If your business is new, this may be the right strategy for you, as you can start new clients out with lower prices, and then raise the price later.

Value-based pricing

This strategy focuses on accommodating your customers ’ preferences and setting your prices accordingly. This requires you to look at individual client values to see what they are willing to pay.

Skimming pricing

This pricing strategy focuses on creating new or exclusive services with higher prices and then continuing to lower these costs over time. One example of this would be initially charging a higher amount for a new hair extension service, and then lowering the cost once the trend starts to simmer down.

Premium pricing

If your salon already has a prestigious brand image, this may be the pricing strategy for you. If you can price your hair salon services high due to your popular brand image, why shouldn’t you?

Economy pricing

Economy pricing can prove extremely successful, but only if it’s done carefully. This pricing strategy sets your business apart from your competitors as being the most affordable option. If you want to give it a try, look around at what’s offered in your area. You may be surprised.

But do remember, you don’t need a set-in-stone pricing strategy. In fact, the best pricing strategies are regularly evaluated and adjusted to reflect the current market. Also, try to consider your customers ’ feedback to keep your hair salon growing in popularity. There is no point in running a hair salon if no one is going to come.

What Is the Average Margin for Salon Retail?

Last of all, what about salon retail? It can be an important source of income and profit for hair salons while building customer loyalty and satisfaction. Also, according to The Salon Business, the average percentage of salon revenue that comes from retail is 12%.

Since retail is built upon costs and profits, a high-profit margin can be the defining factor for a successful hair salon. In general, most profit margins for hair salon retail depend on factors like the quality, type, and brand of the products.

But by carefully selecting your products and actively selling what you have on hand, your margins can improve quite a bit. The average profit margin for salon products falls between 42% and 48%. In reality, you could continue to improve your margins to continually diversify your income.

FAQ on Is Owning a Hair Salon Profitable

What are the ongoing expenses of running a hair salon?

Running a hair salon involves various ongoing costs. You’ll have regular expenses like rent, utilities, and staff salaries. Plus, you’ll need to frequently restock beauty products and maintain or replace equipment as needed. Also, don’t forget about marketing costs and any fees associated with licenses, permits, and insurance.

How do I maintain high service standards in my hair salon?

Maintaining high service standards means investing in continual staff training and making sure everyone is up-to-date with the latest beauty techniques and trends. Regularly soliciting feedback from clients and acting on it is another effective way. Keeping your hair salon clean, well-organized, and inviting also contributes to high service standards.

How can I ensure client loyalty to my hair salon?

Ensuring client loyalty is all about providing consistent, top-notch service. Beyond that, consider implementing a loyalty rewards program. Offering perks like discounts or free treatments after a certain number of visits can encourage repeat business. Also, remember to celebrate special occasions like birthdays with a small gift or special offer.

What strategies can I use to increase my hair salon’s profitability?

Increasing profitability might involve expanding services or selling high-quality hair products. Consider implementing booking software to streamline appointments and reduce downtime. Promote off-peak hours with special discounts to spread out your income. Also, keeping tight control of expenses is key.

How do I handle customer complaints in my hair salon?

Handling customer complaints with grace and professionalism is essential. Listen to the customer’s concerns, apologize sincerely, and find a way to make it right, whether it’s a refund, a redo, or another form of compensation.

Importantly, learn from each complaint to improve your services and avoid similar issues in the future.

How can I keep up with hair styling trends and techniques?

To keep up with trends, consider subscribing to beauty magazines, following influencers, and attending industry trade shows.

Also, ongoing training for you and your staff can be invaluable. Remember, what’s trendy isn’t always what’s best for your clients. Always prioritize their preferences and needs.

What kind of software can help me manage my hair salon?

Software can be a huge help in managing a salon. Look for a system that can handle appointments and online bookings, staff scheduling, multiple locations, and marketing efforts, like Trafft does. Such software can save you a lot of time and help improve customer service.

How can I promote sustainability in my hair salon?

There are many ways to promote sustainability in your hair salon. You could switch to eco-friendly products, implement recycling programs, and reduce water and energy consumption.

Also, consider sourcing locally to reduce your carbon footprint. Communicating your commitment to sustainability to your clients can also strengthen your brand.

How often should I update my hair salon’s interior?

Your hair salon’s interior should be updated with a newer design whenever it starts to feel outdated, which typically happens every 5-7 years. However, smaller updates like fresh paint, new art, or updated furniture can be done more frequently to keep the space feeling fresh and inviting.

Always ensure your hair salon’s interior reflects your brand and appeals to your target market.

How can I maintain a healthy work-life balance while running a hair salon?

Maintaining a healthy work-life balance can be tricky when running a hair salon.

Consider delegating tasks, setting firm boundaries between work and personal time, and using technology to streamline operations. Also, remember it’s okay to take time off. Your well-being is crucial to the success of your hair salon.

So, Is Owning a Hair Salon Profitable?

Can we finally answer the question? Is owning a hair salon profitable? The simple answer is yes, it can be, as long as you approach it with effective management, careful planning, and exceptional services.

But that isn’t the whole story. The better question to ask is, “How profitable will your salon be?” No doubt through efficient business strategies, continually adapting to new market trends, and leveraging software solutions like Trafft, your business will find success. All that’s left is to get started. So, go, get started!

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Jovana Smoljanovic Tucakov
Jovana Smoljanovic Tucakov

Jovana Smoljanovic Tucakov is a Content Marketing and SEO Specialist who uses both words and data to communicate a message and deliver value. With more than 5 years of experience in digital marketing and content production in the IT industry, she loves identifying and solving the readers’ pain points and creating targeted content.

Curious about the human mind and emotions, especially those that drive consumer behavior. Likes fitness, food preparation, board games, reading (both for pleasure and learning), and binge-watching Netflix.