How to Calculate Your Hair Salon Service Price: A Practical Guide

Making the right decision about your salon pricing strategy can be challenging, especially if you’re just starting out as a hairstylist. Knowing how to calculate your hair salon service prices will directly impact your ability to grow a profitable and successful business. 

While analyzing your competitors’ prices is a good practice, it is not enough. There are lots of aspects you must consider when calculating your hair salon service price, as businesses vary in many ways. 

First of all, understanding your fixed costs, variable costs, and hidden costs is crucial. Knowing exactly how much you invest and what you put your money into is just the beginning of your pricing process. Also, to set the right price for your hair salon services, you must understand your local market demographics, your brand positioning, and the economic situation in your area.

In this blog post, you’ll find what the average hair salon prices are, what are your costs as a salon owner, and how to calculate your hair salon service prices.

I’ll dive into understanding the factors that influence salon pricing,  how to balance competitive pricing while maintaining profitability, and how to adjust your service prices in response to market changes. Last but not least, I’ll provide insights on effectively communicating price changes to your clients.

What Influences Hair Salon Prices?

Your salon’s service prices depend on the salon’s location, target audience, your experience, competition in the area, local cost of living, and the type of services you provide.

To give you a better overview on how these prices can vary, here’s the average hair salon price list:

• Women’s haircut: between $15 – $90
• Hair coloring: $70 to $200
• Balayage: $80 – $400
• Blowouts: $20-$90
• Hair styling: $65 to $1,000+, depending on the style’s complexity
• Keratin treatment: $60 – $400
• Hair extensions: $100 – $1000
• Add-on services: $10- $20

Another huge factor that influences hairstyling service prices is your hourly rate. When calculating your service price, you must take into account the time you spend at work and price it accordingly. Because yes, your time is a big part of your salon’s costs. So, you need to know exactly what your hourly rate is.

If you didn’t calculate it yet, here’s a statistic for you: 

The average hourly wage for a hairstylist in the United States is $95, but the range typically falls between $40 and $160. Of course, this wage can go higher or lower depending on many factors. 

Now, let’s discuss these factors.

Hair Salon Fixed Costs

Your hair salon’s fixed costs are those expenses that do not fluctuate from month to month. They don’t change with the volume of clients, days worked, or number of appointments. They remain constant regardless of the salon’s level of business activity. 

Knowing your salon’s total fixed costs is crucial for setting your service prices and financial planning. 

Common fixed costs in a hair salons include:

• Rent or mortgage payments: This is the cost of leasing or owning the physical space where you perform your hairstylist activity.

• Insurance: There’s no beauty professional that works without insurance. This includes liability insurance, property insurance, and possibly additional coverage depending on the location and services offered.

• Salaries (for salon owners who have employees): These are the monthly staff wages.

• Utilities: Here, we can include monthly bills such as electricity, water, gas, and internet service, which may vary slightly but are generally predictable.

• Loans: If you have taken a business loan to open your salon, the monthly repayments are one of your salon’s fixed expenses.

• Property taxes: This is relevant for professionals who own the salon’s property.

• Monthly subscriptions: These are the costs for salon management tools, like appointment booking systems and other digital tools used for improving your business operations.

• Equipment and furniture: While this is not a monthly expense, the depreciation of chairs, styling stations, wash sinks, and your salon tools is considered a fixed cost for accounting purposes.

• Licenses and permits: Your annual or periodic fees are paid for salon licenses, health and safety permits, and other regulations.

Understanding and properly calculating these fixed costs is essential for maintaining the financial health of your hair salon, as they must be covered permanently, regardless of the salon’s income. 

Calculate your total fixed costs by summing all the above costs and any additional fixed costs you may have.

Hair Salon Variable Costs

Variable costs in your salon are those expenses that change continuously. They can depend on the economy, the number of services provided, the number of clients who entered your salon that month, or even your suppliers’ changing prices. 

Let’s dig a bit deeper into the variable costs:

• Hair products and supplies: This includes the cost of hair care and styling products like shampoos, conditioners, hair dyes, gels, and sprays used during services, and supplies like gloves, towels, capes, and sanitary products. The more clients served, the more products and supplies you’ll need to buy.

Tip: Apps like Goldie offer you daily, weekly, and monthly reports in which you can easily see your revenue and how many clients you had in a specific period. You can even add client notes and appointment notes, in which to write down what and how much product you’ve used on a specific client. 

Read more about how to set up your Goldie account and keep track of your income and clients effortlessly.

• Laundry services: For salons that use a professional service for laundering towels, capes, and uniforms, costs will increase with the volume of laundry generated.

• Commission payments: You can consider your employee’s commission depending on the number of clients, the volume of services they provide, and bank commissions and other fees.

Variable costs have to be carefully summed weekly, as a good practice if you don’t want to lose track of anything you spent and you might forget until the end of the month.

Hair Salon Hidden Costs

Hair salon hidden costs are those expenses that may not be immediately visible or considered monthly. Anyway, they have a significant impact on your hair salon’s profitability. 

Some common hidden costs include:

• Maintenance and repairs: The costs for maintaining your hair salon equipment (hair styling tools, chairs, sanitary group, etc.) can vary, often increasing with heavier usage.

• Equipment depreciation: Over time, salon equipment like chairs, hairdryers, and styling tools need to be replaced. Your hair salon’s equipment depreciation is a cost that’s often overlooked.

• Payment Processing Fees – Using a payment processing system like Goldie’s card readers comes with certain fees that businesses must account for.

Read the advantages of using a payment processing terminal

• Training and employee development: These are expenses for staff training, development, and bonuses, which might fluctuate based on the number of training sessions or courses taken.

• Waste management: Proper management of chemicals, hair dyes, and other dangerous materials, as well as regular waste, can incur hidden costs, which can also be variable.

• Shrinkage: It is the loss of inventory that occurs because of theft, damage, product expiry. This inventory loss can be a significant hidden cost in your hair salon.

• Other salon activities: This includes the time you and your staff spend on non-revenue generating activities, like cleaning, inventory, lunch, education, or downtime between appointments.

• Marketing and advertising: These are regular marketing expenses, like social media advertising, marketing campaigns, influencer collaborations, and so on.

Taking into account these less obvious expenses is essential for a successful and sustainable salon business.

Now, you have to look at the previous months and make a forecast on the average monthly price for all your salon expenses. 

Complete Guide on How to Calculate Your Salon Service Price

I’m going to explain every step on how to calculate your salon service price by giving an example, and all you’ll have to do is to replace the numbers and follow the same formula.

Step 1. Determine your annual fixed costs (overhead)

Calculate all your monthly costs and multiply that number by 12 (months in a year). As a result, let’s suppose your annual overhead (total salon costs in a year) is $50,000. 

Step 2. Determine your draft annual working hours 

Your draft annual working hours means how many hours you work in total in a year, without counting days off and holidays.

You need to take into consideration how many days and hours you want to work. For example, let’s say you want to work 8 hours/day, 5 days/week. 

That means 8×5 = 40 (hours a week. Multiply it by the number of weeks in a year. 40 x 52 (weeks in a year) = 2080 hours worked in a year, or your draft annual working hours.

Step 3. Reduce holidays and down time from your draft annual working hours

Let’s say you’ll want to have three weeks off per year. In our example’s case, that will mean 15 days x 8 hours = 120 hours (hours of holiday in a year).

Reduce from the draft annual working hours the total hours of vacation.

2080 – 120 hours vacation = 1,960 annual working hours without holiday.

Also – as much as we want to be fully booked all the time, it is safe to say that many hair stylists have down time during the day (last-minute cancellations or not being fully booked). Let’s say you are booked for 90% of your working hours.

1,960 x 90% booked rate = 1,764 annual hours servicing customers.

Step 4. Calculate your working cost per minute

To have this number, you’ll have to divide from your annual overhead (step 1) the final annual working hours (step 3).

50,000 / 1960 = $28.34 cost per hour

51.02 / 60 (min in an hour) = 0.47$ / cost per minute

This means that in your operating time, you need to make $0.47 to hit $50,000 in a year. 

Step 5. Determine product cost per service

Considering you use one product for a determined service, that product costs $20 and has 8 oz, the price will be 20/8 = $2.5 / oz. If your service requires 10 oz, then the product cost per service will be $2.5 (cost per oz) x 10 oz (amount of product used on client) = $25 product cost per service. 

Note: If you’re using multiple products in a service, use the same formula on each product and sum.

Step 6. ALWAYS calculate service time in minutes

If the service takes 1.5 hours, that’s 90 minutes. This will depend on how much hair your client has, on how long the hair is, and how damaged or frizzy it is. You should calculate an average, + or -. 

Step 7. Total cost per service

If the service takes 60 minutes, that’s $0.47 (your working cost per minute) x 60 (minutes spent on that service) = $28 cost per service. 

To this number, you’ll have to add the product cost. For example, $28 (cost per service) + $25 ( product cost for that service) = you will charge $53 for one hour service in which you use 10oz of a specific product.

Step 8. Include your profit margin in the service cost

To calculate the profit margin, you first need to decide what percentage of profit you want to make on each service. The profit margin is a personal business decision, influenced by factors like market rates, competition, quality of service, and your business goals. You should leave room in your profit margin to cover hidden costs.

Here’s how you can calculate the price to charge for a service including your desired profit margin:

🟢 Determine your total cost per service: As seen in our example, if the service takes 60 minutes and we use 10 oz of a product, the total cost is $53 ($28 for overhead + $25 for product cost).

🟢 Decide on your desired profit margin: Let’s say you want a 20% profit margin. In decimal form, this is 0.20.

🟢 Calculate the final price to charge: Use the formula: Price=Total Cost÷(1−ProfitMargin). 

For a 20% profit margin, the calculation in our example is $53 ÷ (1 – 0.20) = $53 ÷ 0.80 = $66.

If it sounds too complicated, read that again and again. It will make sense! 

This means you would charge $66 for the service. This price covers your costs ($53) and adds an additional 20% profit on top of those costs.

Tip: Here’s an informative blog post on calculating and maintaining a positive Return on Investment in your salon.

If you’re just starting your hairstylist career and you have no clue how to calculate profit margin, you can make a prediction based on well-done research on other salon businesses that are similar to yours. 

Remember, this is a general formula and might need adjustments based on specific business needs, market conditions, and target market. Adapt the costs in our example to your business and you’ll get the right price to ask for your services, that will guarantee you’re asking the right amount of money and that your business will be always profitable.

Here’s a video that explains in more details how to calculate your salon service prices based on the formula above.

Do’s and Don’ts When it Comes to Your Hair Salon Price List:

Do’s:

✅ Be transparent about your prices (make them visible in your salon, on social media, and in conversations with your clients. Make sure they understand why you charge them a certain amount and why prices can be variable, so they know what to expect to pay)

✅ Notify clients in advance (if you don’t know them and you don’t know what to expect, fix a consultation and tell them an approximate price for the service they want)

✅ Constantly analyze market and competition (to adjust your salon prices in response to your competition, you must understand the average pricing in your area and to determine your Unique Selling Proposition)

✅ Identify your target clientele  (demographics and spending habits) and tailor your services to meet client needs

✅ Constantly monitor your costs and revenue and adjust them if needed

Set a clear documentation about your expenses and all your salon financial data and save it in multiple copies

✅ Adapt to economic changes

✅ Carefully consider your pricing strategy (here are 3 salon pricing strategies you might like to consider)

Dont’s:

❌ Avoid hidden charges

❌ Don’t change prices too often

❌ Don’t overuse discounts: remember you can’t charge less than you’re spending, if you want your salon to be profitable

Tip: Here’s a hair salon price list template and advice on how to create it.

Conclusion

In the end, all this long story on how to calculate service prices is about your salon being profitable and your clients being satisfied.

Aligning prices with your salon’s image while ensuring they are grounded in the realities of your economic environment is an act that requires constant adjustment and a keen understanding of both market trends and customer behavior.

If you enjoyed this blog post, you can share it with your industry colleagues and encourage them to try this formula on their business and analyze the result. Also, let us know in the comments section below what’s your method to calculate your salon prices.