The Ultimate Guide to Pricing Your Treatments

Jan 20, 2021
Ultimate Guide to Pricing your Treatments with Bring On Salon Success

The age-old question “how much do I charge for this treatment or that treatment,” would have to be one of the biggest questions that we see plastered on Facebook and Instagram and all those other social media platforms.

It is a question that has multiple answers and everyone has their own way of working it out. Whether it is right or wrong, they all have their ways. Today, we will look at some of those ways to price your treatments and the pros and cons that go with them.

After working in the salon industry for many years and having a family history in the accounting industry, numbers are one of those things that I have a general knack for and a little OCD with them as well. For me personally, if I cannot do it on a spreadsheet, then it is not worth doing.

 

 

So lets look at the different ways that you can work out how much to charge for your treatments:

  1. The “Cost of Product” Method
  2. The “Nothing Left Behind” Method

Just to be fully open and transparent, the names that I have chosen for these methods are totally made up by me, because I don’t think there are official names for either of these two methods as of yet but could always be wrong.

 

The Cost Of Product Method 

 

 

 

The Cost of Product Methods appears to be the most common method that is talked about in all the social medias and forums and all that jazz.

How it works:

  • You calculate how much product you use for each treatment and the cost of disposables that you use as well, add them all together and that is how much you need to make a profit

Let’s use a Hair Dying appointment for this.

  • You calculate the total amount of hair dye you use in your treatment.
  • If for example you use 10ml of hair dye, the tube is 100ml and costs $10, the totally cost of hair dye used is $1.
  • Then you add your disposables in,
    • Gloves – Box of 100 cost you $20. So $20 divided by 50 (because you always use them in pairs,) equals $0.40 per pair
    • Spatula – Box of 1000 cost you $15 and you use 1 during your treatments. So that would be $15 divided by 1000 which equals $0.015 per spatula used
    • Staff Wages – If dying a clients hair takes 1 hours and your staff cost $30.82 per hour, you need to add this in as well.
  • So in theory your break even on this treatment would be $31.235

I understand that this is not a complete list of products or things that you would add into a Hair Dying treatment and we are not Hairdressers but hopefully you understand what I am talking about.

The Pros:

  • You learn exactly what each product is worth and exactly how much you need for each treatment.
  • You learn how much individual products costs
  • You can see very quickly where you are over spending
  • You can see where your wastages are (and every business owner hates wastages.

The Cons:

  • Product purchases prices change. One week you may get a colour tube for $10 and the next it will be $12
  • Generally, the postage is not included in the purchase price, so this will have to be added to it as well.
  • This method does not include all of your actual overheads, such as electricity, water, rents, rates, taxes, superannuation etc etc etc
  • It can be very time consuming to work out how much product you use for each treatment and can start to get confusing when you have to calculate multiple products into one treatment

As you can see, there is nothing wrong with this method, however you have to be extremely mindful to make sure that you break down and include everything that is in the treatment, as well as your other overheads.

 

Nothing Left Behind Method 

 

 

 

This is by far my personal favourite. To the point that I have created a course, Pricing Like a #BOSS, where there is a template and all that, that makes this process sooo much easier to do and to navigate. Regardless of a course being on offer, I will still explain everything and how to do all the calculations.

How it works:

  • The point of this method is to work out your costings based on TIME, as opposed to PRODUCTS
  • To use this method firstly, you work out how many hours your salon is open for operation in a year.
    • Easiest way to do this is work out how many hours you work in a year and multiple it by the number of weeks that you work in a year (I suggest put in 50)
  • Secondly, find out how much money you have spent over 12 months and then divide it by the amount of hours that you worked out in the previous step.
  • Thirdly, you break this down to minutes. Easiest way to do this, is shown below
    • Here is an example to make it easy.
      1. You work 40 hours a week for 50 weeks for the year – so 40 x 50 = 2000 hours
      2. Your total spend for a 1 year period is $400,000 – you then go $400,000 / 2000 = $200 (that is $200 per hour you are open)
      3. To work out how much you need per minute is easy $200 / 60 (minutes) = $3.33 per minute. THIS IS HOW MUCH YOUR SALON NEEDS TO MAKE PER MINUTE IT IS OPEN
    • Now that you have this information, the rest is super doper easy. You use the dollar value that you worked out in step 3 ($3.33) and multiple it by how many minutes your treatment takes.
      • My example here will use the Hair Dying scenario
        • 60 minute treatment x $3.33 = $200. That is your break even number.

This is my favourite way to work out how much you need to charge. Yes to is a little more complicated but, but as you will see in the pros and cons list, there are wayyyy more pros.

The Pros:

  • It covers everything you spend over 12 months and your expenses are spread over all treatments.
  • Less time consuming if you use an accounting system.
  • Do not have to weigh, measure, or count the products you are using.
  • If you have staff, you can spread this over the hours they work to make it not look so scary.

The Cons:

  • It can still be time consuming if you do not use an accounting system such as Xero, MYOB etc
  • You are using the previous 12 months data, so if you make changes and save money or spend more money, it will not always reflect in your pricing straight away
  • You will need to update this every month to make sure that you are still making a profit
  • If you forget anything, you will not get a very accurate number

 

The Conclusion: 

 

 

 

Out of these two methods for pricing your treatments, both have their pros and cons. We always recommend an accountant to look over your business figures to help you work out what your break evens are.

Remember, no matter what method you use, make sure that you account for everything when pricing your treatment and also that no 2 salons are identical. EVERYONE has different rents, electricity bills, different staff wages, and the list continues.

While asking on social media what everyone else charges will give you a ball park figure but without actually knowing what you need to make, you could literally be paying your client to come to see you.

This is the case that we are seeing with sooo many home salons and even some commercial salons as well. They are undercharging (especially for lash extensions) and are quiet literally paying their clients to come have their treatment done by them.

 

The Sales Pitch

 

The one thing that we are not about is selling. The truth is, we were not born into sales, more so just learnt how to do it because we own our salon.

Over the last 4 or so years, I have been developing an excel spreadsheet that uses the “Nothing Left Behind” Method. It has been developed to help us run our salon and a spreadsheet that is used by myself about 4 or 5 times a day.

The spreadsheet does all the steps in the Nothing Left Behind Method and then some. It also includes:

  • Year Staff prices based on hourly wages
  • The exact amount staff cost you on a weekly basis (including tax and superannuation)
  • Staff targets to keep your staff motivated
  • Salon Targets to keep you motivated
  • A Pricing Increase calculator that does all the leg work for you
  • And a Profitability report to show you quickly, which treatments make you the most amount of money (great for a Salon Co-Ordinator or receptionist to have on the desk)

And then you also are going to get:

  • The full course including videos on how to use the spreadsheet and fill it in correctly
  • Lifetime access
  • And access to Dee and I for any help that you require with the spreadsheet

If you want to check it out, head over to our Pricing Like a #BOSS short course

Well, I hope that this all makes sense and help you when it comes to making up your own price list in your salon. Feel free to reach out to us if you need any help at all running your business or have any questions.

xxSteve