When opening your own salon, it’s important to budget—for both your income and your expenses. But how do you increase that income portion of your budget? What can you do as a salon owner to increase your sales?
How can a salon make more money and boost sales?
- Increase booth rental spaces or rental cost.
- Increase employee commission rates.
- Market your salon and your stylists.
- Sell retail items.
- Build relationships with the community and your clients.
- Provide additional services.
How do salon owners make money in the first place? According to The Salon Business, 92 percent of income generated for hair stylists comes from the services provided—haircuts, colors, perms, and everything in between—while the remaining eight percent consists of retail sales.
So how do salon owners get that cut of the profits? In most cases, they’re renting out their booths to independent contractors. Most salons follow this business model, as it has the most consistent income for a salon owner. Through this, you must have a rental agreement, much like a tenant and an apartment owner. They pay you for the rental of their booth, and they run their end of the business like it’s their own—you have no say on their prices, what they provide, or their hours. You also cannot fire a booth renter—in this case, eviction is the way to go if you find any issues with their work. You also do not have to pay their taxes or for their insurance, as they’re technically self-employed and that responsibility lies on them.
1. Increase booth rental spaces or rental
While possibly an unpopular increase among your independent contractor, the easiest way to increase your income at a salon is simply to increase the rental fees of your booths. While you should make sure that you’re permitted to within the rental agreements, this may also be something that your renters may dislike, as it cuts into their profits, too.
If you have the capability to add more booth rental spaces, you can do that as well. This is going to be your most consistent income throughout your salon, so allowing for more stylists to rent out your space means more consistent income to you.
On average, a booth rental is about $400 to $600 depending on the community. Smaller communities can have much lower costs, while larger cities could exceed $1,000. Make sure you have a competitive rate among your community—that means both low enough to be competitive but high enough to prove your worth among your renters. Most hair stylists already undersell their services, so a higher cost may also help them to value their own work more.
2. Increase employee commission rates.
Much like the booth rental, you can also increase the commission rates for your employees. If you hired employees, you should be collecting about 50 percent on average from their services. Similarly to how the booth rental model is set up, increasing your commission costs can also help your stylists understand their own value and increase their prices to where their expertise is being paid for. Make sure you do not increase it too much, like the booth rental—remain competitive in your community.
3. Market your salon and your stylists.
People want to know the stylists they’re going to visit for their haircuts, and you can help achieve that personal connection by marketing not just your salon, but the people doing the work in the salon. Use social media to your advantage and make people aware of what services you provide and the kind of people working in your salon—that sort of exposure can be free, and if you do it right, get a significant number of views. Getting the word out there about what you can do and who is doing it only makes it more personal and brings in more customers—which means more income.
4. Sell retail items.
While eight percent of income for salons come from retail items, that doesn’t mean you have to pull back on this portion of your income. Make sure you buy products that you want to use in your own salon. Your clients will want to know why you’ve chosen those products and what makes them the best, so your stylists should be able to answer that question. Buy wholesale from the supplier and mark them up to make more profit.
Within this same process, consider working with one of those favored suppliers to secure some sort of endorsement. If you like a product, contact the company to see if they’re willing to partner with your salon on cross-marketing their brand—especially if you’re already doing it.
Check out this cost breakdown of owning a hair salon!
5. Build relationships with the community and your clients.
Word of mouth is still one of the best ways to get the word out about your salon. People can market your work wherever they go simply by being there and wearing their hair in the style they’ve gotten from your salon, and if it’s done well, people will ask. Clients not only share good experiences, but bad experiences too, so make sure you always provide them with a good one.
Relationships aren’t just important with clients, but the businesses in your community. Especially in smaller communities, you can work with the businesses around you to cross-promote and work together to bring more clients to your area.
You should also consider getting to know the other salons in your area. While some may consider it competition, you can learn from each other, and increase the profits of all your businesses throughout the community—if you provide a higher standard, people are willing to pay for better services, regardless of where they decide to go.
6. Provide additional services.
Expanding out into other services is another great way to increase your sales. Consider adding waxing, lash extension services, massage therapy, aromatherapy, or even a nail portion to your salon—making it a one stop shop for your clients will add ease to their routine and increase your profits. Make sure to have someone on staff that is properly licensed for these services, though—it will help you to stay compliant within your community.
This may be an initial increase to your expenses, so if you’re looking for a quick increase, a different choice may be best for you. If you’re looking to increase your profits in the future, adding services may serve you well.
As you attempt to increase the profits of your salon, it’s important to note that you can’t increase those profits without the people. If you create a great experience for your clients and your employees or renters, more will come—a positive experience and positive workplace is your best asset in making not just your business grow, but your income grow.
In what states can I not rent out a booth in my salon?
There are several states that do not allow for the booth rental model. Those states are Colorado, Michigan, New Jersey, New York, Pennsylvania, and Virginia.
Where do hair stylists make the most average income?
According to Zippia, Michigan, Arizona, Idaho, Pennsylvania, and Utah are the best states to make a high salary in the United States.
Looking to start your own Salon? Get the documents you need to get organized and funded here.
Please note: This blog post is for educational purposes only and does not constitute legal advice. Please consult a legal expert to address your specific needs.
Shawn Chun is an entrepreneur who has owned several types of businesses from a coffee shop to an import and export business to an online review business plus a few more and now creates online resources for those interested in starting a salon business. It is demanding work he loves to do it. Shawn says “I do it for those passionate about their business and their goals. I know how hard the struggle is to obtain and retain clients, finding good employees all while trying to stay competitive.”
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