The demand for beauty salons is always high among women in every corner of the world. As new beauty products and styles come into the market, the demand for beauty salons keeps going up.
So, if you have a plan to start your beauty salon business, it is always a profitable option. However, we have seen hundreds of salons shut down in the current pandemic situation or remain closed for months because of lockdown. The uncertainty in the market brings us to the real question – “Is opening a beauty salon a profitable option? If yes, what kind of profit margins can you expect?”
This article will clear all your doubts regarding a beauty salon business.
Salon Expenses, Revenue Earning and Profit Margins
If you want to start your salon business today, you should be prepared to meet the basic investment amount and daily expenses. Opening a beauty salon can cost anything around $2,000 to $ 500,000. However, if we consider a basic salon, the expenses bundle up to $62,000 per year on average.
The amount may seem pretty steep, but it is not that difficult to earn back what you spend on a salon. After conducting a global survey, we can conclude that beauty salon owners earn an average amount of $75,000 a year. Though some owners can earn as low as $14,500, the majority of them fall under the earning range of $70,000 – $175,000. For some celebrity salon owners, the yearly income can be as high as $385,000.
The expenditure and revenue earning from a salon business is highly dependent on these four factors-
- Location of the salon
- Hiring professional and talented beauty experts
- Salon management practices
- Beauty products used in the salon
All these factors win over your customers in a combined way, leading to steady revenue generation.
Did you know that the has an annual revenue earning of $63 billion from 257,000 beauty and hair salons? In the USA, the average revenue earning from a salon business is about $245,000.
The above figures indicate strong profit earning from a beauty salon business, and indeed it is. Our studies show that a salon owner makes an average yearly profit of $19,100. We have observed that one can early a profit margin of 8.2% on salon services. In comparison, the standard profit earned in a general business is about 7.7%. Furthermore, with increasing demand for salon services, the profit margin seems to be shooting up. Depending on how you manage your salon business, the profit margin can range between 2%-17%.
Clearly, a beauty salon business is highly profit-earning and can sustain critical situations, like the pandemic. So, if you have the capital to invest, it is a promising business opportunity for you.
How to Improve Revenue and Profit in a Salon Business?
A beauty salon earns its annual revenue by selling salon services and beauty products. Having strong top-line sales is the key to running a profitable salon business. Hence, a salon owner should focus on increasing sales to ensure sustainability and profitability.
You can improve your sales by providing top quality salon services, retail products, or even cross-selling.
While calculating the profit earnings for your business, always remember the expenses you incur to run the business from the revenue you earn. Capital investment is not the only expense. To run a business successfully, you will need to spend on-
- Hiring and paying salaries to the beauty experts
- Production cost
- Procurement cost
- Training programs
Nearly 90% of the revenue you earn goes for all these expenses, leaving you a profit of 10%. You need to price your services and products aptly to earn this 10% profit.
Improving the salon’s profit margins is completely dependent on your management and business planning. You must focus on finding out different ways of improving your sales. These three steps will ensure profit margin increase-
- Correct product pricing
- Selling expensive beauty products
- Exceptional salon service and justified pricing.
The beauty salon business is a profitable business option if you know how to manage, promote, and sell your products. One needs a thorough understanding of the business, the target customers and their needs. Understand the beauty trends and feature your salon with those hairstyling, beauty products, etc. Your business will boom in no time.