If you answer yes to any of the following questions below, this article will assist you answering the age old questions “how much should I be charging”.

• Do you personally know whether your prices are adequate for your business to be profitable?

• Did you set your salon spa prices based off of what your competitors are charging?

• Have you recently received a rent increase?

• Are you just about to open or expand your salon/spa?

The age old questions is how do I calculate my salon spa prices? More than likely at some point you have found yourself calling around to local salon/spas, perhaps, even your competitors and have found ourselves asking for the prices of a multitude of services. Did you know that 74% of salon/spas are NOT profitable?

Since you are not aware if these businesses around you are profitable, why would you assume that their price structure allow for profitability? In addition, you must consider the variances in your businesses. Are you comparing apple to apples or apples to oranges? More than likely, apples to oranges, you might not have the same overhead expenses, different number of services providers, square footage, different number of guests frequenting your businesses or you offer a different level of customer care.

The key here is, YOU cannot set your salon/spa prices based on another’s business model. Your salon/spa prices must be established based off YOUR analysis of YOUR overall expenses.

When you are in the process of establishing your prices, you must determine your prices based on what your business requires to be profitable.

We begin by establishing our “Basic Service Price” this formula will allow you to determine a pricing strategy that is right for YOUR business.

Follow these easy steps to determine your “Basic Service Price”.

Step 1: Calculate your TOTAL Monthly Expenses; we suggest you take several months of expenses to create a true life number of your monthly output.

Step 2: Calculate your monthly PROFIT, take several months of profit to determine your monthly profit or the profit you want to make each month.

Step 3: Calculate total number of Monthly Guest Visits. Take your total number of service providers, multiply by the number of guests each service provider can potentially service in a month’s time.

Step 4: Calculate your TOTAL Projected Gross Sales. Take your total monthly expenses and add to your projected monthly profit.

Step 5: Calculate recommended “BASE SERVICE PRICE”. Take your total projected Gross Sales and divide by the total number of monthly guests visits.

After your calculations are complete, analysis if your current “Basic Service Price” is adequate to meet your financial goals. You will discover one of three things, your prices are correct, your prices are too low or your prices are too high. Now you can create a plan of action to meet your businesses needs.

To support your money in money out, we recommend tools like our Income vs. Expense Worksheets that will assist you on managing your business from a “money in money out” point of view. Therefore, creating a budget that will support your profitability on a month to month basis. Let’s be honest, we are all in it for the money vs. the feel good experience. So we might as well obtain the results that we are looking for – “PROFIT”.

Our business consults are available to support you with any of your needs to achieve maximum profitability.