Ever wondered where your money goes? Do you make a good or decent income from your beauty business, but also seem to spend it all? Here is why salons and beauty professionals lose money:
Simply put, beauty professionals do not charge enough. Artists and stylists love what they do so much that they only consider the labor apart of their job. WRONG.
There are so many costs associated with performing a beauty service, regardless if you go on-location or work in a salon.
Consider the money and time you spend investing into your business. You spend money marketing your services to the world so clients can find you. You spend time answering emails, responding to DMs on social media, creating contracts, bookkeeping, etc.
Consider how much you actually spend restocking your kit. Are you using mid to high end products? If so, your product costs are going to be significantly higher than the average beauty professional.
Even once the client is booked, it takes time, mileage, fighting through traffic, hauling your kit to and from their location or salon just to service them.
During the service, you spend about an hour (or more) being an artists, therapist, and customer service representative. After the service, you spend time taking pictures, editing, crafting captions, and posting on social media.
Charging anything less than $150 for what you do is practically working for free. If you want to make more money as a beauty professional, you need to consider raising your prices to reflect the time, money, and energy you invest into your craft.
I see it all the time. Makeup artists and stylist love showing off their products. Don’t we all? There is nothing I love more than to watch makeup haul videos. But, how much did that Sephora splurge really costs you?
I’m a bookkeeper and finance manager for beauty pros, and often hear my clients say they have no idea how much they spend on products in a year or not sure of the average costs of products they use one a client. This means they have no idea how much they profit after each client.
For example, if you spend approximately $20 worth of product on one client, but only charge clients $100/service then you only profitted $80. This doesn’t include the money and time spent on travel and marketing. Not knowing your product costs results in high expenses and low profits, which is not good for any business.
If you want to make six or seven figures in the beauty industry you need to watch your profit margins, or hire a professional that can help you do that.
Everyone loves a good discount. Discounts and promotions are popular now more than ever because of fasts social media trends. Every month it’s something different. “Valentines Day Sale: Buy One, Get One Free” “Spring Sale: Get 50% off Your Purchase”.
Sales and promotions are fun and may even be needed to boosts revenue, occasionally. However, beauty professionals should evaluate how often they do them and if they are even necessary. The beauty service business is quite different from product based businesses that offer promotions. Companies that sell products have the ability to occasionally price their inventory at lower prices because the inventory wasn’t that expensive to begin with.
For example, Walmart is always having promotional deals. They are able to sell notebooks for $1.00 during “Back to School” season because it only costs them $.30 in the first place.
When providing a service, hopefully your rates are determined based on your value, skill, time, and worth to the market. But when you consistently offer promotions or discounts, you devalue your work and lose profit in the process.
I know you’re probably thinking, “but I get a lot more business when I offer a discount”. Of course you do, PEOPLE LOVE DISCOUNTS. However, working more to make less is not a good business model and eventually leads to attracting clientele that values discounts over the quality of service.
To avoid over-discounting your services, try only offering promotions to previous clients on special occasions – like their birthday. This provides incentives to your clients and makes them feel special.
If you need financial, accounting, or bookkeeping needs Centure Financial provides these services solely for salon owners, beauty brands and professionals. Our goal is to reshape how beauty professionals view their business and increase their profits.
August 11, 2020