Find Your Financial Leak

Why should you read this blog:

You are a stylist who is working too hard for too little, you’re feeling like want to raise your prices but aren’t sure where to start, you’re in demand (meaning you’re booked out at least 2 weeks in advance) OR you’re a salon owner and experiencing the same issue with your stylists.

The first step to raising your service prices is Finding Your Financial Leak.

What is a financial leak?

A financial leak comes in the form of services. Services that eat up the majority of your schedule and have the smallest return on investment (ROI) aka, you make the least per minute on these services compared to your others

How do you find your leak?

I will provide you a little outline and formula to help you determine once and for all what is making you soooo burnt out behind the chair.

What do I do with my leak once I find it?

Well… we patch that shiz up. AKA we either eliminate the service altogether, OR we raise the prices to be comparable with your other services.

Formula:

Step 1

• Write down each of your services you offer (be as specific and detailed as possible. Leave space for more notes besides each service

  • if you have combo services, write down everything they entail

    • ex: foiliage: full head babylights, balayed ends, root shadow, tone.

Step 2

• Now you’ve got your list, write down how much time each of them takes you by the minute.

  • You can reverse engineer this by taking your average service time for that service by the hour and divide it by 60.

Step 3

• Now that you’ve listed service and time, document how much product you use for each service and how much that costs you.

  • This might take a little research

    • Find the cost of the tube of color, or tub of lightener, combo with developer total

      • for lightener, price out tub, determine how many ounces are in the tub, determine how many scoops make an ounce, divide the weight of the tub by the amount of scoops are within it, document the average scoop amount per HL service.

      • Find a list of averages here

    • take an average of foils, gloves, shampoo/conditioner, haircare I add $5 for this category

Step 4

• Take the total you charge for your service and subtract the product cost, put this new total in the next column

  • ex: base color $100, cost $10, new total $90

Step 5

• Divide your new total by the amount of time it takes to provide that service

  • ex: base color $90 divided by 90 minutes equals $1/minute

  • ex: men’s cut $40 ($45 minus $5) divided by 60 minutes equals $.66

example of comparison chart

After you do this with each service, it will become apparent which service(s) are taking up the majority of your time and giving you the least financial return.

Typically it will be partial HL, Men’s cuts, Women’s cuts (not combo’d with color service) and base colors. in addition, these services are sprinkled throughout your schedule, booked in advance, consuming your prime time evening and weekend appointments etc. preventing you from booking the big services that pay the big bucks.

Here are your options

Option 1:

Ask yourself if you like these services, if the answer is no then this option is best. Find another hairstylist in your salon or in your area that you would like to help out by referring business to. Set this up in advance. Have a candid conversation with your guests informing them that your business is changing and in order to grow, you can no longer provide this service for them. Give them the referral, ensuring that you’ll pass along their color formula, or details about their service. Kindly wish them farewell.

Option 2:

You like the service, or at least like the people you provide this service to and are a little afraid to lost these clients? Communicate the need for change and that in order to continue providing this service, it will be going up to $___.__ and if they cannot afford that, nor want to pay for it, you can provide option 1.

Option 3.

Modify the service, again offer them the option, but maybe your base colors no longer include a blow dry, or your cuts are only on dry hair (no shampoo/style included) aka, cut the time down so that you’re still making enough per minute for it to be worth it.