What You Charge Is Not What You Keep.
“Don’t make the same mistake I did.”
Nina Tulio
Dear salon owners and independent artists, while some of you may be out here trying to convince your clients on why you have to charge so much for your services, I want to make sure you understand why you're charging what you're charging for your services.
Let’s start off with my independent artists. Yes, pricing is incredibly important, but you also have to understand what your expenses are and what your costs are. Just because you charge something for a service doesn’t actually mean that is what you keep.
Independent Artist Example:
Service Price = $200
Total biz expenses = 55%
45% Profit = $90
Tax on net profit x 25% = $67.50 left
This breakdown is based on independents making a 45% profit. Yes some make more but this is the average. TARGET profit is at least 50%.
The next example here is for my commission salon owners, and as you can see the breakdown is SO different than what it looks like for my independent artists. Profit margin is different for my independent artists as it is for my commission salon owners.
I want you to truly understand that you don’t have to convince your clients why you're charging what you're charging. You just truly have to understand what it actually costs you to run your business, what your break even number is, and base everything on facts and data and not fear.
Commission Salon Owners Example:
Service Price = $200
Expenses = 92%
8% Profit = $16
Tax 0.25% = $12 left
Commission owners. This is based on the AVG owner making 8% profit. Yes, some make more. Target profit is 20%. The average salon owner in the USA makes 8-8.5 net profit. Payroll expense being close to half of their revenue.
Additional Information
TAXES- this is a guide of 25% of NET profit. You can plan on putting aside 25-30% each month so you don’t have to dive into cash flow to pay quarterly taxes. **Yes this may vary but is a great start. Please check with your CPA or accountant.
BREAK EVEN - this is the amount you need just to cover your biz expenses each month and open the doors.
RESOURCES- CLICK HERE for my FREE profit calculator.
CLICK HERE for my free pricing class
Looking to learn more from Nina? Check out Make That Money course for suite owners/renters. And in my Synergy course for commission owners.
Psst! MORE Free resources are a click away!
