How to price your salon services

The four parts of a price

Every service price has to cover four things. First, product: colour, developer, shampoo, treatments, disposable towels and blades. Second, the stylist's share: commission, wage or bonus. Third, the salon's fixed costs: rent, business rates, energy, water, insurance, accountant, software and cleaning. Fourth, profit: money for growth, new equipment and the quiet months.

Fixed costs are the part most often forgotten, because they don't belong to any single service. Yet every service ties up a chair for a set time and uses that time's share of the rent, the lighting and the heating. Spreading fixed costs across services by time is the most solid way to price.

Fixed cost per minute

Add up a month of fixed costs. Then work out how many minutes your chairs can work in a month: opening days, hours per day and number of chairs. A completely full month isn't realistic, so use a cautious estimate of how busy you are. Divide the fixed costs by the minutes you actually fill and you have your fixed cost per minute.

That gives you a floor: sell below it and you are paying for fixed costs or profit out of other services. How far above the floor you go depends on your location, your stylists' experience and your clients. Other salons' prices matter at this point, but as a reference, not as the starting point.

You don't need to do the sum for every service. Start with your five to ten best sellers and set the rest by comparing time and product with the closest service. Redo it a few times a year, especially when rent or product prices change. Update your occupancy estimate with real figures too: if you are busier than you assumed, your cost per minute falls; if quieter, it rises. That is why filling empty slots can lift profit as much as a price rise.

Keep the price list simple

• Group services into categories: cuts, beard, colour, treatments, make-up. Clients and stylists read the list faster.
• Merge near-duplicates; three names for the same job only cause confusion.
• If long or thick hair costs more, say so on the list so nobody gets a surprise at the desk.
• Set up packages as their own item rather than discounting by hand every time.
• Note each service's typical duration, so the diary and your price sums use the same time.

Get VAT right from the start

Whether a price is quoted with or without VAT is a common source of arguments, with clients and with stylists. Clients normally expect to see the price they will pay, so if you are VAT-registered the price on your board will usually include VAT, while your sums above work on the amount excluding it. Not every small salon is VAT-registered. Whether you need to be, and which rate applies, is a question for your accountant; if the rate changes, update the whole list in one go.

Pricing retail products

Retail follows different rules from services. Start from what the product costs you, add VAT if you charge it and check the supplier's recommended retail price. A product priced well above what clients see online rarely sells; one priced too low eats into the margin that should pay for shelf space, stock you never sell and the stylist's retail commission.

Watch for drift from the list price

A price list only works if it is used. Small discounts at the desk, rounding down and "just this once" add up until your real average price is well below the list. Keep an eye on lines charged differently from the list price. If one service is always sold at a different price, either the list is unrealistic or too many people can give discounts.

The aim isn't to punish anyone. Some differences are deliberate: a gesture to a new client, or a discount for a service that couldn't be finished. What matters is that these decisions are visible and that you know who made them.

How to announce a price rise

1. 1

   Do the sums

   Feed higher product and fixed costs through the calculation above, so you know exactly how much the price needs to rise.

2. 2

   Give notice

   Show the new prices in the salon and on your booking page before they take effect.

3. 3

   Change everything on one day

   Update the price list everywhere at once; no old prices on paper and new ones on screen.

4. 4

   Talk to your stylists

   If their pay is a share of the price, the rise reaches them too, and knowing that makes it easier to explain to clients.

Prices in Makastam

In Makastam you build your service catalogue in categories, and each service has a price and a duration. The online booking page uses those durations and shows the client an approximate total. Prices are entered excluding VAT; each line carries its own tax rate, zero included, and in the settings you can apply a default VAT rate to all services and products at once.

On a ticket you decide who may charge something other than the list price; if you like, stylists can change the price on their own lines only. The end-of-day report lists every line charged differently from the list, and the service profitability report shows product cost and gross profit to those allowed to see it. For how the stylist's share affects your prices, read how to calculate staff commission. For plans, see pricing.