What Are the Costs of Running a Salon?

This post investigates the various types of costs associated with running a salon and how to manage them to maximise profits.

The following three cost elements are important to define as accurately as possible to generate a rough calculation of how your turnover and running costs might be determined.

Material Costs
These costs are linked to purchase of products needed for the delivery of in-salon services as well as your stock of products available for retailing to clients.

Overall Costs
All of the following things belong to your salons ‘overall costs’. All of these appear and should be checked on a regular basis:

Depreciation, petty cash, advertising, repair and maintenance, company car, electricity, gas, water, waste, sewage charges, travel costs, telephone, fax, internet, postage, rent, working expenses, office materials, cleaning, computer costs, newspapers, magazines, accountancy, promotion, salon decoration, trade magazines, seminars, insurance, employer insurance, salon liability insurance, damage charges, local business taxes, tourism taxes, counselling, payments chamber of commerce, employee allowances, cash flow costs, electronic payment device, loan and or credit interest, donations, work clothes etc.

Employees Costs
These costs are usually the biggest part of the total running costs and difficult to reduce. To calculate the total, take the gross wage per employee and add the employer’s costs to it (i.e. employer taxes and costs for social security for every employee).

A common mistake is not to include the owner’s wage/drawings/salary under employee costs. If the owner is taking money from the business it needs to be added in to employee costs.

Using the calculation tools below, allows you to quickly assess the key financial information from your salon and allows you to adapt your business approach accordingly. In addition ASK Education offers specific business seminars to help maximise your salon's success.