Salon Costings Part 2: The Home Salon by Simon Clark
By Simon Clark, Simon Clark Hairdressing, Port Elizabeth
In my last article I examined the basics required to calculate what a middle of the road salon in Port Elizabeth and arrived at what I am sure we can all agree was the rather unrealistic total of R475.00 for a basic cut. If we look at things rationally though, hairdressers selling their time at a rate of R950.00 per hour is no different from the rate charged by a psychologist who may arguably have lower operating expenses.
How did we reach a point where most people in a profession can not charge a basic rate for their time that is equivalent to someone of equal professional standing? I hypothesise that the causes are 2 fold: The first is that hairdressing prices have not kept pace with inflation and that this has been caused by poor costing putting downward pressure on industry prices.
Many stylists, from the outset, may be keen to put the blame for the downward pressure on home salons. This got me wondering how much less a home salon can actually charge if they apply a professional approach to their pricing.
I roped in a local one to provide me with her basics which where a total rent of R4,200 and a Water and electricity of R2,800. She sees on average 5 appointments a day and charges R200 for a cut. From this I am going to make the following assumptions for the sakes of privacy. We will allocate a 1/3 of her rent and water and electricity to salon costs. We will also use the same allocation for other fixed expenses like the telephone and alarm. Insurance and accounts will stay the same as these are salon specific and unavoidable. I am also allocating a R1,650 marketing and R6,600 management fee as these do not simply disappear because a person is now working from home.
The costs break down as follows:
If we again apply the same variable costs per appointment R50.00 there are no real savings that can be achieved by moving a salon home and we arrive at a base cost per appointment of R181.28. We double for 50% commission to R362.56 and add our 30% mark up for a profit. There is absolutely no reason why a hairdresser working from home should not apply the same business principles that a big salon does! Which brings us to R471.35. It is business not a charity!
This is the frightening bit, according to our numbers the home salon should be charging exactly the same as the shopping centre one to cover what would appear to be far lower costs. The lesson is a harsh one, as an industry we need to urgently get a grip on our costings or we are going to go under fast!
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