One of the most frustrating comments I hear about the hair industry is how expensive hair services are. I decided to break it down, and explain the costs involved in a haircut and also explain why the average stylist isn't ripping you off by charging $20 - $40 for a haircut. I'd be willing to bet that some of the expenses in a hair salon just might surprise you.
When I first decided to put this together I went back and forth on how to present the numbers. I thought about researching the "national average" and spending a lot of time with numbers and calculations, but then I faced reality and realized that I have no idea how to really do that. I do know how much it costs me to run my hair salon, however and I've decided to just share these figures with you. I live in city of around 200,000 people in the middle of the heartland. Obviously, hair salon expenses in other parts of the country will be higher than mine; others less than mine. I think I am about as average a stylist, in about as average a city as it gets. I lease a small studio salon and run my own business out of the studio. So, I split the difference between a stylist that is employed by a salon owner, and one that owns their business with their own physical building.
For the purpose of this article, I am only going to talk about haircuts. I will not get into vast and various expenses of chemical services, and everything involved with all that. Just haircuts.
Surprisingly, beauty school is not cheap. In Iowa, a licensed cosmetologist is required to complete 2,100 hours of instruction and clinical experience prior to graduation and completion of the Iowa State Board Cosmetology Examination. It takes approximately 15 months of full time cosmetology school to complete these requirements. My final school costs were around $18,000, which were funded with student loans that I repay monthly.
Monthly Expense: $295
Rent and Utilities
Some hairstylist work for a company or person and are paid a commission or salary. Others work for themselves and pay a chair rental fee, studio rental fee, or they buy or rent their own property. At any rate, a building that is properly equipped and licensed by state regulation for hair services is required and is the biggest monthly expense. Some rental fees include utilities, products, or use of equipment. It all varies for each situation. I pay a studio rental fee, which includes my water, trash, heat, and electric utilities as well as the use of a two sinks, two hydraulic styling chairs, two styling stations, a storage cabinet, and hood hair dryer with chair.
Monthly Expence: $1,200
Licensing & Insurance
Maintaining a valid cosmetology license is very important and a required expense of every stylist and salon owner. A salon license ($80) and separate individual cosmetology license ($60) is required to be renewed every other year. In order to be eligible to renew your license in Iowa, you have to complete 8 hours of continuing education, and pay the associated fees with these hours. I typically attend more than the required 8 hours, but for the sake of this article, I will only include the expense of the required hours. In the last two years I have spent $250 on continuing education and license renewal.
In addition, insurance is important to cover liabilities in a salon. You never know what may happen when you're cutting hair and it's important to be covered in case of an accident, theft, fire, or natural disaster. My yearly insurance cost is $250.
Montly Expense: $31.25
Hair Cutting Tools
One of the reasons people think haircuts are too expensive is because "all that's required is a comb and some scissors". It's actually a little more involved than that. I have several pair of shears that I require to do my job. They last any where from 2 to 5 or more years depending on the shear, how often it needs sharpened, and how often it's used. In my first four years as a stylist I have spent $1,200 on hair shears, and $600 on clippers and accessories (which reminds me that I need to buy a new set). I also go through at least a box of razor blade replacements every week. To get a monthly expense I divided $1,800 by 48 (the number of months I've been a stylist), plus $40 (per month) for razor blade replacements.
Monthly Expense: $77.50
If you are going to get a haircut, chances are you will want it washed and styled. This requires the use of "backbar" products and supplies. Backbar supplies are the products and tools used by a stylist to wash and style hair during a haircut service (shampoo, conditioner, styling products, towels, capes, etc.) as well as the necessary sanitizing agents required by the state. I think it's important that all of my clients leave my salon with a polished style to feel confident about their new cut. I've also included laundry expenses to wash the towels and capes regularly. I'm estimating my expense for monthly backbar supplies here.
Monthly Expense: $113.00
Hair Styling Tools
Styling hair can't happen without styling tools. Professional hair dryers, flat irons, curling irons, brushes and combs are not inexpensive. Professional quality products are important because they need to have the ability to stand up to hard repeated daily use. Of course, some last longer than others. I've estimated that in the past four years I have spent at least $1,000 on hot tools and hair styling equipment.
Montly Expense: $20.83
Total Monthly Expenses
Let's add this up. Please keep in mind that the monthly expenses that I included in this list are minimal and apply only to hair cutting. If a stylist performs any other services like waxing, paraffin, coloring, perming, other chemical services or offers retail products for sale, the costs would increase. This monthly expense list also doesn't include the little extras in a salon like coffee, decor, magazine subscriptions, and other miscellaneous costs.
Total Monthly Expenses: $1,737.58
Breaking It Down: Why Haircuts Cost So Much
Now, let's break down this monthly cost of $1,737.58 so it makes sense on a haircut by haircut level. If I work 40 hours per week, and assuming 4 weeks in a month, that's 160 hours in one month. Dividing the monthly cost by 160 gives me the amount of money it costs to have basic hair cutting supplies and tools on hand each hour.
It costs $10.86 to cut hair in my salon for one hour.
In order to make a profit and take home money to make a living, I have to bring in more than $10.86 each hour. It takes me 20-30 minutes on each man's or child's haircut and 30-60 minutes on each women's haircut. This includes washing and styling time, discussing products, and ensuring my client's satisfaction.
To break it down further. Let's assume a men's haircut is $20 and a women's haircut is $30. in two hours time I can bring in approximately $70, or $35 per hour. $35 minus the $10.86 operating cost leaves me with $24.14 per hour "profit". However, keep in mind all the extras that I did not include in the figures above like decor, coffee, magazine subscriptions, online reservation system, website costs, telephone expenses, advertising costs, marketing materials (business cards, brochures, etc), and other miscellaneous expenses come out of that $24.14 profit. Not to mention income tax and sales taxes that need paid, and let's not forget the countless hours that I spend doing paperwork, updating my website, purchasing supplies, returning emails, setting appointments and other miscellanous tasks that I am not compensated.
Every year the costs go up, and every year your stylist gains 365 days of increased experience, talent, and skill. How do you place a price on that?
I hope this helps you understand all the costs involved with getting a haircut, and maybe you'll appreciate all that your stylist manages on a monthly basis to simply make an honest wage.