how to increase salon profit

How are your retail sales? How are your upsells? Cross-sells? Other services? Are all your service providers busy? These are questions you should be asking yourself if you want to increase your salon business profit. But to put everything in a simple perspective, making your salon more profitable comes down to two points:

Reduce your expenses

This means reducing your overhead, possibly letting go of some staff, and eliminating services that are not making you money. Reducing your salon expenses also means tracking your spendings and removing the unprofitable ones.


Increase your sales

You can increase your salon sales in a lot of ways. You can either

  • Grow your client base,
  • Increase the average spend per visit, or
  • Increase the frequency of their visit to your business

But there’s one way to make your salon more profitable and hit all three points mentioned above – simply make sure your new salon clients return for a 2nd visit (and a 3rd and 4th and so on, for that matter)

On average, salon owners only turn 30% of their new clients into regular, loyal clients. Let’s use this figure in the next section to calculate your salon’s potential profit and leakage cost.

Know your potential profit number to make your salon more profitable

Your leakage cost is the opportunity lost each time you lose a new client. But before we calculate this, let’s explore the potential profit of your salon business first.

Average Cut x Average Visit per Year = Customer Spending Per Year

Let’s say your haircut rate is $50 and the average visit of each customer per year is 5 times. Your potential profit per customer is then $250. If we add in a couple of colour services, say twice a year at $75 per visit – that’s $400 potential profit per new client annually.

Assuming you have 50 new clients coming to your salon every month  (50 clients x 12 months x $400), you are now seeing a $192,000 potential annual profit for your salon just from these new clients and basic services.

Taking in what we previously mentioned that salons only keep about 30% of new clients and losing the other 70%, that’s 420 new clients each year bringing their money elsewhere i.e. your competitors. And that’s a whopping $134,400 of leakage cost and profit you’re missing out on. 

If you start working on converting an extra 5% of your new clients into regular ones will already make your salon more profitable by $12,000 in gross profit each year. 10% and that doubles the figure to $24,000 annually. You can also ensure more profits by increasing their spending per visit by encouraging them to buy retail or avail more services than just a haircut or hair colour.

Identify Customers You Want To Keep

Another way to make your salon more profitable is by classifying your customers – those whom to keep and whom to fire. Ideally, you only want to keep on growing your client base. However, trying to maintain all customers and giving them equal attention and resources might just be keeping you from making more profit.

So, what kind of customers should you keep? You would classify your A-list customers as low maintenance ones turning in high profit.

You don’t want those who spend very little but want to get the best possible deal and the juiciest discount. Who are these customers? They don’t buy retail, they drive your team nuts, they usually don’t turn up on their appointments, and generally keep you from servicing your profitable clients. Letting these customers go is not shrinking your client base – it is actually a sensible management strategy to increase your salon business profit.

Your A-list clients are those who will try new services, buy your retail and recommend you to their friends. They are the ones who deserve your time, resources and efforts. They need to be taken care of and nurtured.

Pay Close Attention To Your Front Desk

Your front desk staff plays a very crucial role in bringing more business and profit to your salon. You need to ensure that your front desk is being run efficiently and your putting the right people there.

Your front desk staff should be there with a mission and make the most out of every call and every walk-in. You need them to

  1. Give leads for the business by getting contact information for you.
  2. Ensure every phone call gets to the appointment book
  3. Provide value to customers by giving them helpful information
  4. Promote your website and ongoing promotions
  5. Sell your other services
  6. Do follow-ups

And that goes for every member of your salon team. Everyone should be there working to make money for the business. You should not have people who are there to just do the hours and just waiting to clock out. 

Let’s discuss how you skyrocket your salon business profitability and level up your business, book a call with me here.