How much does it cost to run a salon?

Running your own salon business can be a dream come true. But as a salon owner or manager, dealing with budgeting and crunching numbers also falls on your shoulders, even if you don’t have much experience doing so.

Whether you’re working on a salon business plan or simply looking to cut existing costs, managing your budget can be overwhelming and exhausting. You might worry that you’ve missed something, and you likely want to keep expenses as low as possible while still delivering an excellent experience to clients. We get it.

That’s why we’ve dedicated this article to:

  • Outlining the 12 most common monthly salon expenses
  • Offering our top tips to save on everything from rent to marketing to staff
  • Sharing our recommended digital tool to save you money and make running your salon easier and more cost-effective

Time is money, so let’s get started.

What are common monthly salon expenses?

The specific expenses of running your salon depend on the services you provide. For example, if you run a hair salon, you’ll need different products than a nail salon.

Expenses also vary depending on your business model. For instance, if you run a booth rental salon and offer your tenants lots of extras like drinks and snacks, towel laundry service, and Wi-Fi, your costs will be higher when compared to a salon that just offers the basics. 

Similarly, if you run a salon where everyone’s a full-time employee, you’ll have more expenses associated with hiring costs, products, HR management, payroll, and training.

Long story short, if you own (or rent) a physical salon space, many of your expenses will be associated with the simple reality of owning and maintaining a property.

Now, let’s discuss 12 of the most common salon expenses in detail.

1. Rent

What you pay for rent depends on your location, foot traffic, and the quality of the property. A large, modern studio in downtown Manhattan will obviously cost more than a modest salon space in a small town. But wherever you live, rent is likely to be your biggest salon expense.

Industry research suggests that in late 2021, the average US commercial rent was $9.54 per square foot.

2. Utilities

Your salon will need the basics like water and electricity, but you’ll also need to factor in business necessities like Wi-Fi, phone, and heating and air conditioning. 

Utility costs also partly depend on usage, so if you have booth tenants, you should factor utility expenses into the rent you set. If you’re looking for an estimate, Iota Communications reported that businesses typically spend $2.10 per square foot on utilities.

3. Payroll

Full-time employees require regular pay, which business owners know quickly becomes much more complicated than a quick pen-and-paper calculation. 

It helps  to invest in team management software with a dedicated payroll tool like Homebase so you can track hours accurately, keep data and payments secure, deal with taxes, and pay your employees automatically. 

4. Products

Product expenses vary the most because you have the freedom to choose the products you want to use. Average product costs also depend on the services you offer and the products you offer for sale. .

You can also include items like tea, coffee, bottled water, and snacks in this bucket  — whether for employees only or clients too.

5. Cleaning

It’s boring but true — your salon will need to be kept squeaky clean if you want to impress clients. Whether you’re scrubbing hair washing sinks, sweeping hair off the floor, wiping the payment desk, polishing mirrors, or simply keeping the bathroom spotless, cleaning must be factored into your salon expenses. This can cost from around $10 per hour to $200 or more for a deep-cleaning service.

You might also include necessities such as toilet paper, paper towels, cleaning products, and hand soap here. 

6. Laundry

Laundry is one of the trickiest parts about the day-to-day of running a salon. Even trickier is finding a reliable laundry company that can manage the workload of a busy salon so you always have a fresh supply of clean linens, towels, and gowns. You’ll also need to factor in the cost of replacing towels periodically if they’re used and washed very often.

7. Maintenance

Any property or business budget should put aside some money in case of malfunction, leaks, breakages, or simply everyday wear and tear that isn’t worth dealing with insurance to claim. Hair dryers break, plumbing stops working, boilers break down, lightbulbs need replacing, and espresso machines need servicing. Keeping a ‘rainy day’ buffer of $500-$2,000 for new salon equipment or emergencies is best to avoid tricky situations in the future.

8. Insurance

You’ll need insurance for your building as well as its contents. Be sure to check that your policy is well-suited to your space and that any risks associated with your property specifically are covered. 

Your staff may also require liability insurance and health insurance, especially if they’re full-time. If your salon is your livelihood, you may also want to take out insurance for loss of earnings if you ever can’t work for any reason. Estimates suggest salon insurance costs around $500-700 per year on average.

9. Marketing

Marketing costs depend on where your clients come from—do they hear about you online, in the local press, or via word of mouth?

Your marketing budget should account for a quality, mobile-responsive website (including hosting, and whether you’ll design it yourself or hire someone to do it for you). You may also factor in social media advertising costs, as well as listing fees for websites like Treatwell

You might also consider the cost of making flyers, posters, or business cards; or hosting or attending beauty industry events and shows.

10. Hiring and HR

It costs money to hire and manage people, whether you’re advertising a position online, sending out contracts, or managing employee information. Business News Daily estimates that it can cost as much as $4,000 per new hire! Luckily, powerful tools like Homebase make the onboarding process much more cost-effective by doing everything from organizing staff contracts to sending new hires welcome packets and ensuring legal compliance.

11. Licenses and permissions

Different states require business owners to obtain different permissions and licenses to operate. Make sure you have the right license to do business on your property and bear in mind that different salons (nail salons vs hair salons, for example) may require different permissions, depending on the state. 

Many official application processes have a fee attached, so be sure to include it in your salon budget. If you need legal advice, fees can cost at least $200 per hour.

12. Technology and payment fees

Credit card processing fees are usually around 1.5%-2%, but you may need to factor in up to 3% depending on your system of choice. Similarly, you’ll need to consider the cost of your POS (point of sale) system and any other potentially expensive items like TVs, streaming subscriptions, or music licensing fees.

How to reduce your salon’s monthly expenses

While some monthly salon expenses are unavoidable, there are many ways to save money — whether you’re just starting out or need to cut costs.

Rent

Reducing rent isn’t easy, especially in an in-demand area. But if your business isn’t location-dependent and clients will easily find you online or by word of mouth even if you don’t have a prime downtown location, then you may be able to save costs by moving somewhere with less foot traffic but lower property prices.

Utilities

As with your own home, shopping around for utilities can save you thousands of dollars a year. Keep an eye out for new deals and be diligent about saving resources, which is also eco-friendly! Include staff in your mission to save and make it part of your business culture. 

Keeping tools and electronics in good working order also reduces power waste, as does installing items like water-saving shower heads.

Payroll

Paying your staff properly is a cornerstone of a good business, and if you shortchange your stylists you could find yourself working solo — or even on the wrong end of a legal battle. 

Don’t worry, you can save yourself from costly mistakes in the long run (not to mention the cost of your time) by using a dedicated payroll tool that’s specifically designed to help small businesses thrive. Homebase instantly converts your timesheets (including hours, breaks, overtime, and PTO) into hours and wages in payroll — and calculates wages and taxes and sends the correct payments to employees, the state, and the IRS. So you can run payroll painlessly in just a few clicks. 

Products

While the products you use will vary considerably depending on the services you offer, there are still ways to cut costs without compromising on client care. Many salons strike deals with brands to use their professional products exclusively in return for lower prices. You can also buy products in bulk to save on often-used items. 

Another option is choosing a few flagship, professional products that clients love, and then opting for less-premium options for items that aren’t client-facing.

Cleaning and laundry

The obvious way to save here is by doing it yourself, or including cleaning and laundry as part of your stylists’ job (which they may or may not appreciate!). You could also hire an intern or less-experienced staff member to help. 

But cost-cutting here generally won’t win you any fans — and it’s easy to burn out trying to do everything by yourself. Instead, shop around for good deals, or ask clients and other salon owners if they know of any laundrettes, cleaning agencies, or local people who charge fair prices without sacrificing time or quality.

Insurance

As with utilities, it pays to shop around. Price comparison websites are your friends here, and you can save yourself hundreds (if not more) by taking the time to gather a few quotes before making your final decision. 

Similarly, each time your policy comes up for renewal, don’t just pay automatically — browse for new deals and make sure your needs haven’t changed in the meantime.

Marketing

How much marketing you do depends on where the majority of your clients come from. If you’ve had big success with Facebook adverts, for example, you may be reluctant to stop spending big bucks on them. But if you need to cut costs, you could try placing flyers in local coffee shops (or anywhere your ideal client hangs out), posting in online forums, groups, and classifieds, prioritizing social media content, or even boosting word of mouth by giving existing clients incentives for referrals.

Hiring and HR

Good HR is worth its weight in gold, as new hires will feel valued, increasing trust and satisfaction. Choosing a tool such as Homebase helps keep you and your staff organized easily, for fast job ads, streamlined hiring, and stress-free onboarding.

Using Homebase will also save you time and money, given that it’s an all-in-one platform that offers a wide range of handy features — including time tracking, scheduling, messaging, and payroll — alongside classic HR tools.

Licenses and permissions

You don’t want to cut corners when it comes to legal matters, but you can keep licensing applications to a minimum, hire staff as independent contractors rather than full-time employees, and/or require them to have their own insurance and pay for their own certifications (although you may pay the price for this with less-satisfied staff, so proceed with caution!).

Focus on employee happiness

Speaking of staff satisfaction, a major way to cut salon costs is by improving staff happiness — it reduces time and money lost on sick days, burnout, and turnover.

The American Institute of Stress found that an estimated one million staff members are absent from work daily because of stress. The Great Resignation also saw millions of employees quit jobs in 2021, with Pew Research finding that “feeling disrespected at work” was one of the major drivers.

Team management tools like Homebase have employee happiness built into their core systems, so your staff members will feel like they’re part of a close-knit team, communicate better, enjoy a respectful company culture, get notified about scheduling changes well in advance, and even have early access to wages in case of emergencies (without any cost to you)

Homebase can also help you offer staff perks, remember birthdays, celebrate successes, and keep track of staff morale, so you can ensure your salon is a happy, productive, and rewarding place to work. This will reduce the cost of new hires, keep clients coming back, and increase word-of-mouth recommendations from staff and clients alike. A happy salon is a thriving, profitable, and successful salon!

Salon expenses: The bottom line

There will always be some unavoidable costs when you’re running your own salon, but being savvy about comparing deals, gathering expertise from your industry network, and using digital tools to streamline processes and save time can definitely help.

Homebase helps your small business manage your work schedules, time clocks, payroll, HR, and more — so you can keep expenses down and spend less time buried in paperwork and more time managing the salon to grow the business.

Above all, keep in mind that team communication and employee engagement go a long way in boosting the happiness and productivity of your team, improving the atmosphere in your salon, and ensuring your business is as efficient, streamlined, and cost-effective as possible.

Monthly salon expenses FAQs

How much does it cost to run a salon monthly?

The cost of running a salon monthly varies depending on your location, services, and business model. Key expenses include rent, utilities, products, cleaning, and laundry — plus extras like staff payroll, marketing, and HR. Using a digital tool like Homebase to boost efficiency and staff happiness can help.

What is the average cost of utilities in a salon?

The average cost of utilities in a salon changes with water and electricity rates and varies depending on extras like Wi-Fi, phone lines, and the cost of heating or air conditioning. Utility costs also partly depend on usage, so if you have specific tools that use a lot of power or water, your costs will increase.

How can you reduce a salon’s monthly expenses?

You can reduce a salon’s monthly expenses by shopping around for good deals on utilities and insurance, as well as considering whether you can save on rent by exchanging a prime downtown location for a space in a less busy area. You can also use local classifieds and word of mouth for low-budget marketing, and cut the cost of turnover, new hires, onboarding, and HRby using dedicated salon software like Homebase.

How much does it cost to open a salon?

The cost of opening a salon depends on a variety of factors like location and services offered. You should also make sure you have upfront costs covered right off the bat, including managing your property (rent, utilities, insurance, cleaning, maintenance), as well as staff, products, cleaning, and legal compliance. You’ll also have up-front costs related to furniture and decor.

What are common beauty salon expenses?

Common beauty salon expenses include your salon space rent, utilities, products, cleaning and laundry, maintenance, staff hiring, onboarding, HR, payroll, marketing, and licensing & permissions fees. 

What are hair salon monthly expenses?

On top of the usual beauty salon expenses — like rent, utilities, staff management, payroll, marketing, and licensing fees — hair salon monthly expenses include things like product costs and specific resources like hot water for hair washing and electricity for drying and styling.

What are nail salon monthly expenses?

As well as the usual beauty salon expenses — such as rent, utilities, staff management, payroll, marketing, and licensing fees — nail salon monthly expenses include the cost of products like nail polish and electricity for service-specific tools such as UV LED nail lamps.

How much do salons spend on products?

The amount salons spend on products depends on the number of clients they have and how much product they use on average. Product costs also depend on the brand quality and how many different types they buy. Some salons strike deals with brands to use their products exclusively in return for lower prices or buy in bulk to save on their most-used items.

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