How Much Money Does a Beauty Salon Make?

The beauty salon industry has experienced significant growth over the past few years, driven by an increased focus on personal grooming, self-care, and the influence of social media. Beauty salons offer various services, from haircuts and coloring to skincare, manicures, and more, catering to a wide audience that values aesthetic and wellness experiences. 

This blog explores the financial aspects of a beauty salon, including average earnings, operating expenses, and overall profitability. It provides valuable insights for entrepreneurs, small business owners, and startups considering investing in this thriving sector.

The Beauty Salon Industry Overview

The global beauty salon market was valued at approximately $155.6 billion in 2022 and is projected to grow at a CAGR of 8.0% from 2023 to 2030. The market’s growth is fueled by rising consumer spending on beauty and personal care, a trend toward advanced beauty procedures, and a heightened focus on enhancing the customer experience within salons. 

Additionally, technological advancements, such as online appointment booking systems, are pivotal in the industry’s expansion by improving customer convenience and operational efficiency​.

The target demographics for beauty salons vary but primarily include women, who account for 71% of the clientele in the U.S. However, there is a noticeable rise in male customers seeking grooming and self-care services, influenced by changing societal norms and the growing popularity of skincare and grooming among men​.

Factors Driving Growth

Key factors driving the growth of the beauty salon industry include:

• Self-Care and Wellness Trends: The increasing emphasis on self-care, wellness, and mental health has encouraged more people to visit salons regularly.
• Social Media Influence: Platforms like Instagram and TikTok have significantly influenced beauty trends, with consumers seeking salon services that mimic looks seen online.
• Consumer Spending on Beauty: Rising disposable incomes, particularly in regions like Asia-Pacific, have led to greater spending on premium beauty services​. Countries like India showcase a rapidly growing beauty salon sector, primarily fueled by changing consumer attitudes and increasing male clientele. Notably, post-pandemic, there has been a 3% to 4% rise in male customers visiting salons seeking services beyond basic haircuts.

Types of Beauty Salons

Beauty salons come in various forms, catering to different customer needs.

Hair Salons

Hair salons are among the most common types of beauty salons, offering services such as haircuts, styling, coloring, highlights, blowouts, perms, and hair treatments like keratin and conditioning. These salons cater to men, women, and children seeking hair care services. They often employ stylists with expertise in various techniques, making them a popular choice for anyone needing regular hair maintenance or a complete makeover.

According to data from Trafft in June 2023, approximately 92% of revenue in the U.S. hair salon industry arises from various hair-related services. Haircutting and styling represent the largest share, making up around 62% of industry revenue, while hair coloring services contribute about 23%.

To understand the financial potential of running a hair salon, the SHEETS.MARKET Hair Salon Financial Model provides a detailed tool for forecasting revenue, managing costs, and optimizing profit margins. This model helps aspiring salon owners make data-driven decisions to ensure financial success.

Nail Salons

Nail salons focus on hand and foot care, providing services like manicures, pedicures, nail art, acrylics, gel nails, and extensions. While predominantly frequented by women, these services are also increasingly popular among men. Nail salons emphasize aesthetics and hygiene, offering a wide range of polish options and creative nail designs.

For those considering opening a nail salon, the SHEETS.MARKET Nail Salon Financial Model is an invaluable resource. This model helps you project earnings, track expenses, and plan your business strategy precisely, giving you the insights needed to thrive in this competitive market.

Day Spas

Day spas offer a more comprehensive wellness experience with facials, massages, body scrubs, wraps, and aromatherapy. These establishments cater to clients seeking relaxation and rejuvenation, often featuring tranquil environments with saunas, steam rooms, and dedicated relaxation areas to enhance the spa experience.

Barbershops

Barbershops are tailored for men and boys, providing grooming services such as haircuts, beard trims, and shaves. These establishments focus on a classic and trendy atmosphere, often incorporating traditional grooming techniques like hot towel shaves and specialized beard maintenance.

If you’re planning to open a barbershop, the SHEETS.MARKET Barbershop Financial Model is designed to help you understand your business’s financial dynamics. This model allows you to project income, manage overhead costs, and optimize your pricing strategy to maximize profitability.

Full-Service Salons

Full-service salons combine hair, nail, skincare, and sometimes spa services under one roof, making them a one-stop shop for clients seeking various beauty treatments. They cater to a broad audience, offering diverse services to meet different client needs, making it convenient for those seeking multiple therapies in a single visit.

Blow Dry Bars

Blow dry bars specialize in blowouts, styling, and hair washing but do not offer cuts or coloring services. They cater to clients needing quick hair styling for events, work, or everyday looks, providing a fast and convenient service that leaves hair polished and styled without the time commitment of a full salon visit.

Skin Care or Facial Salons

Skincare or facial salons focus on specialized skin treatments, offering facials, microdermabrasion, chemical peels, and acne treatments. These salons cater to clients looking to address specific skincare concerns, such as anti-aging or acne, with trained estheticians providing personalized therapies tailored to individual skin needs.

Tanning Salons

Tanning salons provide services that help clients achieve a tanned appearance year-round, offering UV tanning beds, spray tans, and self-tanning products. These salons cater to individuals who desire a sun-kissed look and often provide customized tanning experiences, including spray tan booths and skin-safe UV tanning beds.

Medical Spas (Medi-Spas)

Medical spas, or medispas, offer advanced skincare treatments like Botox, fillers, laser hair removal, and other minimally invasive cosmetic procedures. These salons cater to clients seeking more intensive skin and body treatments with medical-grade products and services. Operated under the supervision of medical professionals, they bridge the gap between traditional beauty salons and cosmetic clinics.

Massage Parlors

Massage parlors specialize in various massages, such as Swedish, deep tissue, hot stone, and sports massage. These establishments cater to clients looking for relaxation, pain relief, or therapy for muscle tension, offering a soothing environment with dim lighting and calming music to enhance the massage experience.

Specialty Salons (e.g., Lash and Brow Studios)

Specialty salons, such as lash and brow studios, enhance specific features like eyelashes and eyebrows. These salons provide eyelash extensions, eyebrow shaping, microblading, tinting, and threading services. They cater to clients interested in enhancing their lashes and brows, offering precision and personalized approaches to each service.

Bridal Salons

Bridal salons are tailored for brides and their wedding parties, offering hair styling, makeup application, nail services, and beauty packages specifically designed for weddings and special events. These salons focus on creating customized looks for brides, often providing on-location services to accommodate the needs of bridal parties.

Revenue Insights for Beauty Salons

The average revenue of nail, skin, and eyelash beauty salons in the U.S. is approximately $531,000 annually. Other types of beauty businesses, such as massage and spa services, report higher earnings, with average revenues reaching up to $851,000 annually. 

These figures highlight the revenue potential within the beauty industry, with specialized services often commanding higher prices and attracting a more affluent clientele​.

Beauty salons generate income from a variety of services and product sales. Understanding these revenue streams is crucial for maximizing your salon’s earning potential.

Hair and Styling Services

Hair services, including cuts, coloring, styling, and treatments, are the backbone of most beauty salons. These services typically account for 50-60% of a salon’s total revenue. 

The average ticket price for a haircut ranges from $40 to $100, depending on location, stylist expertise, and salon reputation. High-end salons in metropolitan areas can charge over $150 for haircuts and upwards of $200 for coloring services.

Skincare and Beauty Treatments

Skincare services, such as facials, waxing, microdermabrasion, and other beauty treatments, are becoming increasingly popular. 

These services usually command higher prices than basic hair services, with average costs ranging from $60 to $150 per session. Specialized treatments, such as chemical peels or micro-needling, can cost even more, providing significant profit margins.

Product Sales

Retailing beauty products like shampoos, conditioners, skincare products, and styling tools can be a lucrative add-on for salons. 

Product sales can contribute 5-15% of a salon’s revenue, with 40-60% profit margins. Encouraging clients to purchase professional-grade products used during their appointments can boost overall sales and enhance the customer experience.

Specialized Services

Specialized services, including eyelash extensions, microblading, and hair extensions, are high-margin offerings that can set a salon apart from competitors. 

These services are often priced between $100 and $500, depending on the service complexity and time required. These services can attract a more diverse clientele and significantly increase your revenue per appointment.

Factors Influencing Beauty Salon Profitability

Location and Customer Demographics

Location is a critical factor in determining a salon’s profitability. Salons in high-traffic, affluent areas can charge premium prices, whereas those in lower-income neighborhoods might need more competitive pricing strategies. 

Understanding your target demographic is crucial; younger clients might favor trendy cuts and color treatments, while older clients may prioritize maintenance and classic styles.

Salon Size and Service Range

The size of your salon and the range of services offered play a significant role in revenue generation. Larger salons with multiple stylists and treatment rooms can accommodate more clients simultaneously, leading to higher total earnings. 

Offering a diverse service menu also helps cater to various client needs, increasing the chances of upselling and cross-selling additional treatments.

Operating Costs and Overhead

Operational expenses directly impact profitability, including rent, utilities, staff salaries, and supplies. Rent alone can account for 10-15% of a salon’s monthly expenses, with larger and more luxurious spaces costing significantly more. 

Efficiently managing these costs while maintaining a high standard of service is essential for maximizing profit margins.

Factors Influencing Earnings

• Location Importance: Urban salons generally earn more than rural ones due to higher foot traffic, better access to affluent customers, and the willingness of urban clients to pay a premium for services.
• Pricing Strategies: Competitive pricing is crucial; salons that offer tiered pricing for different service levels (basic to premium) often see better customer retention and higher average ticket prices.
• Service Offerings: Salons that diversify their services—adding treatments like microblading, lash extensions, or advanced skincare—can increase their revenue streams and appeal to a broader audience.

Common Costs Incurred by Beauty Salons

Running a beauty salon involves various operating expenses, including:

• Rent and Utilities: Location is a significant cost factor, especially in high-demand urban areas.
• Equipment and Product Supplies: Maintaining quality tools and products is crucial for service delivery and customer satisfaction.
• Employee Salaries and Labor Costs: Labor is one of the highest costs, especially for salons offering specialized services that require skilled professionals.
• Marketing and Advertising Expenses: Promoting services through social media, local advertising, and special offers is essential to attract and retain customers​.

How Much Do Beauty Salons Make on Average?

Starting a beauty salon can be a substantial financial investment. The average cost to open a full-service salon is around $60,000 to 130,000, with lower costs for niche services like nail or waxing salons. Potential funding options include personal savings, bank loans, investor funding, and small business grants tailored to the beauty industry​.

The average profit margin for full-service beauty salons is about 8.2%, indicating strong profitability potential. However, profit margins vary significantly depending on service offerings, location, and operational efficiency. Salons focusing on high-margin services like hair coloring and advanced skincare treatments often see better financial performance​.

Small salons or solo practitioners may earn between $35,000 and $75,000 annually, while larger, full-service salons can exceed $500,000 in revenue with net profits ranging from $40,000 to $85,000 per year.

Example: A mid-sized salon with five stylists, offering a mix of hair, skincare, and specialized services, can generate around $400,000 in annual revenue. With efficient cost management, this salon could see a net profit of $60,000 to $80,000.

Industry Benchmarks and KPIs

To gauge the financial health of your beauty salon, it’s essential to track key performance indicators (KPIs) regularly:

• Average Ticket Size: The average amount spent per client visit.
• Client Retention Rate: Percentage of clients who return for repeat services.
• Occupancy Rate: The percentage of available appointment slots that are filled.
• Product Sales Percentage: Contribution of retail sales to overall revenue.

Using industry benchmarks, salon owners can identify areas of improvement. For instance, if your average ticket size is below the industry standard of $75, consider introducing higher-value services or packages to increase spending per visit.

Enhance Your Financial Knowledge with SHEETS.MARKET

Understanding the financial landscape of your beauty salon is essential for success. SHEETS.MARKET offers specialized financial modeling tools for beauty salons, helping owners project earnings, manage expenses, and make data-driven decisions. 

The Beauty Salon Financial Model from SHEETS.MARKET is designed specifically for salon owners and entrepreneurs who want to streamline operations, maximize profitability, and make data-driven decisions.

Here are the key features of the Beauty Salon Financial Model from SHEETS.MARKET:

1. Revenue and Expense Tracking: Includes sections for tracking various revenue streams, COGS, operating expenses, and CapEx.
2. Customer and Sales Analysis: Allows detailed tracking of average daily customers and sales from different services, such as haircuts and color treatments.
3. Dynamic Calculations and Projections: Offers automated calculations for sales, cash flow, and profitability, enabling accurate future projections.
4. Customizable Inputs: Adaptable for various business scenarios with inputs for business name, start date, and financial assumptions.
5. User-Friendly Excel Interface: Features a clear, organized layout for easy navigation and updates.
6. Valuation and Key Financial Metrics: Provides valuation calculations and essential metrics to assess financial health.
7. Affordability and Accessibility: Available at a discounted price, making it accessible for small business owners and startups.

Explore more templates and resources designed specifically for the beauty industry to gain valuable insights into your business’s financial performance.

Conclusion

The beauty salon industry presents a lucrative opportunity for entrepreneurs, with56 significant revenue potential and strong service demand. By understanding the market dynamics, potential earnings, and operating costs, prospective salon owners can make informed decisions to optimize their businesses. Comprehensive market research and financial planning are essential to launch or scale a beauty salon successfully.