Many of you have reached out to me in regard to knowing your cost per service.

I know what the industry tells us. Break down the cost of each individual service. From suds to soap. From top to bottom.

Most of you break down the “product” cost per service. However, to get a true picture of what your overall “cost per service is”, involves more than just knowing your product cost.

This advice was good advice 50 years ago…..but not now. It’s 2020 for crying out loud.

We have gadgets to determine anything for us. We have Technology like never before and its only getting better.

In other words, we have FREE access to ANYTHING educational.

ARE YOU LEARNING?

ALWAYS?

I believe as a Nail Technician in the Beauty Industry, most of us….not all….most of us only search out education which is pertinent to our Profession.

  • Nail art
  • Nail Glitter
  • E-file
  • Acrylic classes
  • Pedicure classes
  • The list goes on and on

 

How many of you go outside your bubble to experience other types of education?

I have. When I was in search of the best disinfection product available to us, I researched the dental industry. Which, is how I found our disinfection product and why I solely endorse Micrylium.

That’s what I do my entire life. THAT is who I am.

I like to learn so I can  grow so I can share and watch others grow

I learn all over the internet from highly well know Professionals, to someone you would never expect to learn from. It’s amazing.

This is how I was taught, it’s not about cost per service.

It’s about square footage!

How much money do you need to bring in to cover your square footage $$$.

Every bit of money you spend on that Salon must be accounted for.

  • rent
  • electric
  • water
  • taxes
  • payroll
  • insurance
  • license/fees
  • toiletries/misc
  • automobile

Anything and everything that is purchased and ran through your Business.

When we calculate our square footage cost, you can determine so many other areas.

  • If you chair rent, how much should you charge?
  • When you hire, what $$$ production do you need from them?
  • What is your service cost going to be?
  • When you offer a special, how much can you really afford to discount?

These and many more questions come to light when you know your square footage cost.

Let me help you with the calculation. We need to begin with some very important questions

  • What is the total square footage of your facility
  • What is your monthly rent
  • What is;
    • Utility
    • Purchases
    • Education
    • Insurance
    • Payroll
    • etc….ALL your expenses

Once you have these concrete numbers, you can begin to determine your sq footage $$$$.

Let’s use the example of a 2000 sq ft facility, rent amount $3,000.00 per month. And, let’s just use $3000.00 as additional monthly expenses.

Divide your sq footage amount by your monthly rent ($1.50 per sq foot)

Divide your sq footage amount by your monthly expense ($1.50 per sq foot)

Total the 2 numbers together ($3.00 per sq foot)

NEXT SET OF QUESTIONS;

  • How many services will you be offering?
  • What sq footage will these services take up?

In other words, if you have 2000 sq feet (as the example above), the breakdown looks like this;

  • 120 sq feet Skin Care
  • 120 sq feet Massage
  • 120 sq feet Tanning
  • 150 sq feet Pedicures
  • 200 sq feet Manicures
  • 200 sq feet reception
  • 520 sq feet Hair
  • 400 sq feet warehouse/break room
  • 80 sq feet kitchen
  • 90 sq feet bathroom

Now you start the breakdown

  • Skin care = $3.00 x 120 = $360.00
  • Massage = same
  • Tanning = same
  • Pedicures = $3.00 x 150 = $450.00
  • Manicures = $3.00 x 200 = $600.00
  • Reception = same
  • Hair = $3.00 x 520 = $1560.00
  • Warehouse/break room = $3.00 x 400 = $1,200.00
  • Kitchen = $3.00 x 80 = $240.00
  • Bathroom = $3.00 x 90 = $270.00

However, remember….the last 3 produce no income (Warehouse/kitchen/bathroom), so you have to incorporate those $$$ into your other pricing.

  • All 3 = $1,710.00
  • Divided by # of services (7) = $242.85

Therefore, you actual total sq footage cost per service =

  • Skin care = $3.00 x 120 = $360.00 $602.85
  • Massage = same
  • Tanning = same
  • Pedicures = $3.00 x 150 = $450.00 $692.85
  • Manicures = $3.00 x 200 = $600.00 $842.85
  • Reception = same
  • Hair = $3.00 x 520 = $1560.00 $1,842.85

Knowing these numbers is how you determine how your services are performing. You can determine how your team is doing. You can determine how much to charge for rent, if you booth rent. And, if you are in a suite, you can determine how much you have to bring in just to cover the overhead. In addition, and most important….you determine what to charge for your services…..and so much more!

The last, but not the least of what you need to determine is….

What is your worth?

When I was hiring, I would always ask potential team members, how much do they want to make? I never ever got a satisfactory answer. Either they couldn’t give an answer or the answer was so low, it didn’t make me want to hire them.

This is a very important and necessary question to answer.

As you can see, determining your cost per service is well beyond knowing your product cost.

If you really want to know your cost per service, the exercise just listed will give you the most accurate.

Don’t know the numbers? Bad on you. Every Business owner large or small MUST know their numbers. Having this information and surviving during critical times is the difference between success and failure.

Once you have all the numbers, you now need to break it up into hours.

Will all your services being working 7 days a week, 24 hrs a day? Of course not. Therefore, you have to break it down even further.

Let’s keep it simple and figure that all services will be available 40 hrs per week.

  • Skin care = $3.00 x 120 = $360.00 $602.85 ÷ 40 = $15.07/hr
  • Massage = same
  • Tanning = same
  • Pedicures = $3.00 x 150 = $450.00 $692.85 ÷ 40 = $17.32/hr
  • Manicures = $3.00 x 200 = $600.00 $842.85 ÷ 40 = $21.07hr
  • Reception = same
  • Hair = $3.00 x 520 = $1560.00 $1,842.85 ÷ 40 = $46.07/hr

Realization – we aren’t done yet, however based on the above. If you charge $30.00 for a pedicure, you have just rated your worth at $12.68 per hour 

    This exercise is not easy and it is an exercise which you should take your time on.

    I also recommend adding another 10% to your numbers….for incidentials that you may have forgotten. AND…don’t forget to add at least 10% for “owner drawer”, an expense we should always take first. (the most valuable lesson I ever learned)

    Once you have determined your sq footage cost. You now know what amount of $$$ you MUST bring in JUST to pay the rent and expenses.

    Once you know your worth….how much do YOU want to be worth per hour.

    Combine the two(2) together and THAT is your bottom line service cost.

    I’m sure heads are spinning and many may look at this like it’s too much work. Well, if you are one of that many…..close shop right now. You don’t belong in Business.

    Knowing your bottom line cost is your key to survival. Otherwise, you are just winging it!

    Ya know……I was self taught after my years in College. I taught myself how to do nails, I taught myself the Business aspect. There was no internet, no utube and not even a spec of Mfg. education that there is now.

    Resources are our greatest assets. I’m happy to be your resource if you would like some help. Reach out to cj@centreforbeauty.com

    CJ Murray, President

    CJ Murray
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