Pricing salon services: cost, margin and when to raise prices

Pricing salon services starts with knowing what each one costs you. Add four things: the products it uses, the stylist’s time and commission, a share of rent, electricity and other fixed costs for the hours the chair is busy, and the margin you want. Then add 5% GST, or include it in the menu price. Most salons copy the salon down the road instead. That works until a service that looks popular turns out to make a loss every time.

Step 1: product cost per service

Take each service and list what it uses, in the amount a stylist really uses, not the amount on the box. For a colour that might be 60 ml of colour and 90 ml of developer. Work out the cost per ml from your purchase price, including the GST you paid. At 5% without input tax credit, that GST is a cost you can’t claim back (see GST on salon services).

• Colour tube 60 ml bought at ₹420: ₹7 per ml.
• Developer 1,000 ml bought at ₹800: ₹0.80 per ml.
• Add the small things: shampoo and conditioner at the basin, gloves, foil, cotton, towels washed.

Weigh or measure for a week. Many owners are surprised how much more is used than they think, especially on long hair. A stock routine shows the real figure month by month.

Step 2: stylist time and commission

Staff are usually your biggest cost. Work it out in one of two ways, or both:

• Time cost for salaried staff: monthly salary ÷ productive hours. A stylist on ₹30,000 who does about 200 hours of client work a month costs ₹150 an hour.
• Commission: a percentage of the service price, usually worked out after discounts and without GST. If you pay salary plus commission, count both.

For a stylist on commission only, the commission is the staff cost, so leave out the time cost and use the commission line alone. Either way, remember the helpers: a junior who shampoos and blow-dries is part of the service’s cost too. The commission calculator helps you test rates, and our guide to stylist commission covers the common structures.

Step 3: rent and running costs per chair-hour

Add up a month of fixed costs: rent, electricity, water, maintenance, the front desk’s salary, software, cleaning and marketing. Divide by the chair-hours you actually sell, not the hours you are open. A chair that is empty half the day still costs rent.

Example: ₹1,80,000 a month in fixed costs, 6 chairs, 11 hours a day, 30 days = 1,980 chair-hours. If chairs are busy 60% of the time, that is about 1,188 busy hours, so each busy hour carries about ₹151 of overheads. Fill more hours and this number falls. That is why quiet-hour offers can make sense.

Worked example: pricing a global colour

All numbers below are a sample. Use your own.

The formula behind it: price before GST = cost before commission ÷ (1 − commission % − margin %). Here, ₹1,154 ÷ (1 − 0.10 − 0.35) = ₹1,154 ÷ 0.55 ≈ ₹2,100. Now test your current price the other way round. If your menu says ₹1,500 with GST for this colour, that is ₹1,428.57 before GST. Take off ₹142.86 commission and ₹1,154 of costs, and about ₹130 is left for two hours of a chair.

Put GST in the menu price, clearly

Decide once: prices include GST, or prices are plus GST. Including it gives clients one round number and fewer arguments at the desk. Printing “+ GST” makes your prices look lower, but the client pays 5% more than the menu. Whichever you choose, say it on the menu, the website and the WhatsApp price list.

When to raise prices

• Your costs went up: rent renewal, a supplier’s price rise, a salary round.
• Your best stylists are booked out a week ahead. Demand is higher than your price.
• A service’s margin falls below what you set, month after month.
• It has been over a year. Small yearly rises of ₹20 to ₹50 upset fewer clients than one big jump every three years.

Give clients notice: a line on the menu, a message to regulars a fortnight ahead, and a reason in plain words. Keep a few entry prices steady so new clients still walk in.

Be careful with discounts too. A 20% festival offer on a service with a 35% margin gives away more than half your profit on every bill. Before running an offer, work out what is left per service at the offer price. Offers on quiet weekday hours, when the chair would otherwise be empty, cost far less than offers on a busy Saturday.

Menu design and combos

• Price by stylist level. Senior, stylist and junior prices for the same cut let clients choose, and give juniors a way to build a book of clients.
• Combos with a reason. “Haircut + Beard ₹400” saves the client a little and saves you a booking slot. Check that the combo still beats its cost.
• Lead with what you want to sell. Put high-margin services near the top; clients read the first lines of each section.
• Don’t list every variant. Fewer lines with clear lengths (short, medium, long) are easier to read and to bill.
• Packages for regular services. Five hair spas paid upfront bring clients back. See salon packages.

Checking your prices in Frizzi

The Profit by service report shows what each service really leaves after costs, and Analytics shows the average bill and estimated profit. With Pro, a service’s recipe (for example 60 ml colour and 90 ml developer) takes products off stock as you bill, and Frizzi warns you when a frequent service’s margin falls below 30%. Combos and branch prices for services are in every plan. See reports, stock and plans.

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