Here’s another article that shows you how important your computer can be in your battle to run a profitable salon.
Did you know that very few salon owners create their price list with profit in mind. Instead they look at their competitors’ prices and work round that, don’t they. This is actually a dangerous thing to do because, without realising, you can easily create a price list full of ‘Profit Vampires’ and because they only come out at night you won’t even see them eating up your profits and sucking the life blood out of your business!
Come on Simon … Profit Vampires eating up your profits while you can’t even see them!
I wouldn’t blame you if you thought I was being a bit dramatic, but the fact is, I’m not. Profit Vampires do exist and to prove it I’m looking at the waxing section of a real beauty salon price list right now and using a simple formula I’ll explain in a minute, I can see something which should scare all of us!
Let me show you why.
If the salon owner who created this price list had two beauty therapists, both fully booked waxing clients for a 40 hour week you’d presume they’d each take roughly the same amount of money, wouldn’t you.
If one was doing ‘Brazilians’ and the other doing ‘Underarm’ waxing … you’d presume wrong!
Based on this real price list:
The Underarm waxing therapist would take …. £792.00
The Brazilian waxing therapist would take …. £1992.00
That’s a difference in turnover of £1200 and a difference in profit of about £900 working the same hours doing very similar work … all of which would be eaten by the Profit Vampires … OUCH!!!!!
Please don’t think this only applies to beauty salons, although it often does. I’ve got a typical hair salon price list here as well. If this salon owner had two stylists, one doing children’s cuts and the other doing full head colours for 40 hours the difference would be
Children’s cuts turnover …. £600
Full head colour turnover …. £1800
Again that’s a difference in turnover of £1200 and a difference in profit of about £900 … DOUBLE OUCH!!!
OK I think that’s enough of the doom and gloom let’s look at a simple formula we can use to check your price list for profit vampires … it’s called the Pence Per Minute Formula. This is what you need to do.
Go to your Phorest system and click on the manager button and then your services button. What you’ll see is a list of all the services you provide … the price you charge for each … and the time booked out for for each.
All you have to do now is get a calculator and go down your services dividing the cost of every service by the number of minutes you book out and then make a note of the pence per minute you are charging for each service.
Just to be clear the formula is:
Price ÷ Minutes Booked Out = Pence Per Minute Charged
By the way, when we’re talking in ‘pence’ and ‘minutes’ the differences don’t sound a lot, do they. A few pence here, a few minutes there, as long as we’re busy … does it really matter?
Well to find out, just do what I did and take the lowest pence per minute figure from your list and multiply it by 2400 minutes (a 40 hour working week) and then do the same with you highest pence per minute figure and you’ll soon see just how much your stylist or therapist can lose you by being busy doing the wrong things on your price list!
Simon is now the UK’s foremost business coach for salon owners. His latest book The Salon Owner Guide To Beating The Recession was published recently and all Phorest customers are welcome to a free coaching session with him.To arrange your FREE session send an Email with the title Free Coaching Session to simon@simonlotingaconsulting.com
Why not request a demo of our salon software today? We can help you get more clients, back more often spending more!
