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Splitting the Dollar— Understanding Today’s Salon Economics

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At Ethos, we have had the privilege of working closely with licensed stylists and salon owners across the country. Through our interactions and partnerships, one topic that consistently arises is the financial challenges faced by those in the salon industry.

In a recent video, our managing partner, Josh Hafetz, addressed a crucial aspect of salon economics that often goes overlooked: where does all the money go? This question is not just a matter of curiosity; it’s essential for stylists, salon owners, and their guests to understand the financial dynamics that impact their business and services.

Let’s break it down. For every dollar that comes into a salon, a significant portion, around 60 to 65%, goes toward customer wages. This includes paying stylists, front desk staff, support assistants, and associated payroll taxes. The next substantial chunk, about 15%, is allocated to purchasing products, followed by approximately 10% (at the low end) for rent expenses.

After accounting for these essential expenditures, salon owners are left with a mere fraction of the revenue, typically around 15 cents per dollar. However, this amount quickly diminishes when factoring in additional costs such as credit card fees, technology and software expenses, insurance premiums, and providing conveniences like refreshments and luxury amenities for clients.

Furthermore, maintaining a clean and welcoming salon environment entails expenses for cleaning supplies, maintenance, towels, and other essentials. These costs add up quickly and further reduce the already slim profit margins.

It’s alarming to note that despite the dedication and hard work of salon owners and stylists, a staggering 85% of salons in America are not profitable. Many salon owners find themselves relying on their own service income to keep their businesses afloat, highlighting the immense financial strain within the industry.

At Ethos Beauty Partners, we understand the challenges facing salon owners and stylists. That’s why we’re committed to providing not only top-quality beauty products but also valuable resources and support to help our clients thrive in a competitive market.

By shedding light on the economic realities of the salon industry, we hope to empower salon owners and stylists to make informed decisions and navigate financial challenges more effectively. Together, we can work towards building a stronger and more sustainable future for the beauty industry.