Taking the leap of faith to venture out and begin your own business as an esthetician is something to be super proud of! Whether you’re employing others in a salon or renting your first solo salon studio space, maximizing your return on investment (ROI) is a crucial part of building ongoing success.
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What is ROI for Salons?
Investing in a salon space requires not only time and careful consideration, but also a large sum of money. We’ve all heard the saying, “You have to spend money to make money,” and it definitely is applicable when talking about ROI for salons.
ROI is the acronym for “Return on investment.” ROI for salons is important because an efficient salon business has an ROI that ensures a reasonable return on the investment.
When looking at your ROI as a salon owner, you want to make sure you’re not overspending and funneling more money into the business than you’re making from the business.
How to Calculate Your ROI for Your Salon
To calculate ROI for your salon, divide the net profit by the total investment. A good ROI aim for a salon is 10%.
Buying Products and ROI
One way to maximize your ROI as a salon owner is to start buying products more thoughtfully. Better quality products means a bigger return on your investment, period.
Think about it this way, imagine you’ve decided that you want to buy a new wax warmer. If you buy a high-quality wax warmer initially you might hesitate because of the higher price; however, that high-quality warmer isn’t going to have malfunctions that delay services like the wax not warming up thoroughly.
If you invest in a low-quality warmer, on the other hand, you might save more upfront but in the long run you’re wasting time that could be spent providing more services waiting for a good melted wax consistency.
Another investment that makes a huge impact on your overall salon business success is buying formulas that are effective. When it comes to things like wax, good quality wax can make all the difference. Our Nova wax formula is a great example of effective buying.
The Nova formula works everywhere on the body, meaning you don’t have to spend time researching what works best where, experimenting with different clients, or monitoring your inventory.
Since it works everywhere you can also reduce your overhead costs greatly because you can buy it all at once and not have to worry about storage space. Oh, and it’s also stripless! You don’t have to spend that extra money on supplies like you would when investing in a soft wax.
Meaningful investments in machines, tools, and products make a big difference in your return on investment through acquiring repeat business. Clients really value salon owners who take pride in their business and spend that extra money to provide them with the best of the best.
Wholesale Salon Supplies and ROI
Another way to get a good return on your investment is by buying salon supplies wholesale. Wholesale salon supplies are the same high-quality supplies only in a large or “bulk” amount, which reduces your overhead cost and saves you time - talk about a good return on investment!
The best way to assess how buying in bulk can really help you maximize your profits is by comparing the prices per pound of bulk hard wax.
Buying in bulk for a salon means that salon owners can have peace of mind that their quantity is sufficient for the number of services they’re providing. If the salon gets unexpectedly busy there’s no rush to go get whatever wax you can find at the beauty supply store (yes, we’ve been there too!) because the investment was made in purchasing bulk.
The low-cost high quantity model that buying wholesale provides is a great way to stay on track with reducing operating costs.
At Nova, we really care about our customers and want to provide them with the best wholesale buying experience we can. Our NovaPro Portal is our exclusive professional portal that offers preferred pricing to licensed professionals on wholesale supplies.
Service Pricing and ROI
Deciding the pricing for your services is a huge part of not only maintaining and attracting the right kinds of clients, but also ensuring that your salon is on the track toward improving ROI. Some things to consider when pricing your services include the prices of other services in the area, general business expenses, and your own waxing preferences.
In order to stay competitive in your area it’s important to do a little research and figure out what other salons are charging for services. You don’t want to overcharge and turn potential clients off; but, you also don’t want to sell yourself short by discounting your awesome work!
As for general business expenses, you want to keep things in mind like whether or not you have employees, overhead costs like salon rent, and cost of supplies. Keep in mind that your general business expenses can vary from month to month and it’s important to stay organized and really monitor every cent you spend on making your salon the best it can be.
Sometimes it might be necessary to run some specials on service pricing in order to meet your end of the month goals expense-wise!
Lastly, waxing preferences make a huge difference when it comes to calculating how much to charge for your services. Some esthies are really “heavy-handed” when it comes to wax application and can use a lot more than others who take a more conservative approach.
The best way to figure out how much wax you use is to do some experimenting! Measure how much it takes for each service with a measuring cup and use a lucky friend as a wax guinea pig. That way, they end up getting a free service and you’re able to see just how much wax you need to buy for each service to factor into your ROI.
Although it may cost you first initially, in the long run it will really save you and allow you to justify maybe charging a little more for large services like leg waxes.
How to Increase Sales in Your Salon
Increasing sales in your salon can be done very easily with a few strategic moves.
One of the best ways to increase sales is to sell take-home aftercare products. Clients really appreciate salon owners going the extra mile and thinking about their care outside of the salon room.
Products like pre-wax cleanser and post-wax lotion/oil are a great aftercare bundle to sell after services. They also help start a conversation about the client’s next visit and how to prep. Hello, loyal clients!
Another great way to increase sales in your salon is by upcharging services. If you’re doing a Brazilian wax, for example, you can add an addition like a post-service hydrating mask to really prevent ingrown hairs as much as possible.
Lastly, a really easy and cost-effective way to increase sales in your salon is to offer a referral program.
A referral program can be as simple as “refer one client and get 20% off your next service.” Referral programs are a great way to gain more clients and increase revenue, without adding any additional operational costs. They’re a win-win!
Improving ROI and increasing salon sales are two tasks that can be easily accomplished with thoughtful buying and planning. Investing in high-quality products and buying wholesale supplies in bulk reduces your salon operation costs greatly and secures returning good business.
At Nova, we support all salon owners and operators and offer a NovaPro discount program and portal for the easiest access to wholesale supply shopping.
Making sure that your services are priced fairly and increasing or decreasing them accordingly as you really start to get an idea of your salon expenses is a sure way to improve ROI. Finally, selling products, upcharging services, and implementing referral programs are all other great ways to improve your salon sales.
Now, go get that return on your investment and increase those salon sales!