#26 Where the Heck Is Your Money Going? A Real Budget Breakdown for Salon Owners
You ever look at your profit and loss report and think, “Where the heck is all the money going?”
Because same.
It’s a wild ride—bringing in a solid amount of reveune but somehow still sweating every product order and praying payroll clears. Most salon owners I work with aren’t overspending because they’re careless. They’re overspending because no one ever showed them what “healthy” even looks like.
So let’s do it now.
Let’s break down how much you should be spending on rent, payroll, and products—and how to know when your budget’s out of balance.
#1 Rent: Keep it under 10% of your total revenue.
Yep. Ten percent.
If your salon brings in $500K a year, your space should cost you no more than $50K annually. That includes your lease, utilities, insurance—everything tied to keeping the lights on.
📌 If you’re over that: Ask yourself if you’re maximizing every square foot.
Are stylists booked consistently?
Are retail shelves earning their keep?
Are you paying for things you don’t really need?
Remember! A big space doesn’t always mean big profits—especially if it's not earning its keep.
#2 Payroll: Aim for 30–35% for service providers (not including taxes).
Here’s the hard truth: If your team costs you 50% of service sales, there’s no room left for anything else.
This number feels tight for a lot of owners because we’re wired to “be generous.” But generosity without strategy? That’s just sabotage with good intentions.
Your payroll % should include:
Hourly or commission pay
Bonuses
PTO
It does not include employer taxes or benefits. That’s a separate line item (usually another 8–10%).
📌 If you’re over that:
Consider raising prices
Tighten up productivity (are stylists hitting performance benchmarks?)
Revisit your compensation structure—especially if it's commission-based
#3 Product Cost: Stay around 5% of service revenue.
Yes, this one shocks a lot of people. Most salons are spending closer to 15–20%, which means you're literally coloring your profit down the drain.
Your backbar usage should be efficient, tracked, and not based on “just in case” restocks.
📌 If you’re over that:
Start tracking how much color/product each stylist is using per service
Implement a color usage system (software or scale)
Train your team on how waste = lost profit
#4 Total Overhead: Keep your fixed expenses under 50%.
This includes:
Rent
Utilities
Subscriptions
Insurance
Admin support
When this number creeps up, it puts pressure on your profit. And pressure always breaks somewhere—usually in your paycheck.
📌 If you’re over that:
Audit everything. Are you paying for software you don’t use?
Can you renegotiate terms or find better rates?
#5 Profit: You deserve at the very least, 10-15%.
This isn’t the “maybe” pile.
Profit is what allows you to invest back in the business, build savings, and pay yourself without panic.
If you’re doing everything right and still aren’t seeing that 10–15% net profit? It’s time to take a deeper look at your pricing, productivity, and payroll strategy.
If you’ve been feeling overwhelmed by the numbers or unsure how much is too much to spend—take a breath and give yourself some grace.
You’re not alone.
And you don’t have to figure it out on your own. I hope this breakdown helps you lead with more clarity, confidence, and calm.
Salt & Light,
Heather