If you’ve ever wondered how to precisely determine whether every dollar a client spends actually turns into profit for your salon—or just quietly disappears into the daily hustle—then you’re in the right place! Calculating your service cost price may sound a bit dull, but it’s truly the secret to salon success. And – honestly – it’s easier than you might think!

What exactly is service cost price, and why should it matter to you?

The cost price is the revealing figure that shows exactly how much money it truly takes to perform one service—from all the little details accounted for! It’s the financial backbone of your salon. Without knowing your cost price, it’s easy to fall into traps like “My competitors charge this much, so I’ll charge the same” or “Maybe the client will cover it?” If your price ends up lower than the real cost of the service, you’re essentially giving away freebies.

But how do you calculate this number precisely? Let’s break it down step-by-step with real-life examples!

1. Material costs – tally up everything you use!

This is the most tangible part: shampoos, masks, serums, nail polishes, gloves, cotton swabs—everything that even briefly touches the client deserves to be noted. Often, only the big items like hair color are listed, but small details such as towel laundering or wear and tear on metal clips get overlooked.

Simple tip: Pick one of your most common services (for example, hair coloring), perform it mindfully, and write down:

  • Exactly how much color, product, conditioner, and mask you use;
  • How many cotton pads, disposable capes, pairs of gloves;
  • Whether any tool—like a comb or foil—needs to be replaced or washed after each service.

Then, create a list (or small spreadsheet). Add the purchase price of each item (yes, even a single cotton swab counts!) and total them up to get the material cost per service.

Pro tip: If you use SalonLife’s inventory management system, you can log product usage directly in the app—no paperwork needed, all expenses are tracked, and it’s easy to spot if any cost is gradually rising. Think big and check out which best inventory management practices can boost your salon operations!

2. Labor cost – your time is priceless

No salon service performs itself! If you give away your hour, you should earn that price back—not just as wage, but including all taxes and employer expenses.

How do you do it? Measure how many minutes or hours each service actually takes. Include not only the hands-on client time but also:

  • Preparation (mixing colors, getting towels ready),
  • Cleanup and aftercare,
  • Consultations with the client.

Then multiply the total service duration by your (or your employee’s) hourly rate. Remember the hourly rate includes taxes, work clothes wear, and any related training costs. For example: if a haircut takes 45 minutes and your fully burdened hourly wage is $14, allocate about $10.50 labor cost per service.

SalonLife helps: If you book services digitally, you can see exactly how much time each service takes in actual appointments. This helps you quickly spot if some treatments are becoming time sinks. See how optimizing your salon calendar can improve your time management!

3. Other costs – all those little expenses that don't just vanish

Now we have materials and labor. But your salon’s daily life also includes numerous small fixed costs that don’t go away. We’re not quite in the era of “self-cleaning towels” or “everlasting blow dryers” yet!

What falls under this? Electricity bills, water usage, cleaning supplies, towel laundering and ironing, amortization of work conditions (“how many hair color sessions does a chair endure before needing replacement?”). And sometimes even the little chocolate or cup of coffee you offer your client.

The easiest method: total these expenses monthly, divide by the total number of services performed, and you get, for example, an added $1.60 “overhead” per service. Monitoring this consistently (and categorizing expenses within SalonLife) helps you spot early if any part of your salon’s utilities or overhead costs are creeping up. And all this also belongs in your service cost price.

Decoding the final figure – what to do with your cost price?

Once you’ve added up material costs, labor, and overhead, you get the exact cost price for a service. This is the number below which it’s not wise to set your price—even when your Saturday night booking list is empty and the temptation to lure clients with “cheaper prices” is strong!

Want to learn how to price your salon services confidently and profitably? Before making decisions, be sure to check out industry trends and the most profitable salon services to better understand your market position and potential.

Imagine all these numbers as your small allies, giving you the freedom and confidence to charge a fair price—not just a “guess-timated” one, but an informed choice that secures your salon’s future. And if you used digital tools like SalonLife for your calculations, you can always track in real-time how your material expenses and time usage evolve. This way, for instance, rising prices of more expensive hair colors won’t silently erode your profits.

Sound boring? Definitely not! Knowing your exact cost price empowers you – it frees you from “guesswork,” likely keeps more money in your wallet, and helps build a salon that stands strong even when the market faces tougher winds.

Now that you have the tools to calculate the cost price of each service, in the next article we’ll take the next step—discussing how to set prices that bring profit, not headaches. Which pricing strategy to choose and how it impacts your daily work? Stay tuned! Are you ready?

Find more helpful tips and tools on the SalonLife blog: https://www.salon.life/en/blog