Every year, 15 million pounds of colorlbs of colour is wasted in the United States, which equates to about 27% of colorcolour purchased in the industry. That means that over a quarter of every tube of color never touches a client’s head. Waste underpins the performance of the colorcolour department in salons and there are some key metrics that will help you understand how well your colorcolour business is performing.
Where it All Begins: Profit Margins
The salon industry runs on averages; Salons base the quantity of colorcolour mixed off of what is seen in the industry, rather than what is right for their services and clients. The industry average for a retouch is 40 grams of colorcolour, but what happens when more is used and not tracked? The salon runs out of inventorystock more quickly than anticipated and loses money when more colorcolour is used for the length and density of the client’s hair. And what about the other end of the spectrum – using less than the anticipated 40 grams? The 40 grams has already been mixed, leaving all of the extra product to be poured down the drainplughole. Both of these scenarios aren’t great for business, affecting your bottom line and impacting the environment.
Basing the product use and profit margins on industry averages rather than personalizingpersonalising it for the service leaves your profit margins in a vulnerable position. Vish has tracked that profit margins can vary by up to 20% across different service categories. Knowing exactly what each stylist in your salon uses on every service will give you the ability to accurately predict future profits, ensure your inventory is precisely stocked, and is the best way to guarantee your profit margin.
Variance in Cost Per Service
The average cost per service ranges from $3 – $18£4 – £16 depending on the service being performed, the colorcolour line, and the stylist. With this much variance, it means some services may be profitable but others are low or unprofitable. Why not standardizestandardise the profit margin and guarantee the same profit on every service? This table shows the average cost per service for the three most common services performed in salons and their gross profit margin.