Where Is Your Money Going?

If you’ve ever found yourself wondering, “Why is my salon always busy, but my bank account doesn’t reflect it?”, you’re not alone. Being fully booked is a great feeling… but it’s not the whole story.

In this week’s Know Your Numbers, Know Your Power series, we’re breaking down the five non-negotiable metrics every salon owner must understand to build a truly profitable, sustainable business.

1. Cost of Goods Sold (COGS)

Your COGS includes all the products and supplies used during services — color, shampoo, foil, gloves, etc. It’s not just what you buy, but what gets used.

• Healthy Benchmark: Keep COGS under 10% of your service revenue.

• Why it matters:  Overspending here eats into profit fast. It’s not about cutting quality, it’s about managing inventory wisely, pricing services accordingly, and ensuring product waste is minimized.

2. Profit Margin

This is the bottom line — what’s left after all expenses are paid.

• Healthy Benchmark: Aim for a 15–20% net profit after owner pay.

• Why it matters: Busy doesn’t mean profitable. You can generate $500k in revenue and still break even (or worse). Knowing your margin helps you make smart decisions about pricing, expenses, and growth.

3. Payroll %

This includes all compensation: commission, hourly pay, bonuses, taxes, and benefits.

• Healthy Benchmark: Stay under 50% of your total revenue (including taxes and benefits).

• Why it matters: Payroll is often your biggest expense. A bloated payroll structure can cause cash flow stress. A healthy payroll percentage ensures your team is well-paid and your business is protected.

4. Retail to Service Ratio

This tells you how much retail you’re selling in comparison to services performed.

• Healthy Benchmark: Retail should be at 10–15% of total revenue.

• Why it matters:  Retail isn’t just “extra”, it’s an important profit center. You’ve already earned the client’s trust. Selling take-home products boosts loyalty, results, and revenue.

5. Prebooking Rate

This is the percentage of clients who rebook before they leave.

• Healthy Benchmark: Aim for a 65–85% prebooking rate.

• Why it matters: Prebooking ensures future revenue and stability. It reduces gaps in schedules, builds client loyalty, and minimizes the stress of last-minute bookings.

💡Busy Doesn’t Mean Successful

When you know your numbers, you shift from being reactive to strategic. You stop chasing “busy” and start building something scalable.

Tracking these five numbers consistently will give you clarity, control, and confidence in your business. Because at the end of the day , you can’t improve what you don’t measure.

Numbers aren’t just data, they’re diagnostics. They tell the truth when things feel murky, and they help you lead with clarity instead of emotion. Whether you’re thriving or barely making it, the first step toward growth is understanding exactly where you stand.

Don’t be afraid of what the numbers say. Instead, let them be your guideposts, showing you what’s working and where to focus next.

Because when you know your numbers, really know them, you unlock the power to lead with confidence, create intentional growth, and build a salon that serves both your guests and your life.

You’ve got this. 💪

Let’s build smarter, not just busier.