How to Price Your Services for Profit (Not Just Revenue)

2 min read

Pricing is emotional. I get it. Raising your prices feels scary. What if clients leave? What if they think you're too expensive? What if you lose bookings?

But here's what I learned the hard way: undercharging is the fastest way to burn out and go broke at the same time.

If you're pricing based on what your competitors charge, or what "feels right," or what you've always charged — you're doing it wrong. Let me show you a better way.

Step 1: Know your cost per hour

Before you price a single service, you need to know what it costs you to operate for one hour. Add up everything:

  • Rent (divided by operating hours)
  • Wages (including super, leave loading, workers comp)
  • Products per service
  • Utilities, insurance, software
  • Your own wage (yes, include this!)

For most salons, this lands somewhere between $80-$150 per hour per service provider. If you don't know your number, stop reading and go calculate it. Seriously.

Step 2: Add your profit margin

Your cost per hour is your breakeven. Every dollar above that is profit. I recommend aiming for a 20-30% profit margin on top of your costs.

So if your cost per hour is $100, you need to be charging at least $120-$130 per hour of service time.

Step 3: Price the service, not the time

Here's where most people go wrong. They price a haircut at $60 because it takes 45 minutes and that "seems right." But they haven't factored in:

  • Consultation time
  • Wash and prep
  • Product cost
  • Gap time between clients
  • The 10 years of training it took to cut hair that well

Price based on the value you deliver and the cost it takes to deliver it. Not based on what feels comfortable.

Step 4: Review every 6 months

Costs go up. Rent increases. Products get more expensive. If you're not reviewing your prices every 6 months, you're giving yourself a pay cut.

I know it feels awkward. But a 5% increase twice a year is barely noticeable to clients and can mean an extra $10-20K in your pocket annually.

The mindset shift

Stop thinking about pricing as "what will people pay?" and start thinking about it as "what do I need to charge to run a profitable, sustainable business that pays me what I'm worth?"

You didn't get into this industry to be broke. You got into it because you love it. Proper pricing lets you keep loving it without the financial stress.

A note on "expensive"

When someone says you're too expensive, what they're really saying is they don't see the value. That's either a marketing problem or they're not your ideal client.

The clients who value quality will pay for it. Build your business around them.

NISHA founder