Updated 2026-07-16 · 3 min read
How did you set the price of your cut? If the honest answer is «I looked at what they charge around here and matched it», welcome to the majority club — and to the problem: you're using another business's costs (which you don't know) to set your own income. Today we build your price from your real numbers, with a method that takes an afternoon and a calculator.
Step 1 — All your monthly costs, no mercy
Make the full list of what it costs to open your door for a month, including the lines everybody forgets:
- Rent and rates · utilities (electricity, water, heating) · your own salary (at market rate: if you hired somebody with your hands, what would you pay them?) · the team's wages and employer contributions · product (colour, shampoos, consumables) · insurance, accountant, software · marketing · the write-down on equipment (that £400 dryer wears out too).
A realistic example for a small salon (you plus one part-timer): £1,150 rent and rates + £250 utilities + £1,750 your salary + £1,000 part-time wages with contributions + £570 product + £280 insurance, accountant, software and marketing = £5,000 a month.
Step 2 — Your billable hours (the number nobody works out)
You're open around 170 hours a month, but you don't bill 170: there are gaps, phone calls, cleaning, the client who turns up late. At a good 70% occupancy you have around 120 billable hours across the two active chairs. And here's the revelation:
This number — your cost per chair-hour — is the compass for the whole business. When occupancy drops it goes up (which is why filling the gaps makes your hour cheaper); when you lose an appointment to a call nobody picked up, you lose £42 even though «nothing happened».
Step 3 — From cost per hour to the price of each service
The formula: (cost per hour × the service's time) + product used + profit margin (15-25%). With our example:
- Cut and blow-dry (45 min): 42 × 0.75 = 31.50 + £1 of product = 32.50 → with a 20% margin ≈ £39.
- Root colour (1 hr 15 including application and rinse): 42 × 1.25 = 52.50 + £9 of product ≈ 61.50 → £74.
Did the numbers come out above your current price list? They do for almost everybody: it's the uncomfortable moment of the method, and the explanation for why so many busy salons don't make it to the end of the month. There are three ways out and they combine: adjust prices (this guide is about saying it well), raise occupancy (more billable hours = a lower cost per hour) or cut the dead time inside each service. What isn't a way out is carrying on charging £21 for something that costs you £32 to produce.
Step 4 — Check that reality obeys the plan
A well-calculated price decays quietly: services that run long, product used more heavily than budgeted, «because it's you» discounts that erode the margin. Review average spend and takings by service every month — the takings reports do it for you — and recalculate the cost per hour whenever a big cost moves (rent, a new hire) and at the very least once a year.
The competition can inspire your positioning; your prices can only come out of your costs. An afternoon with this calculator is worth more than ten years of «matching the place next door» — and it's usually the afternoon a trade turns into a business.