I was talking to a friend last week who had this really awesome salon idea focused on a new express beauty service concept.
He’s a very talented guy who’s been working in a few different salons over the past year but he has always been dreaming about starting a salon of his own.
His main challenge was financing as he wasn’t sure if the savings he had would be enough to get going. So I started thinking – how much does it cost to start a salon?
How much does it cost to open a salon? The cost of starting a salon starts at around $62’000 for a good but basic setup in your own physical location. Nail salon start-up costs are typically lower than for hair salons or barbershops. The cost can be significantly higher ($500’000+) but there are also ways you can start your salon business on a much smaller budget ($2’000). Let’s go through the salon expenses you need to plan for in your salon start-up budget.
Salon Expenses List – What Include in Your Beauty Salon Budget
Getting your salon budget right is important.
The right planning will help you avoid sleepless nights and unnecessary stress.
So don’t rush this.
I will give you a rough cost estimate for each item in the salon expenses list. You’ll also get a recommendation for the best way to keep costs within budget while getting what you need. But (as you can understand) the exact cost for your salon will vary depending on numerous factors. So take your time.
Go through each item in the salon expenses list below and try to find out what the exact cost will be for your salon. This will improve the confidence in your plan significantly and you’ll not have to keep worrying about finances as you start out.
1. Salon Loans and Financing (1.25%-10% Interest Rates)
Let’s face it.
It’s probably difficult to cover all the costs of opening a salon using only your savings. You’ll most likely need to raise some capital at the beginning that you pay off during your first year when the salon is up and running. The cost of interest rates you should expect for this will vary depending on how the loan provider sees your risk profile, so it’s not possible for me to give you an exact cost to expect here.
To get an accurate picture of the loan cost for your salon, you can go to Fundera. They allow you to compare different loans for small businesses to find the most cost-effective solution for your salon.
2. Salon Insurance ($50-$1000 per Month)
Full salon insurance costs about $2,900 per year (approx. $240/month) for a beauty salon, hair salon, barbershop, or spa with two employees. However, the exact salon insurance cost can vary greatly. It can range from $50/month to $1,000/month depending on the number of employees, business turnover, which state you’re based in, and the type of services provided. There are also ways you can combine insurance to bring the cost down.
To find out the exact salon insurance cost, you can request a free quote from Hiscox online now.
It only takes 5-10 minutes to fill out the information about your salon, and you’ll get the exact insurance cost immediately.
3. Salon Software and Point of Sale System (From “Free” to $500/month)
To effectively run your salon, you need good salon management software. These are systems with features that range from appointment booking and point-of-sale support to inventory and payroll management.
There are hundreds of solutions on the market – some are “free,” and others come with a higher subscription price.
Since this is such a critical component of your salon business, I spend a lot of time reviewing salon software options (here’s my salon software top list for 2023).
Although there are solutions that claim to be “free”, you always end up paying in one way or the other.
Thus, as you consider this cost, you need to look at the total cost picture as some platforms are quite clever with how they hide the real pricing and you can then be surprised as you start to receive fees and bills.
This is why I prefer software with transparent pricing, where you know exactly what it costs. They may look more expensive at first, but as you start to dig into the details, it can be a better deal for you.
Mangomint is a good example of this – with pricing starting at $165 per month. Then you have other platforms that start at e.g. $29 per month.
But as you dig in, you may see that you have support for 10 service providers with Mangomint whereas the alternative is $29 per user. If you then also add credit card fees and other add-on charges the low-price alternative may have, you’ll start to see that it may make more sense to go with the alternative that looked more expensive at first.
You should also consider the value (time savings, client experience, etc.) the platform provides and not look at cost alone. Like with Mangomint at $165 you get a completely different system, with the best customer support, that will save you a ton of time, compared to if you were to go with a low-price alternative.
Working in Mangomint
4. Salon Website (from free to $10,000)
I’m sure you’ll agree with me that you cannot really start a salon today without an online presence. Your salon’s website helps you get visible when people search for salons in your area and is at the heart of all your other marketing activities.
But having a local agency create your website for you can be quite expensive and, even if you’re using an agency, it means another project for you to manage.
If you don’t have anything, your website may only be your salon software’s online booking page. The criteria for this approach would at least be that you can change the branding of the page with your logo and color so that people who land there understand they have in fact landed at your business.
Below is an example using Mangomint where you can switch the brand colors/ logo etc. to fit your business.
Having just your online booking is ok for linking out from social media etc. But you don’t get the full marketing benefits as you would when having a “real” website where your online booking is embedded.
See an example of this below where I’m continuing to use Mangomint for online booking but it is now integrated with the website.
Building a website like this with an agency or freelancer will likely cost you $2,000-$3,000. If you want to bring this down, you can create one yourself using a salon website builder which you can get for as low as $15/month.
5. Salon Licenses ($500 – $12,000)
There are a number of licenses you need in order to run a hair salon or other beauty business. The total license cost for a salon is approximately $12,000 where the biggest cost is the Cosmetology License. If you already have a Cosmetology License, the additional license costs should be less than $500.
To learn more about what licenses you need to start a salon, I recommend you check out my complete guide to salon licenses here.
6. Salon Branding & Design (From Free to $2,000)
Starting a salon also means starting a premium business. Not everyone can afford to go to a salon. You need to recognize that you’re offering a premium (and sometimes luxury) service.
Your brand and image should reflect this.
So to increase your chances of success with your business, you’ll likely want to invest some money (or time) in the look and feel of your brand. I’m talking about logo design, brand colors, and other visual assets that you’ll use in all touchpoints with your salon.
Here you can also use a local agency or DIY using a tool like Canva.
7. Marketing Expenses to Build Your Salon Clientele ($500-$5,000)
If you’re opening a new salon, you need to make it a priority to attract new clients. In the beginning, very few people will know that you even exist unless you invest in your marketing.
How much you should budget for marketing is really up to you. There are many ways that you can market your salon and the most cost-effective ways are typically using digital marketing strategies.
There are also many free ways you can promote your salon yourself. To give you some ideas, I’ve put together a complete list of salon marketing ideas that I recommend you check out.
8. Legal & Consulting Fees when Forming a Business ($50-$5,000)
You should set aside some budget for legal support and business formation fees. If you’re starting a “regular” salon, I wouldn’t expect this to be very high.
9. Salon Equipment ($5,000-$25,000)
Equipment needed to run your salon can be one of your initial expenses. To help you get to an accurate budget for this, I’ve put together a hair salon expenses list with the equipment you need to operate a hair salon.
As you start your salon you’ll most likely be purchasing a lot of things from Amazon. Thus, I’d strongly recommend that you register for a free Amazon Business account before you start placing orders. This gives you access to better prices and professional products that regular consumers cannot.
It may take a little while to get your account created, so it’s a good idea to register for an account now so that you have it ready when you need to start buying.
10. Initial Salon Supplies and Inventory ($2,000-$15,000)
When you start, your retail shelves will be empty, and you’ll need to fill up your back-bar with products and other supplies needed to perform your services. The cost for initial supply and inventory will vary greatly depending on the type of salon you’re starting, so it’s impossible to give you a scientific number here.
Try to do write down everything you think you’ll need and put a cost behind each item and round up your number so that you can fit all you need in your budget.
To bring costs down, try to negotiate a good deal with your product supplier and register for a free Amazon Business account to save money on the inventory and supplies you need to purchase there.
11. Salon Location (Cost Depends on Your Setup)
We’ve landed on the last item in this list of salon start-up expenses. And this will probably also be your largest expense.
It’s impossible to give you one estimate on the cost to expect for your salon location. There are many different types of locations that you can choose to start your business in. But given that this likely will be your biggest expense, I will cover some of your different options in more depth in this article.
I strongly recommend you also read my article with 21 critical factors to consider when picking your salon location here.
Let’s now go through some questions you really should ask yourself before you build your salon startup budget.
Questions to Ask Yourself That Will Impact the Cost of Opening Your Salon
There are many different things that can and will impact the cost of starting your salon and you will have to take several decisions over the coming weeks and months that ultimately determine the cost.
Before you embark on this, I believe a few questions are important for you to consider, as the answers to those questions will help guide decisions that will influence the cost.
Where do you see your salon in 5-10 years from now?
Try to create an as vivid picture as possible in your mind about where you and your salon business 5-10 years from now.
What does your salon look like? Who are you working with? What’s your clients like? What does it feel like to be there?
This does not mean that what you’re imagining is where you should start your business. However, having a vivid picture in your mind of where you eventually will be will help guide you, even if subconsciously, in many decisions along the way to get there.
What is the type of salon you want to start?
The salon start-up cost will vary depending on if you plan to start a nail salon, a spa, or a hair salon as equipment and space needed is different.
Do you have an existing clientele?
If you know you have a list of clients who will flow through your door as soon as you have your new place open you have come a long way. This will give you more flexibility when choosing your location as you are not as dependent on getting new clients from the street into your salon.
If you do not have an existing clientele you may want to go for a setup where you can benefit from getting new clients effectively.
This could be by renting a space in an existing salon or in a shop with high traffic of people.
If you are still set on having your own physical salon, you probably want to make sure that it is based in an area where there is natural traffic of people outside your salon. An option is of course also to start smaller, build your clientele, and only later move to your own physical location.
How important is a social life with colleagues to you?
Being surrounded by colleagues is very important to some people. I have seen businesses fail because the founder started the business alone and the only social interaction was with the clients.
If you know that you are a person that gets your energy from working and socializing with other people, I would strongly encourage you to find a format for your salon that will allow for this. On the other hand, if you get energy from working on your business alone, you should consider the opposite.
What other things are important in your life right now?
Starting your own salon business will take up a big part of your life. For this to work, you need to make sure you can do it in balance with other things you have going on in your life.
For example, is a flexible work arrangement important for you? Do you want to be able to take holidays and travel? Or do you want to dedicate 100% to your new salon business to truly grow and establish a new salon and brand and having employees dependent on you?
Do you want to create your own brand or rather build on something that already exists?
Setting up your own salon allows you to establish your own brand. A brand that reflects your values and how you want your salon image to be perceived.
But this is not your only option.
You can also join an established salon franchise or buy an existing salon with its brand and name. Joining an existing franchise allow you to benefit from an already well-established name, proven service concepts, and existing marketing channels.
There are pros and cons with both approaches but what’s most important is that you go with what you feel is right for you.
How much capital do you have available to invest and what level of risk are you ready to take?
More money obviously provides more alternative options for the salon you want to open up.
If you have the finances to open a bigger salon, with multiple chairs, you can benefit from economies of scale. However, this will increase your financial risk in case the business does not turn out as planned.
It is important you find a model for your salon that fits the finances you have at hand and the risk you are ready to take. If you push yourself too far here you will have a stressful time ahead of you with sleepless nights worrying about your finances.
Your Own Salon vs. Renting a Space at an Existing Location
The physical location of your salon will most likely be your biggest expense as you start your new salon so you want to make sure you think this through properly.
Having your own physical salon location gives you the full flexibility to set it up as you want it. This is what most people planning to start a salon dream about but it is also the most costly approach. Having your own location also means you alone need to build the salon clientele.
An alternative to this is to rent a chair or booth in an existing salon or shop. This does not give you the same flexibility and your business potential is naturally limited to you within the space you are renting. However, it will significantly reduce your cost as you set out as you probably will get access to equipment and supplies as part of your rent. The location you are renting at will likely also help bring you new clients so this is typically a preferred approach if you do not have an established base of clients yet.
Let’s take a closer look at these different options and what costs to expect for each model.
Your Own Physical Salon
Renting vs. Buying
As you start looking for a location for your salon you’ll likely find locations you can buy, lease, or rent.
Buying a location can in fact be cheaper than renting but it requires that you have the financial ability to get a mortgage for the location. You will also need at least $15’000-70’000 in cash for the initial down payment for a $100’000-$700’000 property investment. Leaving you with a $1’000-2’000 monthly mortgage.
The cost of buying a space for your salon varies greatly depending on the location and standard of the property so make sure you do some good research in the area where you are looking to open your salon first.
Also, the cost of renting varies by area and you can find an average annual cost per square foot for most areas. To rent a salon located in a shopping mall or on a high traffic street can cost $25/sqft while if you go further away the cost can go to $10/sqft.
Depending on the location the landlord may also add additional fees to cover for example maintenance of common areas. Make sure you take into account the total cost for rent, salon utilities average cost, and other fees when selecting a place to rent.
For more factors to consider when picking your salon location, I recommend you read my guide on how to choose a salon location.
What’s the Average Square Footage of a Salon?
Among the 550’000 salons and spas in the U.S. the average size is 1’500 sqft.
I would say that if you have a salon of that size you have a good room to grow your business. It’s also possible to manage in a smaller location but you will need to smartly consider the furniture that you install to optimize the space. In fact, I’ve created a dedicated article with design ideas for small salon spaces here.
Cost for Taking Over an Existing Salon
Taking over an existing salon will minimize major renovation interventions on the property as it is already built out to support salon operations.
You will also get the salon equipment you need to get going from day one. And, more importantly, by taking over an existing salon you’ll also benefit from the existing clientele built up by the previous owners. However, if you buy the full salon with operations as it runs today you will, of course, want to make sure the style of the salon and it’s clientele is in line with the type of salon you want to run and also the current trends.
The cost for taking over an existing salon starts at $62’000 and assumes you rent the location with the below upfront investments.
|Rent deposit||$4 500|
|Buy out the current salon||$10 500|
|Leasehold improvement||$15 000|
|Initial Supplies||$8 000|
|Initial Inventory||$4 000|
|Certifications/ Licenses||$4 000|
|Legal or Consulting Fee||$1 000|
The cost can be significantly higher if you buy a salon with a well-established brand that is has proven to be profitable today.
Cost for Starting a Salon From Scratch
Starting a salon from scratch by renting a new space and turning it into a salon comes with benefits.
You have more options of location on the market to choose from and you will be able to build the salon up exactly the way you want without worrying about the image and reputation of the previous salon.
The drawback of building out a new salon from scratch is that you will need to invest substantial money up front to turn it into a salon with renovation and new equipment.
No one will know about the salon either so you will need to be prepared to do some marketing in the beginning to establish the salon in the neighbourhood.
The cost for opening a salon from scratch starts at $90’000 assuming you will rent the location. Below is a break down of the cost.
|Rent deposit||$4 500|
|Buy out current salon||$0|
|Leashold improvement||$35 000|
|Initial Supplies||$8 000|
|Initial Inventory||$4 000|
|Certifications/ Licenses||$4 000|
|Legal or Consulting Fee||$1 000|
Common Monthly Salon Expenses
On top of the upfront investments, you should also consider your ongoing costs. You should make sure you have some spare budget available to cover at least 2-3 months of expenses without any income as it may take a few months to fully get your salon up to speed and generate income.
- Rent or mortgage payments ($400-$3 000)
- Wages ($4 000): Even if you do not employ anyone at the start you should not forget to plan a wage for yourself
- Utilities ($150-500): Cost for electricity, water, etc.
- Facility maintenance ($300): There will always be some work needed on the facility to maintain it at the state you want so make sure you plan room for this in your budget.
- Education ($50): Continues investment into yourself and your team is important for the long term success of your business so you should set aside money for this as well.
- Buffer Budget ($200): As a business owner you’ll always have some unexpected expenses.
Creating Your Salon Start-Up Budget
You should now have a good idea of what expenses to expect as you set out to build your new salon business. You have an exciting journey ahead of you that will bring you a lot of joy but also hard work and as an entrepreneur, you will go through difficult times.
You can reduce the stress that comes with setting out on a new business venture significantly by making sure you have a solid view of the costs you will have as you start out. I would highly recommend that you plan your finances so that you can cover your start-up costs as well as the first six months even if you fail to meet your planned income target. This will give you more confidence and less sleepless nights.
You should include your budget in your salon business plan. To learn more about how you can create a business plan for your salon, I recommend you read my step by step guide to creating a salon business plan here.
When you have a view on the costs, planning your budget should not be difficult.
Your budget is of course only one of the many steps you need to complete when opening a salon. For a complete opening a salon checklist, I recommend you read my mega salon start-up guide here. This is truly the ultimate guide to opening a salon and a must-read for anyone starting a beauty business.
I hope you found this article helpful. Please share your thoughts, questions, or your own experience in the comments box below.
Have a great day!