Salon Business Practices and Management
Where the money actually goes
A salon owner must know four numbers: product cost per service, labor cost per service, overhead per service, and the resulting price. A workable rule of thumb is that product cost should stay near 10% of the service price, labor (including your own time) around 40–50%, with the remainder covering rent, utilities, insurance, marketing and profit. If a service's product cost creeps above that band, the fix is portion control and correct dispensing - not a price cut.
Know the employment structures: employee (hourly, commission, or salary plus commission, with employer withholding taxes and carrying workers' compensation) versus booth renter or independent contractor (rents space, sets own hours and prices, handles own taxes and insurance). Misclassifying an employee as a contractor is a common and expensive error. Every salon needs a business license, a salon permit where the state requires one, liability insurance, and posted compliance documents, and must follow OSHA rules - SDS sheets for every chemical on hand, PPE, ventilation, and bloodborne-pathogen training.
Operations basics: inventory on a first-in, first-out basis with dates marked; a reorder point for high-use items; appointment scheduling with realistic service times and buffer for disinfecting; a written sanitation schedule assigned by name; retail merchandising near the station but never pushing a product the client does not need; and simple bookkeeping that separates business and personal money. Sales tax generally applies to retail product sales, while personal services are treated differently - confirm the current rule for your jurisdiction rather than guessing.
Worked example: a 60-minute gel manicure uses $4 of product, pays the tech $25 in labor, and the station's overhead share is $8. At $45 the product cost is about 9% and the service is viable; at $30 it is not. Rule of thumb: price from cost up, never from a competitor's sign down.