Hello one and all, and welcome to another nail tale told by yours truly. This is going to be a long one, so grab a pen and paper and try to stay with me!
I see this question pop up daily in the nail forums, so its time we addressed it once and for all. What do you charge for a set of nails… How do I know how to price my work?
I am going to explain how you can pay yourself a wage and make a profit for your business. Read on if this is something that you find a bit mind boggling because I’m going to try and break it down for you.
When you started your business you probably thought to yourself…. I know, I’ll check the other locals techs prices and go a little bit lower than them in order to be in competition with them and gain some clients. While this might work for two identical gas stations who have the same products, and same running costs. It’s not a great idea for two completely different nail technicians with two completely different overheads. You may both be selling “nails” but those nails you sell are just as individual as the people making them. You may have spent 4k pounds on buying the top of the line products and equipment while your neighbor only spent 1k pounds buying the basics. You can both potentially create beautiful nails that clients are going to love, but if you’re charging just a little bit less than your neighbor, you’re really cutting yourself short.
In the beginning, you’re going to have to ball park it, and Yea, maybe even look to other techs in your area for pricing guidelines. But after your first 6 months / 1 year, you need to evaluate your costs and adjust your prices accordingly.
I didn’t go to business school, but I have managed enough small non nail related businesses in my life to know what a profit margin is, and why it plays an important role in maintaining a successful business. Calculating this for a set of nails is no different than Tesco calculating how to price their packs of pringles. Albeit a little more intense.
It’s a bit long winded because of course there’s a lot of items that you use in a typical service. But you can round it off to make life a bit easier. You can use this formula to figure out how much you need to earn per service, no matter what service you provide. Be it waxing, extensions, gel polish, massage…. it is all the same.
I work mobile, I use my personal car and I claim back 45p a mile on fuel when I do my taxes so I don’t include any of that in my calculations. I also have no salon overheads. If you have salon overheads you’ll need to include them in this list.
You’ll need to calculate the following.
Cost of time spent.
Cost of products
Cost of overheads
The first one is the easiest. You want to pay yourself a wage right? Of course. You’re a trained professional and you should earn a wage that reflects that. Minimum wage is not an option here. I pay my self an hourly wage of 11 pounds an hour. For example: If a gel Polish treatment takes me an hour, and if I get all my products for free and have no overheads. I would charge the client 11 pounds for the service.
But we all know that products aren’t free and most people have over heads. So lets move on to number two.
Cost of products.
Make yourself a list of every single replenish-able product you use in a treatment, from start to finish.
Natural nail file
180 grit buffing block
Lint free wipes
It’s hard to say how much of each product you use in a treatment because the amount is so small. So my suggestion, and what I did was make a note of when I purchased the item. Once I ran out, I noted it. I then looked back in my diary and counted how many times I used that product. That gave me an average that I could use. For example, I did 50 sets of nails using isopropyl alcohol before I ran out.
This does take time obviously but it’s the most accurate way I have found to calculate how much usage I personally get from a product.
Please note: These figures are not reflective of what I paid or what I used. They are for demonstration Purposes only.
Isopropyl alcohol costs £ 2.00
I did 50 sets of nails with 1 bottle
2 divided by 50=0.04
So, each time I used the isopropyl alcohol it cost me 4 pence worth of product. It might not seem like a lot, but 4 pence is 4 pence. If you’re doing 25 sets a week, for 50 weeks of the year that’s 1250 sets @0.04 pence a set. Which is a total cost of 50 pounds!
Now, that’s pretty easy to work out because you will need to replenish stock on things like ISA/sanitiser/cuticle remover and cuticle oil regularly throughout the year. Other things like gel polish, you may only use any one color twice in a whole year. Most manufacturers will happily tell you how many applications you can expect to get out of a bottle of their product. Of course these will differ depending on how thick you apply it and how long the nails are but assume you are following the manufacturers Guidelines and aim for the worst case scenario to leave room for those sets that are a bit longer and require a bit more Polish. For example, Gelish claim that in a 15 ml bottle of color you can get 45-60 applications.
Cost of Gelish £15
Worst case scenario 45 sets
15 divided by 45 = 0.33 pence per application.
Same formula applies to Base and topcoat but number of applications will differ so please check with your supplier.
So that’s how I worked out all my liquid costs. It’s the same idea for things like lint free wipes / files but a little bit easier to figure out.
Lint free Wipes, pack of 100.
2 divided by 100 =0.02 pence
6 wipes used per service.
6 x 0.02=.12
Each set of nails cost me 12 pence in lint free wipes. Not much right?
1250 sets a year x 0.12 = 150 £
Files are even easier. A lot of people only use 1 file per client. Some are lucky enough to get a few uses out of it. I include the cost of the file in the price of the treatment so that I can use it only once and then give it to the client to keep. They will take it, and even if they don’t ever need it, they may pull it randomly out of there purse and their friend might ask why they have a file. Then the clients will plant a seed for you, please see “40 ways to get clients in the door and keep them” their friend will remember that you give away nail files with your gel polish treatment and look you up when they want their nails doing. Anyways, I digress…
Cost of files 5 for £1.50
£1.50 divided by 5 =0.30 pence each
I file per client.
30 pence per treatment.
1250 files a year = £ 375
ARE YA STILL WITH ME??!??
Once you have all your product costs figured out, tally them up per treatment
Cuticle remover 0.16
Natural nail file 0.30
180 grit buffing block 0.26
Lint free wipes 0.02
Isopropyl alcohol 0.04
Base coat 0.19
Color coat 0.33
Cuticle oil 0.04
Grand total of £1.66
Of course, these are ballpark figures. You will never have the exact amount it has cost per set. This is as close as it gets and its going to have to work.
So, my Base price starts at my hourly wage.
+ £ 1.66 (cost of products)
This is the amount it costs for me to provide a set of gel polish.
I don’t have any overheads, other than insurance, if you do, take the monthly bills ie. Rent/gas/electric/insurance etc..and divide that total by the hours you are open for service.
Insurance 100 annually. (divided by 12 = 8.30 a month)
Gas and lights 50
That a running cost of 158.30 a month or 1899.6£ a year
If you’re open for business 6 hours a day, 20 days of the month
That’s 6 x 5=30 hours a week
30 x 52 weeks in a year = 1560
You’re open for business 1560 hours a year
158.30 (monthly costs) /20 (days a month) = 7.92£ a day.
7.92/6 hours a day
So for every hour you are open, whether your with a client or not, it is costing your business 1.32.
I can do a gel Polish application in an hour. So ideally, if I have a client every hour, and I factor in the cost of overheads into the price of the treatment, (12.66+1.32=13.98)the overheads are being paid for. If I only have 3 clients in, when I could’ve had 6, I have missed out on 3 hours wages, but it hasn’t physically cost me anything in products. The business however, is in deficit of 1.32 for each hour appointment that wasn’t filled. That’s 3.96.
Do this every day, and your business will be at a loss at the end of the year by
3.96 a day x 5 days a week =19.8
19.8 x 52 weeks a year =1029.6 This is how much it has cost your business for you to sit in your salon and not have customers. We all aim to fill every appointment, but it doesn’t happen like that, and of course you have times during the day that you are going to be doing other things for your business besides servicing a client, and not earning a wage.
So guess who’s going to be paying for this cost to your salon? That’s right… Your pocket.
You can’t depend on this variable so I don’t include it into my service price. But the money has to come from somewhere, and this is why you need to mark up the cost of your products, to help pay for the business.
If I now charge 12.66 for a gel Polish manicure, I’m making 0% profit for my business. I’ll earn enough money to replenish the supplies I use, pay myself my wage and nothing more. That’s not good business. I will be in debt at the end of the year for whatever my running costs were for the year and probably be out of business with a hefty debt to pay the bank.
In order to fix this, you need to mark up your physical products. This is what is going to make your business a profit and pay for your initial start up costs.
Lets break it down…
So let’s say you charge 15 pounds, because Sandra two doors down charges 16 pounds and well, you don’t want to change more than her.
11 is your wage, which leaves you 4 pounds. Subtract 1.66 for the cost of products. That leaves you 2.34. You’re earning 2.34 for your business. Is that going to be enough to cover your bills at the end of the year even at the best case scenario? 158 (monthly costs) x12 =1899.6(total yearly running costs)
2.34 profit on a set of gel polish x 6 clients a day =14.04
14.04 x 5 days a week =70.02
70.02( weekly profit @ 6 clients a day) x 52 weeks a year=3650.40 this is your yearly profit if your books are full and you work every single week of the year.
3650.4 (yearly profit)- 1899.6 (cost of running) =1750.80. That is the profit you will have earned for your business at the end of the year if all of your appointments are full.
From this profit, you’re going to have to pay for future courses, new products, replacement and repairs of equipment, new gel polish colors, basically anything that isn’t already covered in any of the cost sections above. Which isn’t enough.
Say you need a new E-file…
1750.8 (yearly profit) -300 (cost of E-file) = 1450.8
You broke your lamp
1450.8 – 50(cost of new lamp)=1400.8
You bought 20 new gel colors @10 pound each.
1400.8-200(cost of 20 new gel colors)=1200.8
A new product came out and you wanted to try it.
1200.8-100(new polygel product)=1100.8
You needed a new course to provide this new service
1100.8-100(cost of course)=1000.8
Now your business is 1000.8 pounds in profit for the whole year. This is IF you filled all of your appointments. If you only filled half of them, you are going to finish the year in debt, 79.08£
Now, most businesses start off being in debt, unless you were gifted everything you started with, you have things to pay off. If you spent 700 pounds on things to get your business off the ground, it’s going to take you 0.69 of a year to turn a profit because that 1000.8£ automatically goes towards paying off that debt. Or it should anyways. The rest is gravy.
So this is fine, if you can guarantee that all of your appointments will be filled, but this is a variable, and in the first year of business especially, it is very unlikely to happen. remember, if you only filled half of the available appointments, you didn’t even earn enough to pay the yearly running costs…
Please keep in mind, that these figures are fictitious, they are only used to represent the sections that you need to take into consideration. Yours may be significantly different.
Lets look at mark up.
I already showed you how to determine your current profit.
(Price of service – cost of products – wage)15 – 1.66 – 11 =2.34
To figure out how much you’re mark up percentage is calculate
Profit 2.34 / cost 1.66 = 1.409
1.409 x 100 =140.9%
So your markup percentage is 140.9%
If you want to make your mark up percentage say, 200% then calculate cost 1.66 x 200% = 3.32 (this is 200% of your cost)
Add the mark up total to your cost. 1.66 +3.32= 4.98
add your wage 11 + 4.98 =15.98
This is how much you would have to charge to get a 200% mark up.
This is handy if you want to keep all of your prices marked up the same between treatments.
Congratulations if you are still reading this post and haven’t started rocking back and forth in the corner…
Profit margin is a bit different.
divide your profit by revenue.
2.34 divided by 4 (4 is the total revenue after deducting your wage) =0.585
Take this total and turn it into a %
0.585 x 100 =58.5 %
So by changing 15 pounds per gel manicure you have a profit margin of 58.5%
Lets say you charge 200% markup-> 15.98£
15.98 – 11 (your wage)=4.98
[Profit (15.98-11-1.66)]3.32 /4.98 (revenue)=0.66666 x100=66.6%
So charging 15.98 gives you a profit margin of 66%
You can use this formula in the opposite direction, once you have figured out what your ideal markup percentage is and your profit margin will stay the same across all treatments.
The cost of a set of acrylics is 4£
4 x 200%=8
4(cost) + 8 (200%markup) +22 (2 hours wages) = 34
so to earn 200% profit on the products you use during an acrylic appointment, you would have to charge 34£.
and your profit margin will be the same as when you charged 200% mark up on your gel polish application, which you already calculated to be enough, in a worse case scenario to cover your monthly running costs.
34 (price) – 22 (wage) -4 (cost) = 8 (total profit)
34 (price) – 22 (wage) =12 (total revenue)
profit divided by revenue
0.666 x 100 = 66.6%
If you charge 200% markup, and you do an average of 30 gel polishes a week for 52 weeks of the year that’s 1560 sets. You’re charging 15.98 pounds a set, making 3.32 profit each set. 1560 x 3.32(profit at 200% markup) =5179.2£ yearly profit.
but remember when you were charging 15£ (140.9%markup)?
1560 x 2.34(profit at 140.9%markup) =3650.4
5179.2 – 3650.4 = 1528.8
That’s 1528.8£ more a year than when you were charging 15£ a set.
Now obviously your initial outlay, service cost, profit per set, and wage will be different. These are example figures.
Ultimately, you want to tally up all your
1 Costs per service. (expenses)
2 Running overheads. (rent,lights,water,insurance)
These are things that you need to pay for in order to be in business. You have to at minimum; charge as much as it is costing. If you’re not too bothered about anything other than turning some kind of profit, just charge a little bit more than what it costs. If you want to be in control of your successful business… you are going to have to do the math.
Remember, once they’re paid off, the profit from the markup % you were using to pay them off then can go into your wages/buying new equipment/sitting in the bank. Say you paid everything off in your first year by marking up 200% on each treatment. If you don’t need any new equipment in the second year, you could increase your wages without raising your prices.
Remember 200% mark up was 3.32 Profit per set of gel polish. You don’t have any assets to pay off now, so you could give yourself a pay rise of 1.66 an hour, and put 1.66 /set into the business bank account for future expenses. 1.66 x 1560 sets in a year is 2589.6£ . So you will earn an extra 2589.6£ a year, and your business will earn an extra 2589.6£ a year. You could just keep paying yourself 11£ an hour and have your business earn an extra 5179.2£ a year.
You don’t have to have the same markup on different products/services. But it makes it easier when you are trying to figure out how much you need to earn in order to earn your desired wage and break even/make a profit. It just doesnt make any sense to mark up your gel polish products 200% and your acrylic 100% Anything you charge above what your minimum required mark up is, is just gravy. That being said, if you do a special offer at 10%off. It would hurt your pocket less if you gave 10% off a gel polish treatment that cost you 1.66£, (1.66 x .1 = 0.16£) than it would to give 10% off an acrylic treatment that cost you 4£ (4 x .1 = 0.40£) so, keep that in mind!
I guess this was a little more complicated than I had anticipated, and that’s probably why most nail technicians just shoot a little lower than their neighbors. But that is exactly why the cost of a nail service has barely increased at all over the past 10 years, yet the cost of products, and the vast array of products available to clients has tripled. We can not continue like this. Set your prices to run a successful business. Remember that trips to a nail salon are a luxury. Those who can afford it, will. Those who cant, simply wont.
I hope I have not melted your brains too much and you actually gained some kind of knowledge from this entry! If not… Back to the drawing board.