How much does it cost to start a salon?

You have a flair for cosmetic creativity and the skills to transform boring into beautiful. You pair that with an entrepreneurial spirit and what’s your next step? Opening up your own salon and sharing your gift with the world. But you’re probably wondering: “how much does it cost to open a salon?” Maybe you’re wondering: “how much does is cost to start a barbershop?” Or more specifically, “how much does it cost to open a nail salon?” Salon startup costs can vary greatly depending on your particular business model and goals, so you’ll have to home in on some specifics if you want to pin down an accurate estimate. The truth is, there’s a lot to consider.

That’s why we created this beauty salon startup cost worksheet and companion guide—to help you parse through the details and get started right.

Breaking down salon startup costs

Before you can break down the costs of starting a salon, you’ll have to decide what type of salon you want to start. Hair? Nail? An all-inclusive spa business? Nail salon expenses will differ from those of a hair salon, while the average cost to open a barbershop will differ from the cost to open a nail salon or spa. This decision should be first on your list, as it will inform how you estimate the costs of your venture. But regardless of specifics, it’s helpful to break down startup costs into two categories: one-time cost and recurring costs.

One-time costs

The initial, one-time costs to open your salon will vary depending on the type of salon you want to open and how you plan to go about it. Do you want to rent or own the physical location? How big is your operation going to be? These are the kinds of questions you’ll need to answer as you go through. You can use these parameters to gauge the estimated costs of your particular startup and answer questions like: “how much does it cost to open a hair salon?” or “how much does it cost to build a salon from the ground up?” 

  • Certification – you should have this covered before all else. All working stylists must hold a state cosmetology license (or be enrolled in an accredited beautician program). These licenses must be issued in the same state as your salon location and posted on premises. Costs of obtaining certification will vary between specialties.
  • Licenses and permits – there are a few bases to cover before opening your salon. First off, you’ll need a business license, the cost of which varies according to state and city of operation. You’ll need to look into the required health and safety compliance permits for your location as well. Again, costs vary across the board. Another aspect to consider is a seller’s permit. Do you plan on having a retail section in your salon? This can be a great platform to sell cosmetic products related to your service offerings, so a resale permit may be worth obtaining. As you plan, do your research and keep in mind that proper licenses and permits are an absolute must-have.
  • Physical location – now that you’ve got the backend covered, it’s time to consider physical space. If you’re looking to lease, you’ll mostly likely be responsible for a security deposit and a couple months of rent up front. Cost will vary depending on location and size, but it’s always a good idea to do comparative research within your desired neighborhood. If you plan on purchasing a space, the costs will rise significantly. Expect to set aside $40,000 to $250,000 to purchase an existing salon (dependent on location, size, and condition of the property and equipment). Bump that up to $100,000 to $500,000 on average to build a salon from the ground up.
  • Salon equipment – equipment costs will vary depending on type of salon. A full hair salon expense list is estimated to total about $27,000. That includes everything you will need—hood dryers, shampoo and coloring stations, scissors, clippers, etc. A simple barbershop or nail salon will require less equipment. Starting out, you might want to pick and choose equipment to fit your budget. For any type of salon, you’ll need styling stations with chairs, which can range from $200 to upwards of $1,000. Carts and trolleys are necessary to organize individual stylists’ tools in the case of shared stations. For these you can go cheap for about $40 or go high quality for about $300.
  • Initial supplies – both hair and nail salons use specialty products for client services. Costs will vary by brand but make sure you consider sanitizers, perm rods, hair capes, towels, shampoos, conditioners, specialty polishes and the like. Supplies add up quickly—stocking everything you need can cost up to $20,000 to start.
  • Initial inventory – if you plan to have a retail portion to your salon, you’ll need to stock an initial inventory of beauty products in addition to shop supplies. This cost is dependent on the size of the retail display portion of your salon, and should be adjusted as you move forward in your venture, driven by customer demand.
  • Legal and consulting fees – you may need professional help negotiating your lease, closing the property sale, or just muddling through the necessary licenses and permits for your salon. Expect to pay around $200 per hour for these services.
  • Insurance – insurance is a legal necessity, so you’ll have to account for it in the budget. You’re looking at $500 to $700 per year on average for a salon.
  • Building improvements and remodeling – if you’re taking over an existing salon, there may be little to no renovations necessary. However, if you’re starting with a blank slate, you’ll have to consider permanent and nonpermanent fixtures as well as any design elements necessary to your business model. Factor in furniture and interior decorating and you’re looking at an average of $32,000.
  • Computer and POS system – you’ll need to get set up with an internet network and a point of sale system to accept modern forms of payment, including credit and debit cards, Venmo, and Apple Pay, among other options. You’ll also need to be able to print receipts. Depending on which provider and level of hardware you choose, you will need to spend $550 to $2,300 annually and typically twice that amount to get started.
  • Signage – here’s an opportunity to get creative. We’ve seen proper signage pulled off for as low as $23, though you could easily spend much more.
  • Employee uniforms – this is another cost that is entirely up to you. You generally want some uniformity across staff wardrobe, but a dress code is a cheap alternative to costly professional uniforms.
  • Responsive website – every modern business needs a web presence. Expect to pay $300 to $700 for the initial build.
  • Operating  cash – you can’t forget to have cash on hand! It’s important to have at least $500 at starting date in cash reserve for normal business operations.

Recurring and ongoing costs

Recurring costs are the consistent expenses you’ll be seeing as your business grows. These are your day to day, month to month, and year to year costs of normal business operation. You can’t avoid them, so make sure to take the applicable ones into consideration.

  • Mortgage or lease payments – whether you rent or buy, you’ll have a monthly payment to keep the doors open. Cost will vary greatly, but make sure to factor it in the budget.
  • Insurance – insurance is typically calculated in annual premiums, though you may be able to split the payments by month. The average cost is $300 to $700 per year. As the owner, another potential factor is the offering of health insurance. Although rarely offered for stylists, you’ll have to factor it in if you want to provide your employees with this benefit.
  • Permits – compliance permits often have renewal fees. Be sure to check with your locality for specifics.
  • Wages – depending on your business model, you may be paying a salary to each of your stylists. You could very well operate on a commission-based model. This cost will range according to your employee payment structure. Also keep in mind that you, the owner, should be taking a salary, too.
  • Payroll taxes or self-employment taxes – these fees stand alongside your wage expenses and will also vary according to your business model. Make sure you consider your employees’ particular situation, as well as your own to determine the taxes you’ll owe. Keep in mind, these taxes often need to be paid quarterly. Self-employment taxes will shake out to around 7.6% of individual sales.
  • Cleaning – cleanliness is key not only for health compliance but for general business image. Stay on top of regular housekeeping. Make sure to account for mops, vacuums, toilet paper, bleach, general purpose wipes, and access to laundry service. Supplies may range from $50 to $200 per month. You can also go the route of hiring a professional cleaning crew periodically. For a professional service, you’re looking at about $200 per visit, although you and your staff will still be responsible for the day to day upkeep.
  • Equipment lease payments – if you choose to go the route of leasing your salon equipment, factor those monthly costs into your budget. They will vary depending on your particular lease agreement.
  • Utilities – electric, gas, and water bills will vary by the kind of equipment your salon is running. Expect $640 to $4,000 per month here. The high end more accurately reflects salons with multiple big screen TVs, lighted décor, and various other energy-hogging pieces of equipment. Most salons find their utilities costs fall on the lower end of that spectrum.
  • Credit card processing fees – here’s a potentially sneaky expense. As a modern business, you will want to accept credit card payments. Standard industry base rates for processing fees range from 1.5% to 2%. But many salons end up paying more than 3%, so be careful and shop around for your provider.
  • Repairs and maintenance – normal wear and tear takes its toll and equipment often breaks. You’ll need to factor in the costs of routine maintenance. Expect up to $500 per month. 
  • Marketing – you’ll need to get the word out about your operation to drum up clientele. There are a number of avenues you can take (print, broadcast, web, social advertising), all with different price tags. You could spend as little as $20 for an email marketing solution or spend upwards of $4,100 for more robust advertising campaigns.
  • Legal and professional fees – this one is a fluctuating expense, as it depends on your particular business model. Just keep in mind that professional services such as accounting or legal typically run about $200 per hour.
  • Miscellaneous expenses – you never know what problems may arise. It’s always a smart idea to budget in some funds for miscellaneous expenses. We suggest at least $500 per month.

Common salon startup myths and mistakes

There’s a lot to consider when opening a salon, but you probably already know that. Aside from the specific hurdles of your chosen salon type, there are some general considerations every salon owner should know. They’re not always obvious, so we put together some sage advice to combat the most common mistakes we see.

  1. Don’t fear technology. Modern businesses need to take full advantage of today’s computer resources. That means collecting every bit of customer data you can. Does your customer only come in for nail services, or do they take advantage of spa, nail, and hair services you offer? Make note of that! Every transaction should be entered into your digital filing system with details. That data can be used strategically in developing best business practices and for targeted advertising down the line.
  2. Don’t pass on quality products. You cannot forgo quality in a professional salon. The products you use will reflect on your quality of service. Some salon owners try to save money by using inexpensive alternatives, but end up paying in the long run. Clients come to you for an experience they don’t get at home. It’s simple—better products make for a better experience.
  3. Don’t skimp on cleanliness. We talked about this earlier, but we can’t stress it enough—the salon environment should be the epitome of clean. You want your salon to serve as a getaway, a little slice of paradise for your customers. Keep a fresh, crisp shop and the clientele will keep coming back.
  4. Don’t forget continuing education. Even the most advanced skills can be sharpened. Every stylist working at your salon should go through the same training. You want a skilled staff that is up-to-speed on the latest trends to best serve the brand and style of your salon. Making sure all staff are properly trained on new techniques and styles—keeping their skillset fresh and sharp—keeps clients excited. Moreover, continued education keeps you competitive with other salons, and clients know they will always receive quality service when they walk through the door.
  5. Don’t try to please everyone. The truth is; you’re not going to attract everyone. So, transform that into a positive. Maintain a pointed aesthetic and perfect it. Devote your efforts to making your salon an authority. Become the expert to best suit your target demographic and your ideal client base will find you.

What salon owners wish they knew when starting their business

Even the most careful planning leaves room for error and the unknown. And naturally, you’ll have to endure the inevitable learning curve. So we turned to successful salon owners to share the proven best practices they wish they knew from the start to give you a leg up as you begin your venture.

  • “Social Media is Everything.” The ubiquity of social media is undeniable. And it’s free to participate. Take advantage of that when planning your marketing budget. “We’re visual artists, so it’s important to put out quality content,” said Marcus Williams, owner, founder, and creative director of Styles Inspired by MARC. Marcus’s shop is based out of Philadelphia, but he has traveled the world styling hair—in salons and for motion pictures—and teaching. "If you’re a creative artist, you’re cutting hair, you need to represent yourself well and show people how great your work is. ”True to the brand vision he wanted to create, Marc used professional cameras and lighting to emulate magazine editorials when photographic clients, showcasing his work in the best possible light—literally and figuratively. Investing in professional camera equipment to present a killer social media image can be more beneficial than similarly priced, more traditional marketing tactics. If you present well enough, social media can serve as great means for client and employee recruitment.
  • “Consider all financing options.” You don’t necessarily have to stress yourself financially. Look into all available options for securing the initial capital you need—from bank loans to loans from friends and family. There are plenty of avenues to take if you do proper research. Financial literacy and comprehensive planning can prevent mental hardship and allow for a stronger focus on building your business.
  • Choose your location strategically. If you have a specialty, keep your target market in mind when scouting shop locations. If not, consider locations close to colleges. High concentrations of demographically diverse customers can help you discover your niche. In general, proximity to areas with high populations will lead to increased foot traffic and walk-ins; areas with a strong sense of community will be more conducive to generating buzz around your shop. Be sure to consider how your salon will fit into the neighborhood. 

How to use the salon startup cost worksheet

Our salon startup costs worksheet is simple and intuitive to use. Once downloaded, it’s fully customizable to fit your needs. The template includes both high and low-end estimates for starting a salon, so you can get a full picture of what it will take to open your salon.

  • Download the free template.
  • Add or remove fields applicable to your salon type.
  • Assess your needs and related costs.
  • Make note of potentially changing costs or costs to be determined.
  • Plug in your numbers and enjoy the simplified breakdown of your startup and ongoing costs.

Focus on building your business, not tracking expenses—try Sage Business Cloud Accounting

Opening and maintaining a salon requires a lot of work. Day in and day out, you invest your time, energy and focus into creating something great. So why waste your valuable time and efforts tracking expenses the old-fashioned way? Administrative tasks can now be fully automated—so upgrade your business model by deploying online accounting software through Sage Business Cloud Accounting and save yourself some time and money. You have enough on your plate. Outsource the busy work and get back to doing what you do best—making your business a success.

Ready to grow your business ?

Sage Business Cloud will help you spend less time on admin and more on attracting customers.