Introduction to Beauty salon services Market analysis
This article is about finding out the true estimates of the total earnings of a beauty salon service industry. This is a particular unique sector where not much economics is available especially for free. We at salonandspareview.com wanted to show how unique this service sector is and how much it is contributing to the US economy. This article is made public so that everyone can gain access and insights into this industry. Please visit our website link here to check out salon reviews on all of the online platforms. Search by Zip Code
Recently we stumbled upon a dataset that contained just mind-boggling numbers of salons and stores only in the beauty salon sector of the United States of America. This was old going back to 2014, it has been 7 years, and still, the scale at which this industry works is fascinating. This article contains some amazing insights with respect to the microeconomics of the beauty salon industry coupled with the macroeconomics part which loosely talks about the cosmetic industry as well. A lot of the inferences are data-based approach involving statistical approach and is the only pure analysis of the author.
The database has almost 118,000 entries, in any data analysis data set there is always a chance of 4-5% erroneous data. So, 5% of 118,000 is about 5750 stores/salons may be or not wrong entries. For, the purpose of clarity, we are going to pull out 5,750 salons distributed equally throughout. Hence, we will show a base number of around 112,000 entries. The data like mentioned before is of 2014, we are going to factor in the GDP growth USA has in the past 6 years. USA had an overall GDP of $17.53 trillion in 2014 as per the world bank and it was $20.94 trillion in 2020. 2021 numbers are not out public yet and there was a big drop in the GDP with higher inflation in 2021, hence, we are going to include only 2020 numbers where the economy was still growing stronger. With that said, we see n increase of almost $3.41 trillion increase in GDP between 2014 and 2020 which then accounts for a 19% increase in the overall GDP of the country. We are going to use this number very wisely. Also, please note this article pertains to an approximate number of the beauty salon industry as such, and with beauty salons we mean only and only the salons which operate in the stores and hence not including the cosmetic industry. We are also basing our analysis on the registered salon businesses that are open and operate as business entities.
What is a beauty salon?
Source – A beauty salon or beauty parlor is an establishment dealing with cosmetic treatments for men and women. There’s a difference between a beauty salon and a beauty parlor which is that a beauty salon is a well-developed space in a private location, usually having more features than a beauty parlor could have. Usually, a beauty parlor concentrates on a specific treatment or beauty features such as styling either for men, women, or for both. Also, a beauty parlor is a smaller and more community-friendly place that is usually located at the owner’s home. In some cases, the owner is not only the boss but probably the only worker, not having any other crew members. It is predominantly a service-based sector that serves its customers on beauty needs like eyebrow threading, facials, hair styling, eyebrow lashing, waxing, or the hair on the body including a Brazilian wax, nail treatment, nail polishing services, makeup, etc. You can also go through what exactly is eyebrow threading here.
Let us jump into the total spread of the salons by our states, below is the map of the total number of beauty salons/hair salons that provide beauty services in the country
The top 4 states would be California, Florida, Texas, and Illinois in that order. An interesting observation would be although Texas is one of the larger states, it has fewer salons. Direct correlation to the Texan population being less than that of California.
What is the point of beauty salon analysis?
We now have the total numbers by state, it is quite surprising to see the sheer number of salons by state. This shows a very high-level macroscopic view of a small usually ignored beauty industry at a minute level. Let us now start plugging in some $$ values to it and play around to see how we can utilize this data to see the approximate size of this industry.
There are about 3-4 people working in a salon usually, the numbers can really vary. There can be salons with 2, 3, or 4 beauticians working on an average, but some of these salons are huge and employ around 10-15 as well. For our safe bet, we will take the mean of the total number of workers which is about 3 per salon. This number also matches on average with the data from the US Bureau of statistics. Anyways, below is the metric that we will use
Percentile wage estimates for Hairdressers, Hairstylists, and Cosmetologists:
|Hourly Wage||$ 9.06||$ 10.34||$ 13.16||$ 18.25||$ 25.68|
|Annual Wage||$ 18,840||$ 21,520||$ 27,380||$ 37,970||$ 53,410|
This data is from the US Bureau of statistics source link
The hourly wage at 50% or the median wage of the country is $13.16. What this means, is if we have taken the total wages in this sector for the entire country, some earn as high as 90% $25.68 and some earn as low as $9.06 at 10%. In the world of statistics, it is safe to bet to use the median at 50% for all the analyses. The reason for taking this wage is because it matches minimum wages in pretty much all the states across the USA. Some of the states do have lesser than the $13.16 mark but a lot of beauticians make money on the tips as well provided for their services. So, overall, we are going to consider an annual wage of around $32,000 per beautician.
Further, we will consider the 19% GDP growth the USA has had in 6 years between 2014 to 2020. Considering a flat rate of 19% across industries is not feasible since there could be other sectors that have grown at a high rate. So, we will consider a 10% growth in the beauty salon industry spread across 6 years which for any industry in a developed economy is a safe number to be taken. Also, there has to be factored in the concept of inflation, you will see how much was the inflation rate and hence instead of 19% growth on the GDP, we would take 10% growth in this sector. This is our assumption. The idea here is not to get inflated numbers, but bare minimum earnings from this industry. It is always good to have a lower number go up rather than showing a high boosted number. Hence, we will go at the lower range of numbers everywhere. With 10% growth, we will be adding additional salons to each state and hence it will be now 11,200 more stores in 2020 compared to 112,000 in 2014.
US Inflation rate factors
Below is the inflation rate source is macrotrends
|US Inflation rates|
We will factor in a 1.57 % average inflation rate. The reason we have to factor in inflation is that we have taken a 10% growth in the industry at the $$ level, inflation bloats these numbers and hence we have to pull down our final figures by 1.57%.
So, once we plug these numbers below are the state-wise results of the Beauty salon service industry labor earnings estimate.
Graphical representation of Statewise earnings of Beauty salon industry
How to read the map of beauty salons income generation?
All we see in the map are numbers shown up for each state. These numbers are milllion dollar numbers, which means if california shows up 634, it means the state of California generates an overall income generation of 634 million dollars from the beauty salon service industry. Similarly, the map below is a layout map showing the top 20 states of the United States of America, the larger the box the higher is their income generation from beauty salon services. The largest we see here is California while the smallest is Louisiana. If you belong to or are staying in one of the states mentioned below, you are already contributing direcly or indirectly to this portion of US economy.
Beauty salon estimated margins or profits
The total estimate above is the total earnings from labor only. There might be margins that the business owner makes, for instance for a particular store let us a beauty salon in Princeton, New Jersey hires 3 beauticians, 1 of them is the owner herself. The Business owner is there to make good money and great margins but also at the same time responsible for labor costs, operation costs, and other sunken costs the business faces. We will try to see on average how much a business salon makes margins.
Total number of beauticians working – 3
Working days in a year – 300 (there are salons which work more than 300 days but hey like we mentioned, we are going the lower scaled version of the estimates and hence assumption is 300 workdays) Also, 300 workdays are on average workdays for any service-based business. Here, please notice this does not one person is working 300 days, in all reality, it could be many people working in shifts.
Working hours per day – usually these stores are open on average at least for 10 hours a day and hence assumption is 10 hours. But there are many beauty salons which based on observation work only when they are free or available and hence to factor in that portion, we will consider 8 hours per day and not 10. Please note there are and will be beauty salons that might work 12-14 hours per day as well. But, we are pulling the numbers at an average scale to use to find estimate the total revenue coming out from the beauty salon industry overall in the USA.
Hence, the total hours per year = working days x hours per day
Total man-hours per year = 300 x 8 = 2,400 hours
The median wage in New Jersey for beauticians = $15.00 hour per hour
Overall, the total annual labor cost for the salon is 2,400 x $15.00 = $108,000
What does this mean? The business owner needs at least $108,000- $110,000 to run the business every year. The only way to earn this is via performing the services related to beauty and charging the customer. Services like eyebrow threading, eyebrow lashes, hair styling, waxing, Brazilian waxing, nail polish services, hair colors, make-up services, Mehendi or henna services, etc. These services on average are charged based on the location of the salon, the reviews, the expertise the beauticians have, if they are the best in town, they are sure to charge much higher. But, let me again remind you, that we are going the average route and hence we will assume an average location.
What would be on average revenue of a beauty salon?
We interviewed a bunch of beauticians, beauty salons, eyebrow threading experts, and here is what they had to say. On average there are about 20-25 customers each day. The services offered are being charged from as low as $8.00 to $10.00 in the lower range and can go as high as $100-$150 in the higher range. For the sake of keeping our numbers on the lower scale, we will assume a lower 25% percentile median value of $30.00 per transaction. Working days or operational days in a year is around 300.
Total revenue of an average beauty salon = $30.00 per transaction x 25 customers x 300 days = $225,000.00 per year.
So, on average, a beauty salon in a decent area has the potential of earning $200,000-$225,000 revenue per year. Of this, we know that $108,000 is labor cost but will consider $110,000 for our analysis.
Below is our analysis of the margins a beauty salon makes.
Total revenue = $200,000
Labor costs = $110,000
Rent of the place – that is if the salon is a rented place or a leased-out place, there might be also stores that are owned by the beauticians but will still consider the rental cost of around $20,000 per year, this truly depends on the area, some of the downtown salons must pay much higher than this. Also, if it’s in a mall the rent shoots up higher. But, for our overall average game let us consider $20,000 per year as an agreed rent.
Beauty salon estimated Rent- $20,000
Utilities – Electricity is one of the major components in any business, it now depends on how many neon bulbs or lights are being used but our assumption we will consider about $500 per month or around $6,000 per year.
Cleaning charges– $4,000 per year.
Inventory of branded products or cosmetics etc. the beauty salon has to really invest in premium products to entice the customers and ensure the skin and hair of the customers are good, a great product especially organic stuff will sometimes be expensive to get hold of. So, it is safe to assume a cost of around $20,000 – $30,000 on this. Again, we are going on the higher range here to reduce our margins as little as possible.
Single estimates beauty salon margins or profits
|Labor costs||$ (110,000.00)|
|Cleaning costs||$ (4,000.00)|
|Cosmetic costs||$ (30,000.00)|
|Sunken cost||$ (10,000.00)|
|Total Margins||$ 40,000.00|
The above analysis is based on several assumptions and hence, we are going to consider half of these Margins in our further analysis. The reason being some of the years are tough and hence we will take $20,000 per year as margins or profits per salon. This profit is earned by the salon owner on average and yet will be part of total net earnings from the salon.
What is the profit contribution to beauty salon earnings in the USA?
Assumed average profit per beauty salon – $20,000
Total number of salons in USA – 123,840
Net margins across the USA – Number of salons x assumed profits from each store
Net margins- 123,840 x $20,000
Net margins across all the beauty salons in USA – $2,476,800,000.00 or about $2.5 billion dollars.
The macro portion of analysis
Why are we doing this analysis? The answer is to find out the estimated earnings of the beauty salon service industry to the US economy. The overall number we will get is a lower range figure since we have assumed all lower scaled values for this. This by and large can also be considered as GDP contribution to the US economy, and we will figure out how big the industry really is.
How did we start and where we are landing at?
We first started with a simple database of all the registered beauty salons, hair salons, nail salons which all provide similar services as discussed earlier, services like eyebrow threading, hair styling, eyelashes, skin care services, hair removal services like full body waxing, Brazilian waxing, facials, make up services, etc., anything that relates to the beautification of ourselves. We had a database of roughly 118,000 salons across the USA in 2014. We then negated about 5% in the overall distribution of the data sets, the reason being it could have erroneous data or certain stores being closed. Next, we found out how much was the GDP growth in the USA from 2014 to 2020, we took the percentage GDP growth which was about 19% growth in 6 years. We assumed that instead of taking flat 19% growth in this industry, taking 10% growth was quite significant and hence we landed at 10% growth in the beauty salon industry in 6 years, this would include all the new salons that got opened between 2014- 2020. Hence, we also evenly distributed this across states and landed at an overall total number of roughly 123,000 stores of beauty salons in 2020.
How did we factor in the total dollar value?
We went to the department of labor statistics and found what was the median salary per hour of all the beauticians across states, it was about $13-$15 per hour, or roughly to stay at the lower side of the spectrum, took the value of $32,000 per beautician at least per year. There was an assumption that on average 3 beauticians work at one salon, there could be less than 3 but also there are many stores employing 10-15 beauticians, hence the average landing number on the lower side was 3 per salon.
Plugged in these values and generated overall total labor earnings for the USA beauty salon industry which is at roughly $11 Billion. Next, we had to consider the total margins the business owner made from every store, these values were very minimal margins and we calculated it was roughly around $20,000 margins per store at least. This profit earned by the business owner still goes into the beauty salon owner’s kitty bank, but it still is an earning.
What are the estimated earnings from beauty salon stores across the United states?
Earnings from labor – $11 Billion USD
Earnings from profit – $2.5 Billion USD
The total estimated earnings from the beauty salon industry in the USA in 2020 is around $13.5 billion USD.
What does this number mean?
The beauty salon service industry is a strong industry with earning estimates and contributing to the US economy around $13.5 billion USD. We have since the beginning of our analysis have always picked up very humble and lower numbers for this analysis. Hence, it means that at least the beauty salon industry at the minimum or lower 10% percentile section is $13.5 billion dollars. A deeper analysis into this with a clear and better number from the exact sources will give a more accurate value. However, what we have calculated here matches close to 90% accuracy, which is a great deal in itself. The overall range of this industry earnings estimates lies in the bracket below
What is the overall beauty salon service industry in the United States of America?
Answer is $13.5 – $15.50 Billion dollars. (USD)
The beauty salon service industry provides services such as eyebrow threading, eyelashes, hair styling, haircuts, hair removal like full body waxing, Brazilian waxing, makeups, nail polish touch-ups, nail treatment, hair treatment, skincare treatments, facials, full-body skincare, Mehendi and henna designs, bridal makeups, male grooming, full-body spa treatments, massages, body relaxations, skincare tanning treatments, etc. mark up a whopping $13.50 – $15.50 billion dollar industry in USA year on year. These are only cash-generated figures. There are no assets or property included in this report. Next time you meet a beautician, please think that they are contributing equally as you are to the US economy by providing their niche services to make people of America look more and more beautiful every day and for every event.
Disclaimer for beauty salon industry estimated earnings analayis
This report is the sole copyright of salonandspareview.com. This is a one-person lead extensive analysis, quoting it in any official report is at your own risk, salonandspareview.com does not own the responsibility for this report being misused. This analysis and article are for the sole purpose to show how big the beauty salon service industry is in the United States of America. Any feedback and reviews are welcome, please contact us via the contact form on the website here.
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