Imagine looking at your appointment book and knowing exactly how much profit every booked hour was going to generate.

Imagine every member of your team being well-versed in explaining the pricing for every service you offer.

Imagine getting rid of those complicated and seemingly endless price lists.

Now, imagine reinforcing your brand by using a pricing structure that charges for time, skills and expertise rather than the “name” of specific services.

AND … You should already be doing the following three things:

1. You should be pricing your services based on “Cost per Hour + Profit Margin.”


2. You should have established time standards for every service.


3. You should be monitoring productivity rate to track “hours sold vs. hours available for sale.”

• Except for retail, salons and spas are in the business of selling time.


• Charging for time puts value back into skill and expertise.


• Simplifies up-selling and the potential for underpricing.


• Everything, including professional products, is included in the time quoted.


• Service providers are notorious for underpricing and giving services away. Charging by time puts an end to this.


• Clients know what they’re going to pay.


• Drastically simplify your service menus


• It’s time to charge for your time like other professionals do.

• It drives efficiency and productivity because the focus is now on time.


• It’s easy to understand and communicate to clients. Once you have your price per hour, it’s easy to break it down into 45-, 30- and 15-minute price/time increments.


• Higher revenues because nothing slips through the cracks.


• Your salon/spa must have a skill certification program to train and coach service providers to work within time standards.


• It simplifies and reduces miss-quoting price on the phone or during consultations. Example, “This service requires two hours. We charge $XX per hour.”


• Yes, processing time is included in the time fee. 

• This is the total number of scheduled hours you have available for sale in one month. This is different from the number of hours SOLD.


• Scheduled hours ARE NOT based on the total number of chairs, stations, treatment rooms, and the total hours your salon/spa is open.


• You only sell scheduled hours if there is a service provider scheduled to perform those services.


• Example: 10 service providers schedule 36 hours per week x 4.3 weeks. 10 x 36 x 4.3 = 1,548 scheduled hours for sale per month.

• Multiply your monthly scheduled hours by your average or projected productivity rate.


• Example: 1,548 x 80% productivity rate = 1,238 hours sold per month

• Using recent Profit & Loss Statements, calculate your total average monthly Cost of Sales (service payroll, professional product costs, credit card processing) and your total average General & Administrative Expenses (guest services payroll, owner pay, rent, utilities, and every other operating expense).


• Important: Do not include any retail product cost in your calculation.


• Example: $98,000

• To arrive at your cost per hour sold, divide step three (average monthly operating costs) by step two (average hours sold per month).


• Example: $98,000 ÷ 1,238 = $79.16 (your Cost per Hour)

You now have the exact cost to deliver one hour of service.

• IMPORTANT: “Profit margin” and “mark-up” are different calculations.