One of the questions I constantly see popping up on many hairdressing forums I follow is always:
“What’s the going rate for a freelance/rent-a-chair at the moment?”
Is there a going rate?
What makes everyone think there is a standard pricing for this?
Do you ask what does everyone charge for a haircut or colour?
I believe there is no such thing as a going rate.
We base our prices of our services in relation to our costs. To run your business successfully we need to make profit. If there’s no profit you’re paying money to have a business. While this is able to possibly be covered for the short term or when times might be slow, profits must be made to recover those losses before we go bust.
I base my business around a very simple percentage breakdown:
Wages 50%
Tax 15%
Rent 10%
Misc 10%
Stock 5%
Profit 10%
As a simple example I’ll explain:
If I brought in $3000 for the week in my freelance business I would break that amount into 6 different areas:
50% Wages ($1500)
$1500 of this amount would instantly be allocated to wages (including Superannuation and PAYG Taxes). Wages will always be your biggest allocation of expenses and without it…you aren’t getting paid. Pay yourself first…it’s super important.
15% Tax ($450)
Tax is important. If you don’t pay the Tax Office is coming looking for you. BAS is instant 10% on every dollar you declare as income. Don’t take this for granted…it’s the law to pay these things. Make a seperate bank account specifically for this purpose (most banks will have a specific tax account you can create but any simple linked bank account will do the same thing). That way, when your quarterly BAS statement comes in you already have the money aside and it’s never a shock when it arrives. I put an extra 5% as a back up just in case. Sometimes a tax bill can be bigger than you thought they would be…if you have back up in reserves you’ll never have to worry about not being able to pay.
10% Rent ($300)
Rent should average around 10% of your income. If it can be less then that’s even better. Rent would include the cost of your space you work from, the price of the chair you rent or vehicle costs to get to your work places if you’re mobile. This isn’t set in stone in my eyes though. This can have give and take as well…it’s all dependent on what income you can obtain by being in that location as well as what the space you rent from offers.
eg.
The space you rent may include towels, laundering, refreshments, assistants, etc. This alone may be worth paying extra rental costs for.
The space could be located in a more affluent area and is fitted with higher quality furniture and equipment. You would expect to pay a higher price for these things and there fore could charge at a higher rate for your services.
10% Miscellaneous ($300)
I classify miscellaneous as everything else you might need to run your business. Anything that doesn’t fit into the other categories.
5% Stock ($150)
This should really be the maximum amount to should be spending in usage of stock (colour and professional products). If your numbers are higher that this you should seriously think about getting a better deal with your supplier or finding a new one. If that’s not possible then the only way to then achieve this is to have an increase in you’re prices because they’re not set at a profitable price point. Retail doesn’t come under this list as this should be a part of your setup costs. Any retail you stock should also be at 100% markup. When it sells you then have the funds to replace it to your inventory.
10% Profit ($300)
$300 to put into a seperate account. This is a reward for doing well in my business. If you can allocate yourself a profit first mindset your business will thrive. Reward yourself every quarter with a set percentage of these profits. You deserve it if your business has them.
Breakdown:
$1500+ 50%
$450 15%
$300 10%
$300 10%
$150 5%
$300 10%
________________
$3000 100%
As I said…this is a basic breakdown and percentages should be tweaked to suit your own personal business.
eg. if you allocate 12% to rent costs because you get extra inclusions last stated above the you could reduce your miscellaneous costs to 8% as some of these costs are included in the rent allocation.
So basically…
The going rate should actually be a non exist concept to your business. Base the number on what your business needs to operate successfully and profitability. Paying what everyone else is paying might not be suited to your business at all.
Key Points:
- Price is determined by costs
- There’s no such thing as standard pricing
- Doing what everyone else is doing isn’t going to help you
Until next time…
Craig
The Solo Stylist
P.S. Not sure if freelancing is right for you?
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