MATH ISN’T THE ENEMY

Knowing the numbers of your lash business is an important piece of the big entrepreneurial puzzle, and it can definitely be overwhelming without any prior business experience to know what numbers you should be keeping track of to understand the financial health of your business.  Whether your lash business is brand new or you’ve been at it for years, figuring out your pricing, income, expenses – ALL.THE.NUMBERS – is an absolute -must-. So where do you start?

• Did you know how to set your pricing when you opened your lash business?

• Did you look at what your competition was doing and figured if it’s good enough for them, it’s good enough for me?

• Or did you think they were WAY better or WAY more established so if they charge $50 for a fill, of course you’d have to be cheaper than that…?

Unless your competition is going to pay your rent when you can’t make enough to pay your bills, I don’t recommend establishing your pricing solely based on what your competition is charging.

I’m going to walk you through how to establish your average BREAKEVEN pricing per client to be able to keep your doors open and to keep a roof over your head and food in your belly, but first:

We’re about to dive into some math which may make you shake like Bruce Banner trying to contain the Hulk, but I created an easy worksheet you can download to walk through this analysis for your own business: BREAKEVEN COST ANALYSIS WORKSHEET

Discover Your Lash Business Breakeven Price

The last thing I recommend anyone doing when it comes to pricing your services is to compare your level of work with your perceived competition and say, “They do amazing work, and they charge so little, I can’t possibly charge what they charge.”  

It’s a common fallacy to look at another lash artist’s work and price and think that dictates your value and worth to your potential customers. In fact, there are customers who won’t even consider a luxury service (which eyelash extensions falls under) if it’s under a certain price.

This approach to pricing could very well put you out of business before you’ve even opened your doors if you’ve priced yourself below what you need to break even. You know you’ve priced yourself below your breakeven point if you’re running a deficit every month and you’re not able to pay yourself consistently OR you’re working 6 days a week taking 10 clients a day and you’re still not able to take time off or work less because you’re still on the struggle bus to success.

It’s totally expected to not be making bank right off the bat of opening your lash business. Traditional startup businesses don’t make a profit in the first two years of opening, and a whopping 80% of new businesses fail in the first 18 months!

Lash businesses CAN take less time than that when a lash artist learns how to market themselves or they stumble upon a highly connected client who does their marketing for them. It can take anywhere from 6 months to 2 years to be making a comfortable wage in our industry. It’s totally expected and normal for you to save, borrow money, or work a side job until your lash business is able to run on its own and support you.

To jump straight from employment to running your own business without knowing your “Path to Profitability” is going to keep you on the “struggle bus to success” for far longer than you’re probably willing to hang on for.

PATH TO PROFITABILITY

The “path to profitability” starts with knowing your numbers and knowing your average breakeven price per client.

STEP 1

To first assess what your pricing should be, you have to know (or forecast) your expenses to make sure you’re able to at least cover the operating costs of running your business and surviving outside of your business.

You’ll need to know:

• The fixed costs in your business – the costs that are the same every month (i.e. rent, utilities, phone, insurance, booking software, website hosting, etc.)
• Your variable costs – the costs that change/vary every month (i.e. lash supplies, marketing, credit card processing fees, etc.)
• The last thing you’ll need to consider is how much you need to take home a month as your pay – we’re talking bare minimum here, we’re not trying to make you rich off of your breakeven cost analysis!
• As well as include what you’ll need to be setting aside for taxes (your accountant can help you with figuring out that percentage).

Do your best to not guess at these numbers! You need to bust out the bank statements, credit card bills and take inventory of the financial health of your business if you want a business that can support you long term.

However, it is ok to forecast (guess) your variable numbers for the future if you don’t have the data from the past year to look back at. Just make sure you’re being overly generous with your forecast so you don’t underestimate what it costs to run your business which means you won’t be able to pay yourself. If you do have a few months of expenses under your belt, you can come up with an average of what it costs you each month for your variable expenses.

STEP 2

Now let’s dive into what it looks like to map out your AVERAGE BREAKEVEN COST PER CLIENT.  (Are you excited yet?  You should be!)

Here’s an example: 

Once you have those numbers added up, you’ll need to figure out how many working hours you want to work in a month. We are determining what your fill price is to breakeven since what most lash artists do day in and day out is fill appointments.

Fills are the bread and butter of our business.

Your full sets can be priced based on the type of clientele you want to bring in and you can always offer limited time discounts on the full set price, but fill appointments are the ongoing maintenance of lashes and what clients will be paying on an ongoing basis.

Example:

Let’s say you’re just starting out and you can work 3 days a week taking 5 clients a day.

This does not mean that you say, “I can work 7 days a week, 12 hours a day.”  Let’s be realistic about what you’re capable of doing. If you’re just starting out, maybe it takes you 1.5-2 hours to do a classic fill. So if you were to max out at 6-8 hours a day, you’d be taking 3-4 clients a day. If you’ve got your timing down and can do a classic fill in an hour, maybe you can take 6-7 clients in a day with a little break in between clients.

Formula to Find Breakeven Cost/Client:

Average days/week to work – 3

Average # of work days a month – 12 (3 days a week x 4 weeks)

Average # of clients a day – 5

Break your cost down into how much you need to make in a day and then to go one step further – how much you need to make per client.

Example:

$5000 a month/12 days a month = $417 a day to breakeven

$417/5 clients a day = AVERAGE of $83.40 per client to BREAKEVEN

So if you want to be able to keep your doors open and pay yourself, the business needs to be making a minimum of $5000/month, which breaks down into bite-sized pieces like averaging $417/day or averaging of at least $83.40/client.

KEEPING IT REAL

Now I can’t stress this enough…this is an average based on the data you’ll enter on your worksheet. Which means some clients may be more and some clients may be less.  As long as you’re AVERAGING this amount per client or per day amount, you’ll stay afloat.

So what’s the flawed thinking if your “competition” is charging $50/client per fill, and you think you have to be $5-10 cheaper than her to be competitive?  You go from needing to average $83.40/month to charging $40 a fill. Where is that extra $43.40 coming from?

Well, since this is an average we’ve just discovered, there are a lot of strategies and ways to manipulate the numbers to increase the average dollar amount a client spends with you.

For example, if you do a full set at $120 on one client and a $40 fill on another client, you’re averaging about $80 a client.  

Here are some other ideas to increase the average:

• Upsell a brow wax at $20 on your $40 fill client.
• Sell retail to the client.
• Raise your prices.
• Work more days per week.
• Take more clients in a day.  

As long as you’re averaging $83.40 a client… you’ll breakeven and keep your doors open and a roof over your head.

Finding your Breakeven Price is called “survival pricing” because it’s the bare minimum you need to survive on and keep your doors open. I don’t know about you, but I didn’t get into the running my own business to just survive.

So what’s the strategy to get to an income level you WANT?  Check Out the Facebook Live training I did on “How to Reach Your Goal Income”

To get your hands on the Breakeven Cost Analysis worksheet to find out your Average Cost Per Client to breakeven, just enter your email below to grab the download.

Please comment, share or subscribe to ensure as a community we are being taken more seriously in our businesses and join me every wednesday at 1:00pm Pacific time on The Lashpreneur Facebook page for more inspiration, tips, and strategies to start, build and grow a thriving lash business.

Have a great one
Tara Walsh, The Lashpreneur