The Salon Dollar

The Salon CEO Operating System

What the percentages mean, where they are supposed to land, and what your salon actually keeps. Start on the left and work your way right.

A percentage is one number divided by another.

That is the whole thing

Rent was$8,000

The month was$100,000

8,000 ÷ 100,0008%

Cost on top. The month on the bottom. Divide, then move the dot two places right. No accounting degree, no software.

Why the dollar alone tells you nothing

$8,000 rent, $100,000 month

8,000 ÷ 100,000 = 8%. Comfortable. Room to pay everyone and still keep something.

$8,000 rent, $40,000 month

8,000 ÷ 40,000 = 20%. Same lease, now eating you alive.

The rent never changed. The month got smaller. That is why every target on the next tab is a percentage and not a dollar.

Every number, worked out on one month

A $100,000 month · $85,000 service · $15,000 retail

Here is each target with the actual division. Cover the answer and try one yourself.

Payroll

$45,000 paid to people ÷ $100,000 month = 45%

Everyone on the payroll report, you included. Ceiling is 45%. Employer taxes are not in this number, they get their own line.

Rent

$8,000 rent ÷ $100,000 month = 8%

Ceiling is 10%. Rent is fixed, so the only way this number falls is if the month gets bigger.

Your own pay

$10,000 to you ÷ $100,000 month = 10%

Floor is 10%. This is ten of the 45 above, not an extra ten on top. You are on the payroll.

Profit

$20,000 left ÷ $100,000 month = 20%

Floor is 20%. This is what survives after every other line is paid.

Everything else

$27,000 of bills ÷ $100,000 month = 27%

Product, card fees, insurance, utilities, software, marketing, payroll taxes, repairs. No target of its own. It is whatever is left once the other three are right.

45 + 8 + 27 + 20 = 100. That is the whole month. Your own pay is not in that sum because it is already inside the 45. There is never more than 100% to hand out, so every dollar you add to one line comes off another.

Retail is the one that trips everybody, including me

There are two retail percentages. They are both correct. They answer different questions, and mixing them up is why your number never matches anybody else's.

Say you did $80,000 service and $20,000 retail

How much of my business is retail?

$20,000 ÷ $100,000 total
20% of everything you sold was product.

How well is my team selling retail?

$20,000 ÷ $80,000 service
25% retail for every dollar of service.

The second one is the benchmark. Target is 15% or better, so 25% is strong. It is measured against service because retail rides along with service visits. You are asking: for every $100 of service we did, how much product went out the door with it?

Put retail on the bottom too and you are partly measuring retail against itself, which mutes the answer. On these numbers it drops from 25% to 20% and a salon that is doing well starts to look average.

Backbar works the same way. Divide it by service, not by the whole month. $4,250 of colour ÷ $85,000 of service = 5%, right on target. Divide by the whole $100,000 instead and you get 4.2%, which looks better than it is and hides a leak.

Which number goes on the bottom

Divide by the WHOLE month

Payroll · rent · your pay · manager pay · profit · income tax reserve

Divide by SERVICE only

Retail-to-service · backbar

Two more have their own bottom number entirely. Payroll tax divides by payroll, not revenue. Retail replenishment divides by retail sales. When a number looks wrong, check the bottom of the fraction first.

Pull your own four numbers

Five minutes, once a month, all of it in your booking software and your bank.

Total revenue. Everything that came in. Service plus retail.
Total payroll. Commissions, hourly, salary, front desk, bonuses, your own pay. One number.
Your fixed bills. Rent, insurance, utilities, software, marketing.
Product. What backbar cost you, and what the retail you sold cost you.

Use last month, not a good month. The point is to see what is actually happening.

Now go see where the targets are

Every number a healthy salon is measured against, on one page.

Where every dollar of income goes

Measured against total income

Payroll 45% ceiling

Every dollar paid to a human. Commissions, hourly, salaried management, front desk, assistants, bonuses, and your own pay. Employer taxes are not in here.

Rent 10% ceiling

Fixed, so the only fix is more revenue in the same room.

Everything else what is left

Product, card fees, insurance, utilities, software, marketing, payroll taxes, repairs.

Profit 20% floor

A floor, not a goal. Below 10% is survival mode.

Two limits that live INSIDE the 45%

Your pay: at least 10% of income. If this is zero, the salon is a hobby.
Manager and admin: 10% or less of income. Salaried, not behind a chair.

Read that as 10 of the 45, not 45 and then another 10. Both come out of the same block. Add them on top and you have quietly budgeted 55% of every dollar to people, which is where the profit went.

The grey slice is not a target. It is simply whatever is left once the other three are right, and it shrinks every time you beat 20% profit.

Money you move before you spend a dollar

Each one is a share of a different number

Move this	This much	Out of
Income tax	10%	Income
Payroll tax and burden	10 to 15%	Payroll, not revenue
Retail replenishment	50%	Retail sales
Cash cushion	3 months	Operating expenses

Profit is what is left. Reserves are what you protect. Treating tax money as spendable cash is borrowing from next year to pay for last year.

The commission ladder

Measured against that stylist's own service sales

The 45% ceiling is the whole building. This is one chair. Earned on productivity, not on how long somebody has been here.

Junior40%

Stylist42%

Senior45%

Master48%

Hard ceiling50%

Every target, and what it is divided by

Number	Target	Divided by	Why it matters
Payroll	≤ 45%	Total income	Everyone on the payroll report including you. Employer taxes sit outside it. Break it and raises become impossible.
Rent	≤ 10%	Total income	The fix is revenue, not a smaller space.
Your pay	≥ 10%	Total income	Ten of the 45, not on top of it. Zero here means a hobby.
Manager and admin	≤ 10%	Total income	Also inside the 45, not on top. The role has to pay for itself.
Net margin	≥ 20%	Total income	Downstream, so fix what is bleeding into it. 18% is survivable, 20% is the number to build toward.
Retail	≥ 15%	Service revenue	Close to pure margin. The biggest ignored lever.
Backbar	≈ 5%	Service revenue	Over is a leak. Way under is a shortage coming.
Utilization	≥ 80%	Bookable hours	Below 70%, no raises and no hires.

Now put your own numbers in

See what your salon actually keeps, and what it would take to change it.

The Salon CEO Operating System

What does your salon actually keep?

Put in one month of revenue and how you pay your team. This shows you where every dollar lands and whether the profit you want is even available at the numbers you are running.

Service revenue only

Not your whole month. Just what the chairs brought in. Retail goes in the next box.

Retail sales only

Product sold on top of that.

Profit you want to keep

Set this first. Everything else has to fit around it.

Four starting points. Pick the one closest to your salon, then change any number below.

Your numbers

Doing parts and labour? Then it is already in the number above. If colour costs you 10 cents a gram and you charge the guest 20, that charge is revenue and it is sitting in your month. The 10 cents is your product cost, entered further down. The client is covering your cost of goods, which is the whole point, and it nets out around 50% margin the same way a retail product does. Nothing extra to enter here.

What you pay people

Payroll on serviceWhat you pay the team out of service work. Commissions, hourly, salary, front desk, bonuses, and your own pay. Employer taxes go on the next line.

Commission on retailWhat the team earns on a product sale. Much smaller than service commission, which is why retail is your best margin.

Employer burdenOn top of every payroll dollar. FICA, unemployment, workers comp. Kept off the line above so your payroll number still matches the 45% ceiling.

Your pay, per yearThis comes OUT of the payroll number above, it is not added on top. Changing it moves who gets paid, not what the salon keeps.

Fixed bills, in dollars

Rent and CAMYour actual lease number.

MarketingAds, shoots, print, referral rewards. Most small businesses run 5 to 8 percent of revenue. Established salons with strong word of mouth sit at the low end.

Everything elseInsurance, utilities, phone, software, education, repairs, supplies, accountant.

Costs that move with sales

Product you usedColour and backbar, as a share of service sales. Around 5% is the mark. This scales with your service revenue, because more services means more colour.

Retail product costWhat you pay for what you sell. Percent of retail sales.

Card processingPercent of everything you run.

Where it goes

Line	Dollars	% of rev	What is left

How to close the gap

How to read this. Profit is not an input. It is whatever survives after everyone else is paid, which is exactly the problem. Set the profit you want at the top, then move the levers on the left until the number on the right actually gets there.