Your $350 colour may earn less per hour than a $120 haircut

Abby's take

What this means for the industry — and for independents

Industry impact. Headline service prices hide major differences in product use, chair time and workflow. When independent hairdressers plan capacity from revenue alone, heavily booked days can still produce weak contribution and too little cash for overheads, tax and sustainable owner income.

For freelancers. A colourist controls several levers—price, product allowance, timing, deposits, service inclusions and booking mix—but each change affects client value and capacity differently. A worked per-hour comparison shows which lever solves the actual problem.

What I'd do next

• Export completed appointments for four representative weeks and record actual paid price, GST treatment, direct product cost and occupied chair time by service.
• Calculate contribution per occupied hour before fixed overheads, then compare the median result rather than choosing only the best or worst appointment.
• Mark services with repeated overruns, uncharged add-ons, excess product use or long gaps that prevent another suitable booking from fitting.
• Change one commercial lever at a time and track whether contribution, rebooking and client outcomes improve before redesigning the whole menu.

Watch-out. All figures in this article are hypothetical and shown to explain a method. Actual prices, GST treatment, product use, timing, wages, workspace costs and demand differ. Use your own records and obtain accounting advice where needed.

The worked comparison

Assume both figures are ex-GST for a clean comparison. A colour appointment sells for $350, uses $70 of colour and consumables, and occupies four hours. Its contribution before fixed costs is $280, or $70 per occupied hour.

A haircut sells for $120, uses $8 of direct consumables and occupies one hour. Its contribution before fixed costs is $112 per occupied hour. The colour brings in more cash from one client, but the haircut produces $42 more contribution for each occupied hour.

• Colour: ($350 − $70) ÷ 4 hours = $70 contribution per occupied hour.
• Haircut: ($120 − $8) ÷ 1 hour = $112 contribution per occupied hour.
• Difference: the hypothetical haircut contributes $42 more for each occupied hour.

Why neither figure is take-home pay

Contribution still has to fund workspace, software, insurance, education, laundry, accounting, marketing, tool replacement, cancellations and non-client time. Income tax and personal drawings are not direct service costs, but the business must still produce enough cash for them.

GST-registered businesses should compare on a consistent ex-GST basis. The ATO explains that registered businesses generally include GST in taxable prices and remit GST on taxable sales; the GST component is not service earnings.

Separate GST from usable service revenue · Build rates from the complete cost base

Measure occupied time, not menu time

Use the time from required setup through client departure and reset, not the ideal duration printed in the menu. If the four-hour colour regularly needs 30 extra minutes, the same $280 contribution falls to about $62.22 per occupied hour.

Also record processing time that cannot be sold because no suitable service fits, the space or basin is unavailable, or the client still needs supervision. A theoretically open hour is not productive capacity unless the booking system and workflow can sell it safely.

Do not assume every freed hour will sell

Cutting a colour from four hours to three does not automatically create another $120 booking. The released hour must occur at a bookable time, suit real client demand and have the required workspace, staff and equipment available.

Use two numbers: contribution per occupied hour and weekly contribution from appointments actually sold. A slower service can remain commercially valuable when it fills demand that would otherwise go unused, supports retention or produces strong total contribution without blocking better work.

Compare service demand with bookability · Add capacity only when demand supports it

Choose the lever that fixes the weak number

If product cost is the issue, tighten consultation, formula records, weighing and included product allowance. If time is the issue, change booking duration, preparation, assistant support or the service scope. If value and price are misaligned, redesign or reprice the offer rather than hiding an automatic surcharge.

If repeated add-ons are uncharged, define what the base service includes and quote extra length, density, product or corrective work before starting. If the service cannot reach the required contribution without damaging the client result, remove it or offer it only in a structure that works.

Set scope and price during consultation · Check whether a price change is justified

Run the four-week service audit

For four normal weeks, record the service, ex-GST revenue, direct product cost, scheduled time, actual occupied time and whether the next available slot sold. Calculate contribution per occupied hour for each appointment and use the median by service.

Then rank services by hourly contribution, weekly contribution, rebooking and strategic value. That stops one dramatic appointment from driving the decision and shows whether the commercial problem is price, execution, demand or capacity.

Model booked hours, revenue and costs

Common questions