What counts as a fixed cost in a salon?

Anything you pay in a month when nobody comes in: rent, fixed salaries and retainers, electricity and water at their base level, internet, software, insurance, loan repayments. If the amount changes with how busy you are, it belongs in the variable side instead.

Is commission a fixed or variable cost?

Variable, because it only arises when a bill is raised. A guaranteed minimum with commission on top splits across both — the guarantee is a fixed salary and only the part earned above it is variable. Treating the whole of a commission-heavy wage bill as fixed makes break-even look far worse than it is.

Should the owner's own salary be included?

Yes, if you want a number that means anything. A salon that breaks even only because nobody paid the owner has not broken even, it has borrowed from you. Put in what you would have to pay somebody to do your job.

How often is this worth recalculating?

Whenever a fixed cost changes materially — a rent revision, a new hire, a piece of equipment on finance — and otherwise about twice a year. The inputs move slowly, which is what makes the number worth trusting between reviews.

Salon break-even calculator

Not what the salon turns over. How many customers have to walk through the door before any of it is yours.

How do you calculate a salon's break-even point?

Divide your fixed monthly costs by what one average bill contributes after its own variable costs. Rent and salaries are paid whether anyone comes in or not; product used and commission earned are only paid when they do. The gap between the average bill and those variable costs is what actually pays the rent.

The salon

Fixed costs a month

What you pay in a month when nobody walks in.

RentFixed salariesGuaranteed pay only — put commission below.Electricity, water, internetEverything elseSoftware, insurance, loan repayments, your own salary.

The average bill

Average bill valueDays open a monthProduct cost per billWhat the service consumes, as a share of the bill.Commission per billOnly the part earned on top of guaranteed pay.

Work in tax-exclusive amounts throughout. GST collected on a bill is not yours to contribute towards the rent, and including it makes break-even look nearer than it is.

Before you keep anything

Fixed costs a month: ₹1,75,000.00
Average bill: ₹900.00
Variable cost: 22%
Contribution per bill: ₹702.00
Bills needed a month: 249.3
Revenue at that volume: ₹2,24,358.97
Bills a day to break even: 9.6

Why the average bill is not the contribution

The mistake that makes break-even look easier than it is: dividing fixed costs by the average bill. A ₹1,000 bill that consumes ₹120 of product and pays ₹150 of commission has not contributed ₹1,000 towards the rent — it has contributed ₹730. Using the full bill understates the number of customers you need by roughly the variable rate, which on a typical salon is a quarter.

So the calculation runs in three steps. Contribution per bill is the average bill less its variable costs. Bills needed per month is fixed costs divided by that contribution. Bills per day is that figure divided by the days you actually open, which is not thirty.

The most useful thing this reveals is usually not the break-even number itself but the sensitivity beneath it. Raising the average bill by a hundred rupees almost always moves break-even further than adding an hour to the day, because the extra hundred is nearly all contribution while the extra hour carries its own cost.

Common questions

What counts as a fixed cost in a salon?: Anything you pay in a month when nobody comes in: rent, fixed salaries and retainers, electricity and water at their base level, internet, software, insurance, loan repayments. If the amount changes with how busy you are, it belongs in the variable side instead.
Is commission a fixed or variable cost?: Variable, because it only arises when a bill is raised. A guaranteed minimum with commission on top splits across both — the guarantee is a fixed salary and only the part earned above it is variable. Treating the whole of a commission-heavy wage bill as fixed makes break-even look far worse than it is.
Should the owner's own salary be included?: Yes, if you want a number that means anything. A salon that breaks even only because nobody paid the owner has not broken even, it has borrowed from you. Put in what you would have to pay somebody to do your job.
How often is this worth recalculating?: Whenever a fixed cost changes materially — a rent revision, a new hire, a piece of equipment on finance — and otherwise about twice a year. The inputs move slowly, which is what makes the number worth trusting between reviews.

Worth knowing

This is a contribution-margin model, not an accounting statement. It does not produce a profit-and-loss account, and it ignores depreciation, tax and anything below the operating line.
It assumes one blended average bill and one blended variable rate. A salon whose service and retail margins differ sharply will get a better answer by running it twice.
GST is not modelled. Work in tax-exclusive amounts throughout, since the tax collected was never yours to contribute.
It says nothing about cash flow or timing. Breaking even on paper in a month you paid an annual insurance premium still empties the account.
Nothing you type is sent anywhere. The whole calculation runs in your browser.

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