How much money you make selling hair?

How much money you make selling hair?

How much money can you make selling hair? To answer this question, there are many things that you must take into consideration. Like the market price, the vendor price, and your own expenses. Selling hair can be a very profitable business, but you need to do your math. You need to calculate well, especially when you start and have small orders.

How much can you receive when selling hair?

Let us start with the most important side of any hair business, your client. Not only to define your ideal client, but also because this person is the one that will pay you for the hair and services. The amount she or he will pay starts with your retail price. The price for your hair products on your webstore. When you client places the bundles, closure, or frontals in the cart, she will see the amount she has to pay for the hair.

Additional charges

Amazon forced us to offer free shipping, but when you prefer a low price for the hair bundles you sell, it is possible you must charge for shipping. This amount will be added during the checkout process. Please do not surprise your client by telling her the shipping expenses when she is ready to pay for the order. This surprise might be a reason for her to leave the webstore and you end up with an abandoned cart.

It is also possible you charge to dye the hair, or any other special treatment or service. These charges you add to the retail price.

Do you pay tax when selling hair

It all depends on your country and the tax law, but in most countries, you must calculate sales tax for the purchase of hair. This amount you must add to the amount you are going to charge your client. But this amount is not for you, you must pass it to your tax authorities. You only collect the money on behalf of the tax inspector.

How much can you receive selling hair?

Now you will have:

• The price of the hair
• Shipping charges
• Other charges
• Sales tax
The sum of these 4 is the total amount your client will have to pay, and you should receive. This is the invoice amount.

How much do you have to pay for buying hair?

After your client and the competition, your hair vendor is the most important person in your business live. How much will you have to pay to your hair vendor?

This is not as simple as you might expect. It all starts with the selling price of the hair. Sometimes you can negotiate the price down, or you can get a lower price because you purchase a large quantity. Your hair vendor will have a price list they will share with you to let you know the prices per texture, length, and size. You can also expect a different price for colored hair.

The minimum order quantity for hair, or MOQ, is the lowest number of pieces or bundles you must buy to qualify for wholesale conditions. Of you do not reach the MOQ, you will pay a retail price. This might still allow you to make a profit, when you can find a client who values the hair at a higher price.

Additional charges

Now you must start to pay attention. You will not only have to pay for the hair, but you can also expect additional charges, like for shipping and payment. Please inform before you start to negotiate about the hair about additional charges. These expenses will reduce your profit if you are not able to charge them to your own client.

Shipment charges for hair and wigs

The shipment charges depend on how fast you want to receive the hair and wigs you ordered. Check with the hair vendor what the options are and what the price differences are. When you place your orders in time, you can save on shipping expenses, while still having the same quality of hair and wigs.

Payment charges for hair and wigs

The amount of the payment fee depends on the payment method. For PayPal you can expect a 4 to 5% charge, but when you go for western union, you will have to pay a fee to western union when you transfer the money. Here the same goes for the shipment, check with the vendor what the options are and decide about the savings. Please so not forget, using PayPal gives you buyers protection, while a payment via Western Union is a final deal. You will not get your money back from Western Union or Money Gram when you received bad hair.

Other charges for hair

It is possible your hair supplier will charge additional amounts for dying the hair, other textures, or other services.

How you must pay for buying hair form hair vendor?

Now you will have:

• The price of the hair
• Payment charges
• Shipping charges
• Other charges

The sum of these 4 is the total amount your will have to pay to your hair vendor. This is the purchase amount.

Import duties for hair extensions and wigs

Before you start to calculate your profit, you need to know your country might tax any strand of hair that enters the country. Most countries have import duties for the import of human or synthetic hair, wigs beards and other hair pieces. Check with your local customs about the level of these taxes.

It is important to understand you should pay these import duties, but sometimes due to the high level of parcels shipped between countries, it is possible you receive the hair without an additional charge for import duties. But please understand, when you are not charged for the hair with import duties, you are lucky, and you can most often keep the saving in your own pocket. When you must pay, that is normal and no bad luck. So, make sure you add these import duties in your calculations.

Handling fee

It is possible the postal service or the courier will charge you with a handling fee when they must fill the tax return for the import duties, these expenses you will have to take into consideration to.

How much is your gross profit selling hair

You have now all the information you need to calculate your gross profit. This is the difference between the money you receive from your clients and the money you must pay (or paid already) to your hair supplier. This difference is the gross profit, and this is not your profit! There is more to consider.

What are your business expenses selling hair?

For running your hair webstore, you will need a webstore, a hosting contract, a bookkeeper, advertisement, and business coaching for example. Depending on your situation you can have many more items you need, like a car or a location to store the hair. You need to add up all the expenses for these activities and obligations. The total amount of all your expenses, you need to divide over the budgeted hair purchase for the year. The outcome will give you a percentage, the total amount of expenses divided by the total amount of the hair you are going to buy.

This percentage is the mark-up for the expenses of having a hair store. This mark-up you will have to deduct from the gross profit you calculated before.

Congratulations you made a profit selling hair

When you deduct the mark up for expenses from the gross profit for the hair, you will now the calculated net profit you made on a certain sale of hair. When you budgeted your income and expenses for the year, you have also calculated your profit, The profit is the reward for yourself for taking the risk of having a business and a reward for the time and effort you have dedicated to the hair webstore.

In the ideal situation the calculated net profit margin is the same or above the budgeted profit. If not, you need to consider changing your pricing, or how much shipping and payment expenses you charge to your clients. Or even better you should negotiate a better price with your hair vendor.

Our all-in-one hair business package has the templates needed to calculate your sales, the hair price, your expenses and cashflow. I recommend getting the templates to always selling hair at a profit!