How to make the highest profit selling hair extensions

How to make the highest profit selling hair extensions

Last week I was talking to a girl in France who had great news. She did not have a client buying her hair extensions for a long time. But this week there were two clients who placed an order. The only problem was …. she did not have the hair they asked for in stock. She knew a good hair vendor in Vietnam en she got the hair for her clients. Too bad she could not really get the hair for wholesale conditions because the order was too small. But she still made a profit! At least that was she thought until she and I did the calculations. She had forgotten to consider some costs like the import duties and the other store expenses. She had lost money instead! It was not nice to come to this conclusion, especially because it could have been avoided.

To avoid you make the same mistake, I created a hair profit calculator and published it on this website. For free you can calculate the profit you made on any deal you close. But perhaps even better, you can also use it to calculate the outcome of any deal before you buy the hair from your vendor or agree on the price for your clients.

Let me share with you how it works, so you know how you can make the highest profit selling hair!

How to calculate your profit when selling hair

When you want to calculate how much money you made or are going to make selling hair, you need to be sure you take all expenses and income into account. Let me take you step by step through this calculation. Let me start to advise you to use s only one currency when you do the calculations. Use your own currency and convert any amount paid in other currency back to your own. You need to make sure you can compare all revenue and cost items.

How much money you need to sell hair?

To calculate how much money, you need to sell hair you need to do some homework. The expenses are not only the price you pay for the hair from the vendor, but also:

• • the payment charge from the vendor
  • the shipping charge from the hair vendor

But also

• • the import duties you pay when you import hair from abroad plus the handling fee

And the

• cost to keep your webstore online, like hosting costs or Shopify fee
• advertisement cost on Facebook or Google
• packaging material and other branding material
• phone charges for calls with your suppliers
• the depreciation of your phone and laptop

You might have some examples yourself, otherwise I recommend you the all-in-one hair business packages that contains templates to shows all your expenses and helps you to plan your cashflow. A cashflow planning is there to make sure you are not short on money when you need to pay your bills.

How much hair will you buy this year?

After you have calculated all the expenses for a full year, you must estimate the total amount of money you are going to spend in buying the hair to sell to your clients. So how much hair are you going to purchase from your suppliers. It is not easy to make this estimation, but you need it to make sure you have a profitable business that will continue to grow. It will for example help you to plan extra marketing activities when the sales are lacking behind. When you control your marketing and sales activities during the year, for sure you will reach your goals; the money you want to make selling hair, your profit!

Now divide the total expenses for your webstore by the total sales for the same period. This will give you the cost mark up. That is the cost you must add to every purchase of hair to make sure you cover all your webstore expenses. To make it easy, you multiply the division total expenses / total sales with 100 percent. This percentage you add to all your hair purchases. Indeed, it will make the hair more expensive than the price on the pricelist of the hair supplier. But at least you earn back the expenses you make doing business.

How much do you pay for the hair extensions

When you contact a hair supplier, they will mail or app you, their pricelist. This shows an image of the hair, the texture, lengths and size or density. And of course, the purchase price of the hair. Often there are additional expenses for a different texture or color (#613).

But there is more to pay. Most of the hair suppliers will charge you also for:

The shipping charges from hair suppliers

The shipping charges your supplier will bill you, will depend on the weight of the parcel and the kind of courier service you prefer. It can be beneficial to combine some orders, or to increase the level of your inventory and to save on shipping charges. When you buy hair in advance you can save on the more expensive but faster courier services.

But anyhow, the hair supplier will charge you for the shipping of the hair extensions or wigs.

The payment charges from hair vendors

Depending on the payment method, the hair vendor will charge you. For example, when you prefer PayPal, they will charge you with a 4 to 5 percent charge, because this will be the fee, they must pay to PayPal for receiving the order amount for the hair.
But and this is often forgotten when people calculate the profit, they make on selling hair, when you transfer the money by direct bank transfer or a service like Western Union you also must pay a payment fee. This fee you must consider too when calculating the purchase price of the hair or the cost of goods as it is called.

Other expenses when buying hair

It is possible the hair vendor is charging you for dying the hair, or to change the texture of the hair or any other service charge. These expenses you also must consider.

The cost of importing hair extensions or wigs

You can buy the hair in your own country, but when you purchase hair from China, India, or other countries, you must import the hair. Importing hair is bringing the hair from one country to your own country. This can be done by a courier, or your national post service. Or you can import the hair yourself.

Most countries charge tax or import duties when you import hair extensions or wigs, regardless if it is human hair or synthetic hair. It is important to inform yourself about the import duties before you calculate your selling price. It is possible you have not paid any import duties ever, but it is very likely one day you will have to pay these import taxes. Take these duties into account, together with possible handling fee charged by the courier or your postal services.

The price your client pays for buying hair

You have the price calculated following the various pricing strategies for hair extensions. You can find a post about these strategies on my website.
But it is possible your client negotiates a better deal, for her. Or your client wants hair that is not part of your collection, and you need to place a special order for these hair extensions. At these times it is very important to be sure of your negotiating room. How low can you go with your selling price to get the deal and to keep the client happy? At these times you need the [hair profit calculator!]

How much you pay to sell hair?

In the beginning you learned about all the expenses for keeping your webstore online. But there are more expenses when you sell hair. You might be charged by your bank or ecommerce platform for the money you receive from your client. When you use PayPal, this time you will be charged with a fee from PayPal.

How much is the shipping when selling hair?

Unless you have a local pick-up point organized, most clients will receive their parcels by post or courier. Or perhaps you even hand over the hair yourself personally. In these cases, you must make expenses to ship the hair, these shipping or transport expenses you must consider when calculating your profit.

Can you charge your client for shipping the hair?

From a marketing perspective you can decide to offer free shipping. But this will impact your profit margin in a negative way. Good when you can make more sales when clients feel they do not pay for shipping, but you must pay for shipping anyway. You can consider offering only free shipping above a certain order amount. Below this amount you will charge shipping expenses to your client. It is a good way to sell more hair, because most people prefer to pay for hair instead for the postal services. The money you charge your client you can deduct from your expenses.

Can you charge your client for payment?

Yes, you can. When your client wants to pay you and you did not take the payment expenses for a specific service into account when calculating the price of the hair. You can charge them. But be careful, when clients feel they have not only to pay for the hair but also for everything that comes with it, they might bounce away. At the other side, when you prefer to offer the cheapest hair price as possible, like a discounter, you can charge for payment. When you receive money from your clients for payment services, you can deduct this when you calculate the profit you make when selling hair.

The sales tax you pay when selling hair

The tax you pay when selling hair is no income for you. You will have to collect this tax on behalf of the tax authorities. You will increase the amount of the invoice, but it will not increase your profit. You need to forget this amount when you calculate the profit margin when selling wigs or hair pieces.

Profit or loss selling hair?

Now you have all ingredients to calculate the profit, or loss, you made when selling hair extensions. The difference between the money you paid and the money you received will show your profit. Make sure you use the same currency for your calculations and do not forget the cost mark up for your other expenses.

Difficult? No problem to help you there is a hair profit calculator. For free you can make as many calculations as possible you want to get the highest profit possible when selling hair or wigs. When you look for more support check our all-in-one hair business packages for more support.