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Salon, spa & fitness

Salon Marketing ROI Calculator

Works marketing return, where the horizon has to cover the relationship.

Your numbers

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Result

Payback period 10.2 Months
Net gain per month $1,180
Net return over the period $30,480
Return on investment 254%
It pays for itself in 10.2 months and returns $30,480 over 36 months, a 254% return.

Simple payback, with no discounting and no financing cost. For anything large or long, money now is worth more than money later and a lender will want interest, both of which make the real return lower than this.

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How the calculation works

Margin on revenue attributable to the spend, divided by the spend, measured over a horizon long enough to include the repeat visits a retained client makes. A first-visit measurement understates return severely in a business where clients return every few weeks for years.

What moves the number

  • Margin rather than revenue as the numerator.
  • Horizon long enough to include repeat visits.
  • Retention of the clients acquired.
  • Referrals those clients generate.

Where this one goes wrong

Judging a campaign on first-visit revenue makes almost all salon marketing look unprofitable, particularly where an introductory discount was involved, and cutting on that basis removes the spend that was actually building the client base. Measure over the relationship. The qualification is that this only holds where retention is real, so the retention rate has to be measured rather than assumed before the longer horizon is used to justify spending.

Before you quote

  • Measure over the client relationship, not the first visit.
  • Use margin on actual retention, not assumed retention.
  • Ask every new client how they found you.

Questions

About this calculator

Why does salon marketing look unprofitable?

Because it is usually judged on first-visit revenue, often after a discount. Clients return every few weeks for years, so a first-visit measurement understates the return severely and cutting on that basis removes what was building the base.

What horizon should be used?

Long enough to include the repeat visits a retained client makes, which in this trade means a year or more. The measurement is only honest if the retention rate used is your actual one rather than an optimistic assumption.

How should attribution be handled?

By asking every new client how they found the salon and recording it. It is simple, cheap and more reliable than tracking in a business where word of mouth and local visibility do much of the work.

How useful was this calculator?

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The formula

payback = cost / (monthly gain - monthly running cost)

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Free to embed. Paste this where you want it to appear. It stays up to date automatically because it loads from BDEVY.

Please keep the attribution line. It is the only thing we ask in return.

How to use this calculator

  1. Up-front cost ($). Enter your own figure; the page starts at $12,000.
  2. Extra gross profit per month ($). Enter your own figure; the page starts at $1,400.
  3. Extra running cost per month ($). Enter your own figure; the page starts at $220.
  4. Period to judge it over. Enter your own figure; the page starts at 36.

The result updates as you type, so you can try a figure, see what it does to payback period, and change it back. Nothing you enter is sent anywhere or saved.

A worked example

These are the figures the calculator opens with. Every number in the results column below is produced by the same calculation the page runs, so you can follow it through before putting your own figures in.

What goes in

InputValue
Up-front cost$12,000
Extra gross profit per month$1,400
Extra running cost per month$220
Period to judge it over36

What comes out

ResultValue
Payback period main result10.2
Net gain per month$1,180
Net return over the period$30,480
Return on investment254%

It pays for itself in 10.2 months and returns $30,480 over 36 months, a 254% return.

How sensitive the answer is

Holding everything else steady and changing only up-front cost, this is what happens to payback period. It is worth knowing which of your inputs the answer actually hinges on, and which barely move it.

Up-front cost ($)Payback period
$6,000 5.1
$9,000 7.6
$12,000 example above 10.2
$18,000 15.3
$24,000 20.3

Every other input is held at the example value while this one changes, which is not how a real job behaves. Treat it as a guide to which number matters most, not as five separate quotes.

What each figure means

Up-front cost ($)
A money amount, starting at $12,000.
Extra gross profit per month ($)
A money amount, starting at $1,400.
Extra running cost per month ($)
A money amount, starting at $220.
Period to judge it over
A number, between 0 and 240, starting at 36.

What the results tell you

ResultWhat it is
Payback periodThe headline result. A decimal figure.
Net gain per monthA money figure.
Net return over the periodA money figure.
Return on investmentA percentage.

Estimating is the easy part

The jobs you never hear about cost more than the ones you mis-measure. BDEVY builds the marketing, systems and automation that bring them in.