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Learn how to calculate price for hair business

How To Calculate Prices For Hair Business

You should calculate prices for your hair business right after you secure a reliable hair vendor. Many new hair bosses have trouble determining the reasonable profit for their hair brand or salon service. One thing that’s great about having a human hair business is that it is a lucrative business. You can make a great profit with each item you sell. In this article, we will talk about how to price your hair extensions or services for your hair business.

Calculate hair prices and profit based on a fixed percentage

Calculate hair extensions business profit

If you sell hair extensions or any services, as an organized business owner, you should have a set of rules for your prices. A fixed percentage will make everything easier down the line when you need to make a price list.

A good rule for retailers to follow is 50%. For example, if the original bundle costs $50, the profit will be $50 * 50% =$25, so your final price will be $75.

The advantage of having a cheaper hair vendor is that you can keep more profit for yourself. You can also drop your prices to be more competitive (not recommended, but hey what about an enticing 50% off during sales for your customers).

It all depends on how much you think you are worth and your target customers. Sometimes it’s not always about who sells the cheapest hair. If you are a US retailer reading this article, we guarantee that your prices won’t be the cheapest. You should instead focus on quality. Some of the biggest hair companies charge a ridiculous amount for their hair extensions, but people love those brands! (Just go on Instagram and you can see tons of high priced hair companies). These companies mark their prices high up there because they want to attract high-income customers. These customers don’t mind to invest thousands of dollars into high-quality hair bundles and wigs.

Of course, your price tags must match your services. But your brand’s position is definitely the most important factor when you consider your prices. If you do one hell of a good job at creating bomb hair packaging and hand-wash every customized wig, your wig deserves to be 2000K+! The customers who think that it’s worth the price will stick with your brand forever.

Calculate payment fees into your hair prices

Besides the money you need to pay for the product, you will also have to pay the “payment fees”. We made a list of payment fees that you may encounter while setting up your hair business. These fees can get very high and are definitely something you want to consider to include in your price mark-ups. Payment fees are the downsides that come with doing business with a foreign vendor. These fees can get very high. It is usually not something that a small dropshipping hair business owner can easily handle. You should remember to squeeze in these payment fees when you calculate prices for your hair business

1. Paypal fees (payment fees)

This is something that people rarely know until they decide to place an order from a foreign vendor.

When you send money to a foreign hair vendor, you will most likely send money through PayPal, Moneygram or Western Union. Paypal has a high percentage transaction fee. Your hair vendor might add those fees to the hair prices.

If you want to pay your vendor $1000 for hair bundles using Paypal, you will need to pay a standard fee of 2.9% + $0.30, which is $29.30 USD increased by 0.5%. You will also need to pay a currency conversion fee of 2.5% if you send in USD because Chinese vendors would only accept RMB. Paypal’s currency conversion rates are slightly higher than the standard conversion rate because they make a profit that way. If you use a credit card or debit card to pay? You will have a 3.9% transaction fee plus ¥1.91 RMB!

Guess what, you will end up paying $50-$60 for LITERALLY NOTHING this transaction! Not okay. Not only not okay, but this whole “fee” thing is such a headache every time you pay your vendor.

If you are dropshipping hair, these transaction fees will pump up your prices to a not-so-competitive range.

2. Use Money Gram, Western Union, wire transfer to pay your hair vendor

International bank transfers may be good if you are trying to pay a big amount to start with. Banks charge different fees for international transactions. For example, TD Bank can charge $30-$80 per transaction plus currency exchange fees. This is definitely not the way to go for someone that is transferring a few hundred dollars. Bank transfer for small dropshipping hair businesses can be really costly. Plus it takes up to two weeks for bank transfer to arrive in your vendor’s account.

Well, totally not a good strategy when you need to fulfill orders every day.

Money Gram and Western Union charge a smaller fee. But it is still a fixed fee. It can hurt your profit significantly if the transfer amount isn’t that high. If you are using a card to pay, you will be charged a higher currency exchange rate and conversion fee.

Using Money Gram, Western Union, and wire transfer to pay your oversea hair vendor isn’t the best idea unless you and your vendor have a great relationship. We do not recommend sending money to any foreign vendor. If you have any issues with the hair or if they ghost you after you send the money? You won’t have ways to get your investment back!

US hair vendors like Branded Hair Extensions don’t require currency exchange, transfer fees, and all that craziness. All prices are listed openly on the wholesale website. You can use any form of payment that you would normally use at an online retail store. A USA based wholesale hair vendor is a lot more trustworthy.

Include packaging and branding cost for your hair prices

Investing money in high-quality packaging for your hair extensions can pump up your prices. It can be difficult to find the perfect packaging that adds value to your brand. You should expect to spend a few hundreds of dollars to design and have your own custom branding. If you dropship hair, heady packaging may add on weight that can pump up your shipping costs.

Add marketing budget into your hair prices

If you are a new business owner, you should expect 50% or even 100% of your earning at the beginning to go to marketing and advertisement (This percentage may decrease if your hair business is just a side hustle). It is debatable whether to add all the marketing costs into each order. But marketing cost is unarguably something you shouldn’t ignore when your calculate “the cost of doing business”

If you want to learn ways to advertise your hair business, subscribe to our newsletter Hair Boss Seminar.

Below are some of the marketing costs that may pump up your prices.

1. Use Instagram Ads to raise brand awareness for your hair business.

Instagram Ads is the perfect place to start a brand awareness campaign for your hair business. On average, the cost to advertise a hair business on Instagram is about 2 cents to $2 per click. That is just to simply get in front of your audience. Not a conversion.

2. Use Facebook Ads to advertise your hair brand in a cost-efficient way.

Facebook Ads are generally cheaper for cost per click. It also reached the audience that is older and less internet-savvy. Facebook Ads are proven to have a better reach than Instagram Ads. But it’s less effective than Instagram due to less frequent user engagement.

3. Use Google Ads for your hair extensions brand to boost credibility.

When you are on the first page for your business name or a certain keyword. Customers will automatically give more trust to your hair company. But the cost for google ads can rake up to $10-$50 a day. If you are a new business and don’t have the start-up money, it is not really the best option for you.

4. Register your hair business on Yelp

This works for local hairstylists and salons. Don’t ignore the power of local businesses because you will get the most loyal customers. Yelp is free and does not require a sign-up fee to join. However, if you want to rank your business locally, you might have to add that Yelp Ads to your budget.

5. Others


Brochures, business cards, price lists, your business phone number, storefront, suite rent, utility bills… the list goes on. If you have a website, that’s money too. In fact, it can cause hundreds a month for a stable website. This is why we started offering free website hosting to our customers.

We have a detailed article on how to advertise your hair business for free. But if you want real growth, you will have to invest in your hair business’s marketing game. This is why dropshipping is the best way to start a business because you won’t have to invest in inventory, you can put your money on marketing. You have to make sure that most of your money goes to marketing rather than stocking up excessively.

Calculate shipping fees for your orders

Shipping from China or India can be really costly. The shipping rate for 1 pound is$18- $20 dollars. Every pound after that is $6-$8. This shipping fee will also impose a currency exchange fee. What’s terrible is that this fee is a fixed fee so shipping one bundle can cost you $20 dollars!

We commend that you include the shipping in your prices. Even if you do, there is still a lot of risk for losing profit.

The shipping fee is just too high and hard to calculate for each order. You will also lose out on big profit when a customer wants to exchange or return a product. Shipping is also one of the biggest reasons why many people don’t like dealing with pure Chinese and Indian hair vendors. How are you supposed to profit when shipping a bundle is $20.

The benefit of choosing USA based hair vendors is that shipping is straight-froward and return is no hassle. This is one of the major reasons why many new hair business owners decide to go with US-based vendors. Another thing is quality standard. Asian hair vendors usually have lower quality standards than the US, UK customers. The human hair industry has a lot of secrets that your vendor won’t tell you. It’s why Hair Boss Seminar is created! We want everyone to learn before they waste their dollars. You can read this article here to learn how to find a good hair vendor on Chinese Platforms like Aliexpress.

If you have inventory in stock, you should charge a flat fee for your shipment. Depending on your average order weight, it should be somewhere between $6.50-$10.

Add some utility bills into your average order price

if you have a physical location or you provide a local service, you may want to put up your prices. This cost may vary depending on your market and the level of service you provide.

Research how much your competitors charge

If you are a local business, you want to do a bit of research on how much your competitors charge. Your price may vary depending on your neighborhood. If it’s a high-income neighborhood, you may want to put your prices up. If you are located in an average income neighborhood, your prices should be fair.

The skill that you have may vary how much you charge too. It’s up to you to decide your worth. If you put a lot of time and money into customer satisfaction, you should always charge a good profit for your effort. Your customers will receive the hair and still be satisfied with the high price because you did a good job!

Conclusion: know your worth because it’s your business!

It is necessary to take all aspects into consideration when you calculate the prices for a hair business. If you are cautious about the potential costs that we mentioned above, you should be good and covered! It’s always good to know what kind of customers you want to attract. Higher prices may help you filter out the high-income customers who can buy more often and pay more. Average prices may help you attract more average-income customers. But they may also buy less often. It is up to you to make sure that you are satisfied with how much you get paid. That’s the whole point about being your own boss.

To see more articles like this, sign up for our newsletter Hair Boss Seminar.

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Check out Drop Ship & Label Hair Via Branded Hair Extensions to start a hair business without inventory!

Branded Hair Extensions

Branded Hair Extensions is an US/Asia based wholesale hair company that directly supplies virgin hair and hair branding to hair business retailers. We help hair business owners start their own hair extensions line from scratch with as little investment as possible.

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