Understanding Profit vs. Revenue: What Every Beautypreneur Needs to Know
- Kimberly Sulatycky
- Aug 30
- 3 min read
When it comes to running a successful salon, spa, or beauty business, numbers matter. But many business owners focus on one number—and forget the rest.
Revenue might look impressive on the surface, but profit is what truly determines your business’s financial health.
In this blog, we’ll break down the difference between revenue and profit, how to calculate them, where to find your numbers, and how to improve profitability without sacrificing service.
What Is Revenue?
Revenue is the total amount of money your business earns from services, retail sales, tips, and any other income streams before subtracting any costs.
Formula:
Revenue = Price x Quantity Sold
Example: If you charge $100 for a facial and perform 30 facials per month:
$100 x 30 = $3,000 revenue
✔ Pro Tip: Revenue tells you how much is coming in—but not how much you actually keep.
What Is Profit?
Profit is what’s left over after you subtract all business expenses from your revenue.
There are two types of profit you should understand:
Gross Profit – Revenue minus direct costs to deliver the service
Net Profit – What’s left after all business expenses (rent, supplies, wages, utilities, etc.)
Gross Profit Formula:
Gross Profit = Revenue – Cost of Goods Sold (COGS)
Net Profit Formula:
Net Profit = Revenue – Total Expenses
Example Breakdown:
Revenue: $3,000
COGS (products used during facials) $500
Operating Expenses (rent, marketing, wages, etc.) $1,700
Gross Profit = $3,000 – $500 = $2,500
Net Profit = $3,000 – ($500 + $1,700) = $800
Where to Find This Data in Your System
Your numbers are likely already in your booking or POS system. Here's where to look:
Sales/Transaction Reports: For total service and retail sales (revenue)
Inventory/Product Use Reports: For COGS (products used in services)
Expense Tracking: Use accounting software like QuickBooks, Wave, or a spreadsheet to track rent, wages, subscriptions, utilities, etc.
✔ Tip: Pull monthly or quarterly reports to assess trends and identify where profits may be slipping.
How to Improve Profit in Your Beauty Business
Increasing profit doesn’t always mean raising prices. Here are a few smart strategies:
1. Reduce Cost of Goods Sold (COGS)
Use the right amount of product per service—no more, no less
Buy in bulk or through distributors for better pricing
Track inventory to avoid over-ordering or waste
2. Cut Unnecessary Expenses
Audit subscriptions, marketing tools, or supplies you no longer use
Switch to more efficient systems or vendors
Reduce energy usage or rent unused space
3. Raise Prices Strategically
Gradually increase pricing on in-demand or premium services
Bundle services or retail for better perceived value
Offer value-adds instead of discounts
4. Improve Retail Sales
Train staff to recommend products
Place retail at checkout for visibility
Offer limited-time promos to move slow sellers
5. Increase Booking Efficiency
Optimize your schedule to reduce idle time
Fill slow days with loyalty offers or targeted promos
Encourage rebooking before clients leave
Final Thoughts
As a beautypreneur, knowing the difference between revenue and profit is critical. Revenue might look good, but profit is what allows you to pay yourself, reinvest in your business, and plan for growth.
Track your numbers consistently, assess what’s working, and take small steps each month to improve your profit margins. Remember: more clients isn’t always the answer—smarter operations often are.
Want help analyzing your numbers or creating a profit-boosting plan?
Explore mentorship options at www.salonrescueconsulting.com or follow @SalonRescue for tools, templates, and beauty biz finance tips.
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