Barbershop Pricing and Profitability Case
Business context
A small barbershop with two chairs, limited working hours, and a clear cap on how many clients can be served in a day.
The numbers below are simplified fictional examples used for educational purposes.
The numbers
| Average price per haircut | $20 |
| Average clients per day (2 chairs) | 18 |
| Working days per month | 25 |
| Rent | $1,500 |
| Staff costs (one assistant barber) | $2,200 |
| Supplies and utilities | $400 |
Step-by-step calculation
Monthly sales = 18 × 25 × $20 = $9,000
Total monthly costs = $1,500 + $2,200 + $400 = $4,100
Net profit = $9,000 − $4,100 = $4,900
Net margin = $4,900 / $9,000 ≈ 54%
Capacity interpretation
Two chairs working full time can realistically serve more than 18 clients per day, but real schedules include gaps and no-shows. With 18 clients/day the shop is using roughly 75% of its capacity. Growing further means either filling those gaps, extending hours, or adding a third chair — each with different cost implications.
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Pricing sensitivity
Raising the price from $20 to $22 (+10%) — assuming the same number of clients — adds $900 of revenue per month. Because fixed costs stay the same, almost all of that extra revenue becomes profit, lifting net profit from $4,900 to ~$5,800.
But if the price increase causes only 1 fewer client per day on average (17 × 25 = 425 haircuts), revenue at $22 = $9,350 — still slightly better than the original $9,000, but the gain is much smaller. Pricing decisions are sensitive to client reaction.
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This case study is for educational and planning purposes only. It is not accounting, tax, legal, investment, or financial advice. Numbers shown are simplified fictional examples.