The Barbershop Owner’s Guide to Retail Pricing and Profit Margins

You’ve carefully curated the perfect product line for your shop. The shelves are clean, well-lit, and look incredible. Now comes the question that makes most new owners freeze: “What do I charge?”

Pricing your retail products feels like a high-stakes guessing game. Charge too little, and you leave money on the table, killing your profit margin. Charge too much, and your products will collect dust, killing your cash flow.

This anxiety stems from not having a clear product markup strategy. But barbershop retail pricing isn’t an art; it’s simple math. This guide will teach you the basic industry-standard formulas to price your products confidently and ensure healthy barbershop profit margins.

Step 1: Understand the Two Most Important Words in Pricing

Before you can set a price, you must understand the difference between markup and margin. They are not the same thing.

• Markup is the amount you add to the cost of a product to determine your selling price. It’s calculated before the sale.
• Profit Margin is the actual percentage of profit you make from the selling price. It’s calculated after the sale.

Here’s the simplest way to think about it: Markup is what you add, and margin is what you keep. For a new owner, focusing on a consistent markup strategy is the easiest way to ensure healthy margins.

Step 2: Use the Industry Standard – Keystone Pricing

The most common and straightforward pricing model in all of retail is keystone pricing.

Keystone pricing is a simple formula: you take the wholesale cost of an item and double it to get your retail price. This represents a 100% markup.

The Keystone Formula:

Wholesale Cost x 2 = Retail Price

Example:

You purchase a bottle of styling cream from your distributor for $12.00.

$12.00 (Wholesale Cost) x 2 = $24.00 (Retail Price)

It’s that simple. By using the keystone model, you are ensuring a 50% gross profit margin on every product you sell. If you buy a product for $12 and sell it for $24, your gross profit is $12, which is 50% of the $24 selling price.

Step 3: When to Adjust Your Strategy

While keystone is the standard, it’s not a rigid law. It’s a starting point. You can adjust your markup based on the product and your brand positioning.

• Marking Up Higher (More than 100%): You might do this for exclusive, high-demand, or slow-moving items. If you carry a niche beard oil that no one else in town has, you can command a premium price.
• Marking Up Lower (Less than 100%): You might do this for lower-cost “impulse buy” items near the register, or if you need to clear out old inventory to make room for new products.

For a new shop, the best strategy is to start with keystone pricing on almost everything. It’s a proven, simple, and effective way to guarantee profitability. As you start to gather sales data, you can become more strategic, but starting with a 100% markup is the safest and most reliable path to building a profitable retail operation from day one.