So the new award rates for beauty therapists in Australia has just been released. And it’s a BIG increase. Plus, Superannuation has gone up to 11% (and will continue to rise until it gets to 12%)

That’s a tough gig for you, the business owner, which is why it's crucial you to read this blog with utmost attention. First, I want to give you the ‘why’ hourly productivity targets are the only way to drive performance, then I’ll tell you exactly what your hourly target should be, depending on what kind of beauty salon or skin clinic you have and then, why, how I got to the numbers.

Why Only Hourly Targets Can Drive Performance

There’s a huge disconnect in our industry – Not enough people, business owners included, understand the relationship between what a therapist costs a business and the minimum productivity expectation, for that pay. Here’s why it’s important this relationship is understood by all. 

As we all know, the beauty industry is both a service and a retail business. But unlike any other retail business, the retailing aspect of the beauty business is equally a service. It’s not like a clothing store where someone chooses the dress they like or the grocery store where a customer picks things off the shelf based on what they need, not necessarily requiring anyone to help them.

The sale of retail products in the beauty business is not picked or even chosen by the client but rather by their therapist, creating a ‘servicing’ of such. You don’t see people coming in and out of salons picking skincare off the shelves. They NEED the servicing from a therapist.

And that servicing is TIME-BASED. APPOINTMENT-BASED.

And because of this, very little is sold outside of the treatment room. Your therapists are the predominant revenue generators of the business, making every hour they are paid, either an opportunity that is gained or an opportunity that is lost. EVERY HOUR MATTERS. An opportunity missed at the 10am appointment today can never be recovered. 10am today will never happen again, therefore it’s an opportunity is lost.

Understanding this important. Your team’s pay is time-based and the way the business generates its money is time-based.

Therefore, it stands to reason that how we measure every therapist’s productivity, needs to be time-based.

What Your Therapist's Productivity Target Should Be as of July 2023

I have been setting the productivity targets in the beauty industry for well over a decade now with hundreds of businesses following them successfully to secure profitability.

As technology increases at an exponential rate and more treatment modalities are made available in the form of equipment and high end ingredients, one target for the entire industry is no longer enough as some businesses incur much higher treatment costs to deliver their treatments. A business that uses a lot of high cost equipment, such as laser machines which can cost in excess of $100,000, has a bigger cost-per-treatment to cover ie. the cost to deliver the treatment will be much higher than the cost of say delivering a treatment using professional products only or with equipment that’s low in cost to purchase.

So here are the productivity targets you need to follow as of July 2023.

$160/hour - Minimally equipment heavy, means most of your advanced skin treatments are peels, micro, LED, advanced treatments using product only.

$240/hour - Heavily equipment heavy means just about every advanced skin treatment uses high cost equipment laser machines etc.  

$200/hour - Moderately equipment heavy, is 50/50. A combination of both

Where the Heck Did I Get These Numbers From?

No, I did not pull the numbers out of my tush!

The reason hundreds of businesses have been following the targets I set is because they are accurate, because I take EVERYTHING into account. Probably more than you have ever thought to consider.

First, the most important, THE MOST IMPORTANT benchmark a salon or skin clinic needs to follow is that the total wage bill should NEVER exceed 30% of the total revenue generated. So say your business generated $1,000,000 a year, the total wage bill for everyone including receptionists should NOT exceed $300,000. If it does, then you are either overstaffed (too much downtime) or under productive (therapists not producing enough to make a profit). 

So what is the total wage expense of your employees made up of?

• The base weekly wages for the 43.6 weeks of the year they work and generate revenue
• 4 weeks of Annual Leave you need to pay but they don’t generate revenue
• 5% extra when they’re on annual leave (I’ll never understand how we need to pay our employees more when they DON’T work than when they do work!)
• 2 weeks of Annual Leave you need to pay but they don’t generate revenue
• 12 days (2.4 weeks) of Public Holidays a year you need to pay but they don’t generate revenue
• Superannuation of 11% on top of all of the above
• All of the above to cover non-revenue-generating employees such as receptionists or salon coordinators

 So you can see that to work how much they need to produce for your business to be profitable, that amount needs to be produced in 43.6 of the weeks they work, out of the 52 weeks they are paid! 💩💩

The math is challenging, so I’ve worked it all out for you. Got questions, send me a DM on https://www.instagram.com/creamsolutions/