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How Much Does It Cost to Open a Tanning Salon? (Sales Forecast and Breakeven Analysis Included)

Tanning Salon Business

You need a minimum of $298,900 to open a tanning salon (Medium-Scale Salon). When it comes to opening a tanning salon, the major areas that you should look towards spending the bulk of your cash is in renting or leasing a standard facility, converting it into a tanning salon.

You also need to equip the salon with the needed UV tanning equipment, Spray – On tanning equipment, tanning airbrush, Computers and receipt issuing machines, Sound System (For playing music), Point of Sale Machines (POS Machines), CCTV Cameras and Flat Screen TVs.

Aside from that, you are not expected to spend much except for paying of your employees and utility bills and stocking up on inventory. These are the key areas where you are expected to spend your startup capital on;

Estimated Cost Breakdown for Opening a Tanning Salon

  1. The total fee for registering a business in the united states of America – 0.
  2. Legal expenses for obtaining licenses and permits as well as the accounting services (software, P.O.S machines, and other software) – $3,300.
  3. Marketing promotion expenses for the grand opening of the tanning salon in the amount of $3,500 and as well as flyer printing (2,000 flyers at $0.04 per copy) for the total amount of $3,580.
  4. The total cost for hiring a business consultant including writing a business plan – $2,500.
  5. The total cost for the purchase of insurance (general liability, workers’ compensation, and property casualty) coverage at a total premium – $2,400.
  6. The cost for renting or leasing a space or warehouse that will be converted into a tanning salon and that can accommodate the number of customers per time (Reconstruction of the facility inclusive) will cost – $80,000.
  7. Other start-up expenses including, commercial satellite TV subscriptions, stationery ($500), and phone and utility deposits ($2,800).
  8. Operational cost for the first 3 months (salaries of employees, payments of bills et al) – $40,000
  9. The cost for start-up inventory (stocking with amino acid tyrosine to produce melanin and other related tanning supplies) – $15,000
  10. The cost for the purchase of storage hardware (bins, rack, shelves, case) – $3,720
  11. The cost for counter area equipment (countertop, receipt issuing machine, etc.) – $9,500
  12. The cost for store equipment (cash register, security, ventilation, signage) – $4,750
  13. The cost of purchase and installation of CCTVs: $2,000
  14. Equipping the tanning salon with (vertical solarium tanning bed/tanning machine/solarium device with 48pcs Germany UV lamp tubes, furniture (table, stools, and sofas), telephones, filing cabinets, and TV et al) will cost – $80,000
  15. The cost of launching a website: $600
  16. Miscellaneous: $2,000

From the rough estimate listed above, you would need a minimum of two hundred and ninety – eight thousand nine hundred USD ($298,900) to establish a medium–scale but standard tanning salon business in any city in the United States of America.

Please note that this amount includes the salaries of all the staff for the first three months of operation. If you are interested in opening a tanning salon, one of your major concerns should be financing.

3-Year Sales Forecast and Breakeven Analysis

Initial Capital: $298,900

Fixed Cost: Monthly expenses such as rent, salaries, utilities, equipment lease, and insurance.

  • Rent: $5,000 per month
  • Salaries (including front desk and tanning technicians): $10,000 per month
  • Utilities and other fixed costs: $2,000 per month
  • Equipment lease/maintenance: $2,000 per month
  • Insurance: $1,000 per month
  • Total Fixed Cost per Month: $20,000
  • Total Fixed Cost per Year: $240,000

Variable Cost: Costs that vary directly with sales, primarily including the cost of tanning products, supplies, and marketing.

  • COGS: 20% of sales

Revenue: Average Fee per Tanning Session: $30

Growth Rate:

  • Year 1: Starting with an average of 700 sessions per month.
  • Year 2: 15% increase in total sales from Year 1.
  • Year 3: 10% increase in total sales from Year 2.

Year 1:

  • Monthly Revenue: 700 sessions x $30 = $21,000
  • Total Annual Sales: $21,000 x 12 = $252,000
  • Variable Costs: $252,000 x 0.20 = $50,400
  • Fixed Cost: $240,000
  • Total Cost: $50,400 + $240,000 = $290,400

Year 2:

  • Total Annual Sales: $252,000 x 1.15 = $289,800
  • Variable Cost: $289,800 x 0.20 = $57,960
  • Fixed Cost: $240,000
  • Total Cost: $57,960 + $240,000 = $297,960

Year 3:

  • Total Annual Sales: $289,800 x 1.10 = $318,780
  • Variable Costs: $318,780 x 0.20 = $63,756
  • Fixed Costs: $240,000
  • Total Costs: $63,756 + $240,000 = $303,756

Breakeven Point

Breakeven Sales Monthly = Fixed Cost per Month ÷ (1 − Variable Cost Percentage)

: = 20,000 ÷ (1 − 0.20)

Breakeven Sales Monthly = $25,000

In as much as there are several factors that influence the cost of opening a tanning salon, there are key factors that will definitely apply to all entrepreneurs irrespective of the size and location of the tanning salon they want to open.

Factors That Influence the Cost of Opening a Tanning Salon

  1. The Location of the Tanning Salon

You cannot successfully conduct feasibility studies and market surveys without choosing a specific location. Interestingly, all locations ideal for a business don’t come at the same price.

For example, the cost of starting a tanning salon business in a city like Beverly Hills, California will be far higher than the cost of starting a tanning salon of the same size in Silver City, New Mexico.

2. The Size of the Tanning Salon

For example, if you want to rent a facility for your tanning salon in a shop that is 400 square meters, you are expected to spend less when compared to someone who wants to start a tanning salon in a shop facility that is over 4,000 square meters.

  1. The Cost of Rent or Lease

If you want to operate a mobile tanning salon, you are expected to create a budget for rent or lease. Interestingly, the cost of renting a facility doesn’t come cheap and it is one of the reasons why some entrepreneurs have not started their businesses.

For example, if you plan to open your tanning salon in a city like Los Angeles, California, then you should budget to pay between $30,000 to $150,000 per year for a standard shop facility and that will translate to about $30 to $150 per square meter space.

  1. The Cost for Renovations and Add-ons

No matter the choice of salon property you choose to rent or lease, you are expected to at least renovate the facility. You are expected to make the place look good and appealing to potential customers and this doesn’t come cheap.

Even if you the landlord decide to handle the renovation work, you should expect that somehow, the cost will be transferred to you in the form of rent.

  1. The Cost of Furnishing and Equipping

Without furnishing and equipping your tanning salon, no one will patronize you and you won’t be able to carry out your services.

So, you are expected to budget and purchase tanning salon equipment such as tanning beds or booths, spray tanning equipment, UV lamps, and a ventilation system.

You are expected to also budget for furniture, computers, flat-screen televisions, sound systems, and security gadgets (CCTV et al)

  1. The Cost of Hiring and Training Your Staff

Irrespective of the size of the tanning salon you want to open, at least you should have a budget of a minimum of two or three employees to start the business with.

No doubt, you may decide to occupy more than one role as the boss, but there are certain aspects of the business that you may not be able to handle hence you would need to hire employees.

  1. The Cost of Obtaining Licenses and Permits

Although this cost might be far lesser than all other costs discussed above, the truth remains that they are costs that will add to the total amount needed to open a salon.

The cost of obtaining your business license, zoning permit, sales tax permit, tanning permit, and lastly signage permit, will definitely add up.

  1. The Cost of Marketing and Advertising

In this era of social media and the internet, you can use a small budget to achieve great results when it comes to marketing and advertising your tanning salon.

Be that as it may, the budget for your tanning salon will not be complete without filling up the column for marketing and advertising.

  1. The Cost of Insurance

In the United States and of course, in most countries of the world, it is illegal to start a business without having the required insurance policy covers in place.

You are expected to have at least general liability insurance, property insurance, and workers’ compensation insurance in place.

This insurance policy covers cost money and they will add to the budget you are expected to spend when opening your tanning salon.

  1. The Cost for Inventory

Before you can successfully open a tanning salon, you are expected to have a budget for inventories such as towels, lenses, tanning lotions, skin care products, sunglasses and cleaning products et al.

Even though your budget for inventory may not be as high as that for equipment and rent et al, the bigger your tanning salon, the bigger the amount you should budget for inventory.

In Conclusion,

Please note that this is a rough estimate and we usually advise our readers who are interested in opening a tanning salon to go to the market or directly contact wholesalers and suppliers of the types of vertical solarium tanning bed/tanning machine, UV lamp tubes, flat-screen TVs, sound system and related gadgets they want to have in their tanning salon in order to get the real-time prices of these items.