Working out if renting a barber’s chair is worth the money

Speaker 1: Hey Dan I've picked up this flyer for a barber's chair in a salon for £130.00 for a week. What do you think?

Speaker 2: Have you worked out if you could make any money from it?

Speaker 1: I was wondering if you would mind helping me figure that out?

Speaker 2: Sure. So first of all you need to work out an estimate of what your monthly costs would be.

Then you work out the potential money you could make after you've covered your expenses and then just think about if it's worth it.

Speaker 1: Well there's a weekly rent on the chair that's £130.00, then there's my product costs.

(TO AUDIENCE) Last month, my weekly product costs were £12.62, £11.54, £9.99, and £10.22. So last month's costs came to £44.37.

If I divide that by four, that will give me a rough weekly cost.

So that's £11.09 to the nearest penny.

Then I add this to the weekly cost of the barber chair which is £130.00, which equals £141.09.

(TO OTHER PEOPLE) So I've worked out my average spend on products, but last Saturday, I bought a new pair of clippers which cost me £80.00.

Speaker 2: Yeah there'll be other setup costs too.

Speaker 1: Right.

Speaker 2: So, there's your insurance, which is about £120.00 a year and then you wanna get some business cards printed, they cost me about £30.00 last time I got them done.

Speaker 1: So I need to make £230.00 back before I can start making any money?

Speaker 2: Yeah but you could spread those bigger costs over a whole year.

So we're gonna have to do an estimate £230.00 divided by 52, the number of weeks in a year and that's £4.42 per week.

So your weekly costs go up to £145.51.

Speaker 1: Okay, sounds sensible.

Speaker 1: So, now we need to work out how much money you'd be likely to earn.

Speaker 2: I make £330.00 a week, at the moment.

Speaker 1: Ideally, you'd need to make at least that much to take the chair.

So, let's work out an average spend per client.

Speaker 2: (TO AUDIENCE) I could work out an average based on what I did before with my product costs, or by working out the midpoint, between the most expensive and cheapest treatment, to get an average cost per client.

The median is the middle value in the list of numbers.

So if I look at a typical day from last week and what each client spent, and order the amounts from smallest to largest, the median will be the middle one.

(TO OTHER PEOPLE) So the average price comes to £12.00.

Speaker 1: So, the question is, mate, how many clients do you need to make it pay?

Speaker 2: (TO AUDIENCE) So, I need to pay out £145.51 to cover the chair and products, plus £330.00 to myself in wages.

That's a total of £475.51 per week and if each customer spends £12.00 on average, I'd divide £475.51 by 12, which is 39.625, but I can't have 0.625 of a client, so let's round that up to 40 clients a week.

And I'll be open 6 days a week, so 40 clients divided by 6 days, that's 6.666, let's call it 7.

Speaker 2: (TO OTHER PEOPLE) OK, so if I can get a minimum of 7 clients per day that's gonna help me to cover my costs, but obviously I'm gonna aim for better than that.

Speaker 1: It's a busy salon, so I think that sounds OK, don't you?

Speaker 2: Yeah, I think I'm gonna go for it.