Managing costs is at the core of any successful beauty and wellness business. 

Whether you're a stylist duo running a vibrant salon or a team of wellness professionals on a freelance project, understanding your expenses isn't just smart — it's necessary. 

Keeping track of your operating costs ensures your services remain stellar without crushing your budget. And that's where knowing your operating expenses inside and out comes in handy. 

This blog will walk you through what operating expenses are, their importance, and examples of what they include—all tailored to those of you who are killing it in the beauty and wellness industry. 

What Are Operating Expenses and Why Are They Essential?

So, what are operating expenses? In short, operating expenses represent the ongoing costs of running your business. These are the day-to-day essentials that keep everything up and running. Unlike one-off purchases or big capital investments, operating costs recur regularly — think rent, wages, and utilities.  

They aren’t just numbers on a spreadsheet. Instead, they’re the financial backbone of your beauty and wellness business. 

Here’s why keeping them in check is worth your time and energy:

They Cover Essential Costs

Simply put, operating expenses are what keep the lights on. Whether it’s paying salon rent or covering utility bills to keep your spa services warm and inviting, operating expenses fund essentials that directly help you deliver services to clients. 

They Help You Budget Wisely and Keep You Profitable

Tracking these costs allows you to plan ahead. Spotting spending patterns or areas where you might be overspending can help you adjust and allocate resources more effectively — without skimping on quality. 

Operating expenses can also affect your profit margins. By staying on top of them, you can make sure that the prices you charge for services cover your costs and leave enough room for growth. 

7 Examples of Operating Expenses for Beauty & Wellness Businesses

Operating expenses for a business can be grouped into a few broad categories, including fixed costs, variable costs, and semi-variable costs. Fixed costs are the non-negotiable expenses that remain consistent month after month, like rent or a subscription software for your booking system.

Variable costs, on the other hand, change as your business ebbs and flows. An example might be ordering more beauty products when client bookings increase, or paying extra staff wage during your peak seasons. 

Semi-variable costs are those that have fixed and variable components. For instance, utilities often have a base fee (fixed) with additional charges for consumption (variable).  

With those definitions in mind, here’s an operating expenses list to give you an idea:

1. Rent and Utilities  

Your space doesn’t pay for itself, right? Rent and utilities are among the largest operating expenses for a business. These expenses are foundational for keeping your business literally powered and accessible for clients.  

Think about the cost of leasing a salon, spa, or studio space — it’s a big-ticket item that hits your books every month. But it doesn’t stop there. You’ll also need to budget for utilities like electricity, water, heating, and even Wi-Fi.  

Here’s a tip to help you save money: If your team operates on a smaller budget or is freelancing across locations, coworking spa and salon spaces can be a more cost-effective option.

2. Personnel Costs  

Your team is the heartbeat of your beauty and wellness business. Whether you’re paying salaries, hourly wages, or commissions, personnel costs such as compensation are a regular operating expense. Don’t forget to add benefits like health care or bonuses, if applicable.  

Depending on what kind of business you have, you’ll need to budget for salaries for professionals on your team like hairstylists, estheticians, massage therapists, and front desk staff. You’ll also need to account for costs associated with training new hires.

3. Supplies and Inventory  

From shampoo bottles and massage oils to skincare treatments and nail polish, supplies and inventory are some of the most frequently used (and frequently replaced) items in a beauty or wellness business. 

Without high-quality products, it’s almost impossible to provide a great service experience. Nobody wants a facial that smells like discount soap!  

The cost of restocking these supplies adds up quickly, making it one of the key operating expenses to keep track of. If you’re struggling to do so, GlossGenius can help. Our Inventory Management feature means you’ll never accidentally run out of organic scrubs or deep-conditioning masks mid-week ever again!

4. Marketing and Advertising  

Word-of-mouth can only take you so far. To consistently attract and retain clients, you need to get the word out. That’s where marketing and advertising expenses come in. 

These expenses might include running social media campaigns, maintaining an SEO-friendly website, printing promotional materials, or collaborating with influencers.   

A few more examples of marketing costs to consider are:

• Boosted Facebook/Instagram ads 
• Designing and hosting a custom website 
• Sending regular email newsletters  

Not sure where to start with all this? With GlossGenius’ Marketing Tools and Custom Website Builder, you’ll get all the resources you need to make your online presence shine brighter than a post-facial glow.  

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5. Professional Licenses, Permits, and Training  

It doesn’t matter how skilled your team is — if they’re not properly licensed or permitted, your business can quickly find itself in hot water. 

Most beauty and wellness businesses are required to spend money on licenses and permits, whether it’s a business license for the salon itself or individual certifications for your stylists and therapists.  

But it doesn’t stop there. Ongoing education is a must in the fast-moving beauty industry. Allocating part of your operating expenses to professional development keeps your team at the top of their game.  

Some examples might include:

• Cosmetologist licenses and renewals.  
• Online beauty certification programs.  
• State permits for massage studios or nail salons

6. Equipment Maintenance and Repairs  

Ever had a blow dryer quit on you in the middle of a busy day? Keeping your equipment in tip-top shape is an ongoing operating expense you can’t ignore. 

Whether it’s massage tables, nail drills, or spa chairs, regular maintenance can minimize breakdowns and ensure smooth day-to-day operations.  

This can be a frustrating expense to deal with, but remember, equipment downtime doesn’t just increase expenses — it can cost you clients, so invest some money in keeping your gear running smoothly!  

7. Cleaning and Sanitation  

First impressions matter, and cleanliness is often the first thing your clients notice when they walk into your space. 

Cleaning supplies, sanitation stations, and even hiring a cleaning service are all part of the cleaning and sanitation operating costs that beauty and wellness businesses need to consider, too.

How to Calculate Operating Expenses

Calculating operating expenses might sound tedious, but there’s a simple formula you can use to make it manageable. 

Here’s the breakdown: 

• Operating Expenses = Day-to-day Business Expenses - Cost of Goods Sold (COGS) 

Day-to-day expenses include costs like rent, utilities, employee wages, and marketing efforts. Meanwhile, the Cost of Goods Sold (COGS) refers to the direct expenses linked to producing your services — like the cost of purchasing beauty products or supplies for treatments. 

For example:

• Rent for your studio or workspace? That’s an operating expense. 
• The cost of that luxurious shampoo you buy for your clients? That’s part of your COGS. 

Subtract your COGS from your overall business expenses, and you’ll get a clear picture of your operating expenses. 

Operating vs. Non-Operating Expenses

Now that you know what operating expenses are and how to calculate them, you might be wondering about their counterpart: non-operating expenses. Here are the differences between the two:

1. Core Business vs. Peripheral Activities 

Operating expenses represent the costs associated with your primary services (e.g., hairstyling, spa treatments, nail art) and day-to-day functions, like rent and product supplies. 

Non-operating expenses, meanwhile, arise from secondary activities, like paying interest on a loan you took to upgrade your salon equipment. 

2. Impact on Operating Profit 

Operating expenses directly affect your operating profit — this is what’s left after paying costs for daily operations. 

Non-operating expenses, on the other hand, affect net profit but don’t factor into operating profit. For example, paying rent for your salon affects your operating profit, whereas a one-time expense like legal fees doesn’t show up until net profit is calculated.

Manage Your Expenses With GlossGenius

The key to thriving as a beauty or wellness professional isn’t just about delivering exceptional services — it’s about staying in control of your finances. By understanding your operating expenses, you can focus on growth, creativity, and serving your clients without running into unpleasant surprises.  

That’s where GlossGenius comes in. With tools designed specifically for beauty and wellness business owners, GlossGenius can help you stay on top of your finances. From tracking payroll to managing team member schedules and operating costs, we’ll take all the heavy lifting off your plate.  

Our Finance tools offer simplified expense tracking and easy analysis for end-of-month reporting, while our streamlined payroll tools make sure your team gets paid on time, every time. And with our Team & Staff Management features, you’ll enjoy efficient scheduling and performance monitoring to help you keep your team running smoothly.

With those examples of operating expenses in mind, are you ready to see how GlossGenius can streamline your business? Start your free trial today!

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FAQ

What are examples of operating expenses?

A common operating expenses list might include rent, utilities, employee wages, advertising and marketing expenses, office supplies, insurance premiums, and maintenance costs.

What is included in operating costs?

Operating costs typically include expenses directly related to the production of goods or services and the ongoing functioning of a business. This can include both fixed costs (e.g., rent, salaries) and variable costs (e.g., raw materials, utilities) that are necessary for the regular operation of the business.

What are the operating costs on a balance sheet?

On a balance sheet, operating costs are usually listed as part of the income statement and are deducted from the revenue to calculate the business's operating profit or loss. 

Is salary an operating expense?

Yes, employee salaries and wages are considered operating expenses as they are part of the ongoing costs associated with running a business. Other employee-related expenses, such as payroll taxes and benefits, are also typically included as operating expenses.