3. A Formula for Marketing Budget
It's beneficial to test campaigns on Meta platforms like Instagram and Facebook to gauge your likely marketing budget. These campaigns allow you to determine the average cost to reach your target audience, set conversions, and receive inquiries. The key here is to understand the cost of reach by testing various ad sets targeting the same local demographic, regardless of the specific content of the campaigns.
Calculating Customer Acquisition Cost
Once you've established the cost of reach, you can estimate that approximately half of the warm leads from your campaigns will convert into paying customers. This information helps calculate the likely customer acquisition cost in your area.
Evaluating Procedure-Related Costs
After accounting for all other expenses, such as materials, equipment, and overhead, you can decide whether you need additional funding for the procedures. This understanding is crucial as it affects your pricing strategy and motivation in the Lip Blush business.
Concrete Example: Understanding Costs
To get a detailed understanding of your expenses, minimize fixed costs, including workstation rental, transportation, supplies, pigments, cartridges, communication, and a portion of ongoing fixed expenses. Suppose these combined costs total $50 per procedure. Add the marketing cost for acquiring a new customer, estimated at around $50 in our example.
Calculating Total Customer Acquisition Cost
Combining these costs gives a total customer acquisition cost of $100: $50 for operational expenses and $50 for social media marketing per client. This figure should be weighed against the promotional price you intend to offer new clients in your area.
Establishing a Profit Margin
Generally, your promotional price should be about 40% lower than the average for comparable quality work in your area. If top artists charge $250 for a procedure, a realistic profit margin during your startup phase might be $50 per procedure. Conversely, if the average rate is $150, be ready to invest an extra $10 per procedure for the opportunity to perform it. These numbers will vary based on your specific market conditions.
Preparing for Possible Expenses
Realizing that you might need to invest money to work can deter many newcomers to the lip blush or powder brows business. To avoid disappointment, consider setting aside additional funds for building your portfolio and covering procedure costs.