3. Plan a Marketing Budget
The Importance of a Marketing Budget
When aiming to sustain motivation and mitigate disappointment in the Powder Brows business, the marketing budget is often more crucial than calculating other expenses. This is primarily because your other costs tend to be pretty predictable. In contrast, marketing costs are where many newcomers significantly miscalculate.
Calculating Your Marketing Budget
Generally, there are two primary sources for acquiring new clients: offline and online. Research indicates that the larger your city and the denser its population, the more significant the role of online marketing, mainly social media marketing, in your business.
Practical Considerations
If you're looking to assess the cost of acquiring a client, it's safer to anticipate minimal or virtually zero inflow from organic offline sources, especially when starting out. While offline customer acquisition usually incurs lower long-term costs, these marketing efforts often take longer to produce tangible results.
For online customer acquisition, a good rule of thumb correlates with a social media reach of 3,000-5,000 people in your target demographic, assuming your social media accounts contain professional content that can drive conversions. If you lack a sizable following in your target demographic groups, such as local women aged 25-34 and 34-45, the cost per acquired customer for a beginner can range between USD 30-50.
Therefore, be prudent when planning your marketing budget, factoring in both online and offline avenues based on your specific circumstances. This balanced approach minimizes the risk of financial miscalculation and protects against loss of motivation.
Next, let us see how to assess If you need extra funding for procedures.
A Formula for Marketing Budget
To better understand your likely marketing budget, consider running test campaigns on Meta platforms like Instagram and Facebook. These campaigns can help you determine the average local cost for reaching your target audience, setting conversions, and receiving inquiries. The actual content of your test campaign is less critical; the primary goal is to understand the cost of reach by running various ad sets targeting the same local demographic.
Calculating Customer Acquisition Cost
Once you've determined the cost of reach, you can reasonably estimate that about half of the warm leads generated from your campaigns will convert into paying customers. This data will enable you to calculate your area's likely customer acquisition cost.
Evaluating Procedure-Related Costs
After considering all the other expenses associated with performing the procedure, such as materials, equipment, and overhead, you can identify a crucial key performance indicator: whether or not you need additional funding to carry out the procedures. Being clear on this aspect can be vital, impacting your pricing strategy and motivation to stay engaged in the Powder Brows business.
A Concrete Example: Understanding Costs Per Procedure
Minimizing your fixed costs is wise for a detailed understanding of your expenses. This includes costs like workstation rental for individual procedures, transportation, supplies, pigments, cartridges, communication, and a share of your ongoing fixed costs. Let's assume these combined costs amount to $50 per procedure. Add to this the marketing cost for acquiring a new customer, which in our example could also be around $50 (based on reaching a local target demographic of 3,000-5,000 people).
Calculating Total Customer Acquisition Cost Adding these together, you get a total customer acquisition cost of $100: $50 for operational expenses and $50 for social media marketing per client. This is the number you'll need to consider against the promotional price you plan to offer to new clients in your area.
Establishing a Profit Margin
A general rule of thumb is that your promotional price should be around 40% lower than the average price for similar-quality work in your area. So, if high-quality artists in your region typically charge $250 for a procedure, a realistic profit margin during your startup phase would be $50 per procedure. On the other hand, if the going rate for a similar procedure is $150, be prepared to invest an additional $10 per procedure just for the opportunity to perform it. The actual numbers will, of course, depend on your specific market conditions.
Preparing for Possible Expenses
Realizing that you might have to invest money to work can significantly deter many newcomers to the Powder Brows business. To avoid this disappointment, it may be prudent to have additional funds set aside expressly for building your portfolio and covering the costs of performing procedures.