Goodwill is everything a buyer pays for beyond the physical kit and the stock: the clients, the name, the bookings and the profit the salon makes. It is usually the largest part of a salon price, and it can be nil if the salon makes little profit.
When you sell a salon as a going concern, the price splits into three parts. The fixtures, fittings and equipment are the chairs, basins, beds and furniture. The stock is your retail and back-bar products, normally added on top at its value on the day. Goodwill is the rest.
Buyers work goodwill out from the profit. If a salon makes £45,000 a year for a working owner and comparable salons change hands at around one and a half times that, the business as a whole is worth roughly £67,500, and whatever the kit is worth sits inside that figure rather than on top of it.
When goodwill is low or nil
A salon that only pays its owner a modest wage has little goodwill, because a buyer could open their own salon nearby for less. In that case the price usually reflects the fit-out, the lease and the convenience of taking over a working salon with clients in the book, which is still worth something, but it is priced as assets rather than earnings.
Goodwill and tax
How the price is split between goodwill and equipment matters for both sides' tax, so it is agreed in the sale contract. Your accountant should look at the split before you sign.