There are 3 primary ways to compensate hairdressers:
- Booth Rental
- Commission
- Hourly/Salary
Booth Rental
If you own a booth rental salon you are really a landlord not a salon owner. Each technician pays for their station at an agreed upon rate (daily, weekly, etc.). Often they are responsible for booking their own appointments and marketing their services. They may pay a fee for backbar supplies, provide their own, or it may be included in their rent. The trouble with owning a booth rental salon is you get all the headaches of salon ownership without the rewards. Each technician is actually their own business and that is where their loyalty lies. You have no ability to control pricing, quality, hours worked, customer service...basically you have no control! The only bright spot would be that since renters are not employees they are responsible for their own taxes.Commission
Commissioned stylists are generally employees of the salon. Since they are employees you do gain a good deal of control over your business. You can implement policies and procedures that need to be followed, you can disclipline when necessary. You are making the work schedule, managing the appointment book, determining services offered and pricing, etc. Of course you also are running a payroll, accounting for tips, hiring, firing, mediating squabbles. Commission rates vary greatly, but usually what I hear is in the 42% to 60% range (but at 60% the salon cannot be profitable). In some ways commission is a hybrid of booth rental and salary salons. While the technicians are employees, they are also paid entirely on the sales they bring to the business so they act like little one-person businesses. This creates huge obstacles to salon growth and profitability because there is no incentive for teamwork.Hourly/Salary
In a salon where the technicians are paid hourly or on salary the salon owner has the ability to reward the employees who most deserve it. How many of us have experienced the situation where a stylist is rude to co-workers and other stylists' clients, and never picks up a broom or folds towels but still gets a big raise just because her prices went up! Talk about rewarding bad behavior! On the flip side, we all know great stylists whose earnings are capped out because they are at the highest commission tier. In an hourly/salary based salon you can still reward these people!When we bought our salon it was a combination of Hourly and Commission. When we hired a new stylist she would be hourly. After she met certain criteria (retail % at a certain level and request rate at a certain level) she would convert to a 45% commission. Our commission scale topped out at 50% and we had two awesome stylists who were capped out. One of them is also our salon manager and since she was paid on commission she couldn't afford to spend less time behind the chair to manage. The other was getting burned out after years in the business and wanted to spend more time training others, but she also couldn't afford to give up the time behind the chair because we were only paying them for one thing --sales.
Earlier this month (after much thought and analysis!) we converted to Team-Based Pay (TBP). Every commissioned employee was converted to an hourly rate that is higher than what they were making on commission. It's a huge deal when you change someone's comp. And it's scary for me as a salon owner because I know I'm committing to pay them for every hour they are in the salon whether we're busy or not. There's a lot more to TBP than just converting your payroll - it's a way of life! I'll talk about our Team-Based Pay journey a lot on this blog!
I am wanting to start a children's hair salon, but also offer services to adults, but I am not sure of how I want to pay my employees. I have always been on a lease, but I know for the salon to make any money that can't work plus I need the stylist to be at work for walk-ins. Can you give me more insite to the commission vs. hourly/salary? I don't want to get less talent because of the pay.
ReplyDeleteYou are asking the right questions. If you do a booth rental salon you are right, the salon can't make any money and you have no control over the stylists. They are truly self-employed and can come and go as they see fit. You also can't control quality because you have no say over how they deal with clients, how they provide the services, etc. So if you eliminate booth rental you've really got two choices - commission or salary/hourly.
ReplyDeleteLet's look at commission first. When you pay someone on commission you are paying them based on one thing - how many dollars of revenue they produce. The advantage is that if it's a slow time, your payroll costs are lower. Lower sales = lower payroll cost. The disadvantage is that when you pay someone based on a single factor, you are basically saying that all they are to you is revenue dollars. You're not paying them to sweep, to do towels, to speak to clients a certain way, to keep clients coming back, to follow procedures, to sell retail, etc. You can tell them to do those things, but you're going to pay them their commission whether they do them or not. Plus when there is down time, they may think that time is their and they can leave early or go run errands, thus not being there for the walk-in traffic.
That brings us to the final choice - hourly/salary. The big disadvantage is that you are committed to paying that money whether the salon is busy or not! That's a scary proposition, especially for a start-up. But the advantages are huge. When you pay someone hourly you can choose the behaviors you want to reward. When you give out raises you can base them on client retention, cleaning, attitude, retail, upselling, prebooking, and all the other things that are important to you.
I feel strongly that the hourly/salary model is the best choice for a successful, growing salon. Because of the capital commitment, though, it is not a decision to be taken lightly!
Since your salon is not open yet, I would urge you to attend a Salon Incubator class put on by Strategies (www.strategies.com). The class teaches you about the growth factors for a salon and can really help get you off to a good start. I wish I had attended before I bought my salon! (I am not affiliated with Strategies, but I am enrolled in one of their courses). The next incubator is February 17-20. The tuition covers two people and is $1,895. I think it is well-worth it. You will learn how to grow your business and it will pay for itself several times over.
Hope this information helps. Let me know if you have more questions/comments!!
Hi Cindy!
DeleteI am not certain this question was answered or not in the way of Hourly a/o Comm. Based Employees but is it acceptable to take out Product usage fees for Backbar and Stylist Stations? Many salons in my area are doing so but from an accountingpoint of view I am nervous to implement such. Are you aware of this being done throughout perhaps even in the state of Ohio? Any thoughts on this would begreatly appreciated. Many Thanks, I am glad I found your Blog!
I'm not an employment attorney but I'm not aware with anything improper about this practice. You can call your department of labor to confirm. Many salons do this so they can still offer a high commission without breaking the bank. Back when my salon was commission-based we also did this. You could accomplish the same economic goal by lowering commission, but that would create huge morale problems. Service fees are, frankly, a way to disguise a lower commission. And while that sounds sneaky, let's look at an example to see why the service fee or lower commission makes sense.
DeleteLet's say you are selling a Brazilian Blowout for $200. Product cost on this service is high - let's say $30. Without a service fee, the technician earning 50% commission gets $100 and the salon makes only $70 ($100 less the product cost). Essentially, the stylist received a 59% commission on the net proceeds of the sale. With the salon getting only 41% it's hard to be successful. If you add a service fee, the fee comes off the $200 and the remainder is split based on the commission rate.
I think the key is communication. You can't promise someone a 45% commission on sales, then lower the sales by a service/supply fee and commission on the rest unless this is properly disclosed and communicated.
Before you decide if you want to implement this I recommend you do some research.
1) What is your labor cost as a % of sales? (Including payroll tax costs). Most salons are going to be over 50% and some over 60%. If you are above 60% you are probably experiencing cash flow problems, or barely breaking even. This certainly indicates you need to do something.
When we implemented a service fee way back in the day, we raised prices at the same time so our technicians wouldn't take a hit. We raised our price by $5 and added a $2 service fee to each service. The technician received the same commission rate calculated on sales after the $2 fee. Since our price went up $5, they still got a raise equal to their commission times the $3 difference. This made the fee easy to implement from an employee perspective.
When you determine what fee you want to assess, consider the cost that goes into the service. Brazilian Blowout supply cost is higher than a color service, which is higher than a haircut. So you may want to have a larger deduction for services with higher cost.
Alternately you could lower your commission payout (along with a price increase so the technicians take home the same amount) and not mess with service fees.
Whatever you decide, talk openly and honestly with your team about why you are doing this. Their initial reaction will be to see it as a money-grab and you need to demonstrate to them that it is for the healthy and long-term viability of the business. I will prepare a post on Open-Book Management with a great exercise to help get your point across (if you don't mind sharing financial info with the team).
Hi there, I came across this and have been in the business for over 13 years. I just wanted to ask say if we got tipped through debit, visa, mastercard, basically anything that has to do with those type of transaction. Does the owner of the salon have the right to take a percentage from your gratuity? I found it mind bothering....
DeleteAs far as I know it is not improper for the salon owner to charge back credit card fees to you on your tips. Check with your department of labor to be sure in your state.
DeleteIn my salon I do not do a tip charge back buy I know many salons do because it's expensive to process those transactions. Here it is from the owner perspective...
Let's say you do a $50 haircut that is charged to visa. The owner pays a fee for accepting visa - it's usually 2.5% to 3%. So she pays a fee of $1.25 on the charge and nets $48.75. If there is also a $10 tip charged to visa there is a $0.25 charge (2.5% x $10) that she is paying. So basically she is paying a fee on her revenue (the $50) and a fee on your revenue (the $10). She doesn't get any of the $10 but she pays the fee. Owners who do a tip charge back are not trying to make money off your tips, they are only trying to break even.
In my salon we have over $150,000 of credit card tips each year so my credit card fees just on tips are over $3,750 - over $300 per month. If I were paying commission of 50%, 55% etc. or renting out chairs, I would need to recoup that cost. In our case, we are a team-based pay salon so everyone is hourly and I make sure that we can afford those fees in the big scheme of things.
So in summary, if you are getting paid minimum wage and your salon owner is doing a tip charge back, that's pretty cheap of them. If you are getting a generous commission it's reasonable to expect you to pay that cost since you got the money. If you are booth renting, it should be your responsibility to pay your processing fees on all charges, not just tips.
In
Hi there, I am a new nail trainee and am trying to find out what a fair commission rate is, I have researched and come up with 30/70, 40/60, 50/50. What is suitable the salon I am doing nails for will be purchasing the equipment and product, do I need to pay for product? we are both new to environment and I trying to find the norm, help please!! eekkk
DeleteHello Cindy,
DeleteI am new at the commision pay right now I am getting 40/she is getting 60... it's just her and I and she is the owner. My question is I work 6 days a week I am building my boOKs with my own clients aND new ones with marketing. My thing is what are my obligations to the business ? Hours are 10-7 m-f 10-6 sat 11-4 sun. Since its just her and I. I just feel sometimes I am the owner she leaves early most of the days comes in late some days and weekends same either leaves early or takes days off. Now my concern is the shop has only be open 8 mo. I would think she would want to be there more to pay back loans or ake sure things are running good . It get slow and I feel bad leaving incase a walk in or calls come in. She doesn't seem to have that same approach. Am I obligated to stay and be there if she's not ?? Cause I have a family to go home to also?
Sounds to me like you are a hard worker who wants to succeed and wants the business to succeed and you and the owner just need to sit down and talk. Ask her if there is a time you can get a cup of coffee together and have a salon meeting. Ask her what her expectations are of you. Maybe she will be willing to keep more regular hours so you can have an early day too and the salon stays staffed. This isn't a confrontation...it's a conversation. She's a new owner, sounds like you are her first employee...work through this stuff together and make sure everyone is on the same page. (Also, if you are in California their pay laws have changed and your comp structure will need to change as well). Good luck
Deleteactually your incorrect about take fee from tips on CC and for taking service fee for product usage or/and backbar.The IRS clearly states that its illegal for salon owner or restaurant owners to touch employees tips or for salon owner to charge product usage fee.The IRS will force you to pay it back and give find.Yes a lot of salons do it but its illegal just a lot salon don't allow you take lunch or will book you with a break which is violation of labor laws and just a lot salon file employees as 1099 but treat them employees which not also illegal.
DeleteJust realized I did not address Kids Salon's comment about getting less talent because of pay.
ReplyDeletePaying hourly does not have to mean that you get less talent. We hire our stylists straight out of school. Generally, even the commission salons pay an hourly rate until the stylist is busy enough to make it on their commissions. The going starting rate in our area is $9/hr. We bump it to $10 when they get their Master's License after 6 months.
Since we get them straight out of school we are able to train them the way we want. They are not bringing bad habits in and they are not set in their ways.
Their pay will advance when two things happen:
1) the business must be able to afford it. We have a cash flow plan that we live by. We set goals and as we meet our goals money is freed up for raises.
2)The stylist is demonstrating the behaviors we want to reward.
Our stylists are all competitively paid and are very talented.
Obviously I believe in paying hourly/salary because I believe it promotes teamwork and is best for the growth of the salon (and therefore the growth of the employees). But it has to be done right for it to work. If you just pay hourly but you don't have a plan to grow the salon - if you don't set goals, if you don't hold people accountable - it won't work.
Good Luck!
thank you for your insite. I will definately look into www.stategies.com for more information.
ReplyDeleteSo if a technician is paid by commission, are they obligated to stay there all day and do chores, if there is no business?
ReplyDeleteTechnically, an employee paid on commission is still an employee which means they take direction from their employer. Realistically, when things are slow, people tend to sit in the break room and whine. Often they resist doing the chores and cleaning because in their mind they are not getting paid.
ReplyDeleteThe key, I suppose, is trying to get them to see that they are getting paid to WORK for the full time of their shift, whether it's cutting hair or sweeping. Commission only determines how much they will get paid.
Your question highlights one of the problems with commission. When you are paying them by the haircut, there is really no incentive for them to sweep the floor.
what if you are paid commission and still clean, sweep, shampoo like someone being paid hourly and do not get the 'incentive' to keep participating when no one else does?
DeleteThat is actually my point...it's not fair to those who do the work when others don't bother but make the same commission rate. Commission does not allow you to pay people fairly based on their full contribution to the salon.
DeleteThe person who tirelessly sweeps and folds towels is a gem, but is likely to get frustrated if others aren't pulling their weight.
I've been in the business since the 70's, and believe !e when I tell you that those who "tirelessly" do chores are the ones who end up with a huge clientele. Its the old saying that a body in motion tends to stay in motion. I see that people give up too soon. Its not about what others are doing...its about what YOU are doing. Be helpful to the busy stylists and find out what makes them busy. I find that its usually their positive personality creates their clientele.
DeleteWell said! I agree 100%.
DeleteI agree , it is not what others are doing... its about what you are doing. The positive personality is what creates the clientele. yea
DeleteI also agree with you 100%!
DeleteMost of my stylist are commission contractors.. I recently went from "employee to "contractor"..
ReplyDeleteMy problem is that I am having clients bounce checks and my stylist expect to be paid their commission as if they were an employee. I don't agree with this, since they are not an hourly employee.
If they are Independent Contractors then the checks should be written in there name.
DeleteHi Cindy, I own a salon with renters and one employee that is now paid on commission. I have 3 renters that will be leaving at the end of October and I'm thinking of hiring commissioned stylists. Currently I pay my one employee 55% comm, but I'm finding that the 45% the salon gets its pretty much eaten up after product use, taxes, etc. I've heard of salons charging a percentage for product use weekly to their stylists on commission. How do I figure out how much to charge? thanks!
ReplyDeleteWhat would you consider reasonable compensation for a salon owner who is also working as a stylist in the salon? Is it better for a salary or commission? If commission, what is a good rate? Thanks.
ReplyDeleteHi, I am a commissioned based stylist and I was wondering if my employer should be taking taxes out of my check?
ReplyDeleteThanks for your help!
Hi Cindy, you have some great insight and solid advice. I too took the strategies training and highly recommend it. For me in my salon, my success came when I went from commission to salary, simply because I could reward my stylists based on performance.
ReplyDeleteBetter to reward the team performance. We can set a weekly target for the team. When the target is achieved they will get a good commision over the surplus.
ReplyDeleteRegards
Zee Mathews
The Salon Mangers Academy
If you get hair stylists to agree to a commission for sales of product, and they are agreeable to learning how to sell more effectively, you both win.
ReplyDeleteAlso, if you rent booths rather than pay your stylists on commission only or an hourly rate (plus commission), you won't have much control over how your business is run. It's better to control your operate, brand, marketing, and training so as to maximize your return on investment. It will take longer in the hunt for employees, but it can pay off.
The other option is to rent booths but only rent to those that agree to work with you on building your business using the above ideas.
I know that this goes against many industry norms, but that is exactly why it can be more effective. Don't follow the heard :-)
I was looking for Technician Salary and I landed in this post. Had fun reading, I'll be visiting for more for sure
ReplyDeleteThis comment has been removed by the author.
ReplyDeleteI you are an employee and have a w-2 then yes they should be taking out taxes. If you are on a 1099 then n o. It is a good question to ask when you are in the interview process.
ReplyDeleteI have been working in a salon for about 6 months now and i am wondering if what i am getting paid sounds fair to you. i work at a min 32 hours a week and i make 40% commition also i get charged a product fee. is this fair? i am also doing most of the cleaning book work and reception. in this salon is the owner me and an assistant. the assistant gets paid hourly and ends up making more than i do when i have gone through the same assisting/training program she did. i dont even make minimum wage. it is not much to live on considering it is mainly a refferal only salon with not alot of advertising and practicaly no walk-ins. thank you in advance for you reply.
ReplyDeletePoor stylist, I responded to you in a new blog post dated 8-2-2011. Thanks for your comment and best of luck in your career!
ReplyDeletei am having the same issues with the salon i have just started to work at, i am new in the hairdressing industry so would like to knw if 40% is about right, some days i only get 2 clients.so i hardly make anything and what i can and cant do while working as commission based employee
Deletesorry lol i meant what can i or cant do while working commision based
DeleteWhen you are new to the hairdressing industry it is very difficult to get by in a commission environment. You may want to look for a salon that has an apprenticeship program where you get paid an hourly wage while you assist and continue learning. Once you have completed the apprenticeship program you will likely have some regular clients so when you convert to commission it will not be a pay cut.
DeleteAlternately you could look for a salon that uses a team-based pay model where everyone is paid hourly or you could apply at a chain that pays hourly + commission.
Verify this with your state department of labor, but I believe that if you are paid commission, your commission (+tips) needs to be AT LEAST minimum wage or the employer needs to make up the difference.
i already have a full hairdressing qualification so i wont be considerd for the aprenticeship program, should i ask for atleast 50% ? untill i have built clientele.. thankyou :)
DeleteI'm wondering what you see as a fair salary for a stylist/manager position. I am a busy stylist and I also run the entire salon. I started at a 50% commission as a stylist and was bumped up to 60% once I took on the management duties. The only thing that I do not oversee at the salon is the accounting. There are many nights of staying late and coming in on my day off to deal with issues, Do you think this is a fair wage?
ReplyDeleteDeeMcK
DeleteHello, I wish I had someone as dedicated as you are to run my salon.I think if you're running the salon you should keep everything you make.
I would like to see your compensation tied to the success of the salon, not just to how busy you are behind the chair. To be an effective manager you may have to give up some time behind the chair and that should not lower your income in the long run. My suggestion would be a quarterly bonus based on salon profits. You will need to sit down with the salon owner and probably their accountant to figure out what is a reasonable percentage. Also, this requires that the accounting of the salon be open to you, so if your owner is not comfortable sharing this, it won't work. Alternately you get earn a quarterly bonus of a specified amount if certain goals are attained. For example, $500 per quarter if new client retention is over 50%. $500 per quarter if retail sales are over 15% of service. $XXX per quarter if staff cost is less than 50% of service sales...whatever makes sense for your salon. Those key numbers (retention, retail, labor cost) are the drivers of salon success so if you are producing good numbers through your good management, the salon will grow and the owner should reward you.
DeleteI once had a manager who was doing it all like you. I burned her out and she left. It is one of my greatest regrets as an owner, that I did not give her the support she needed. If you need more support, make sure you ask for it and get it. I now have a team of managers (one handles front of house - front desk, retail inventory, supplies) and the other handles technicians (training, coaching, etc.). We meet every week for 2 hrs. You do not need to go to this extent, but you should be having at least a one-hour weekly meeting with your owner. Ideally you can develop a good front desk person to handle some of the items you currently do.
To directly answer your question "do you think this is a fair wage" No, I don't think it makes sense to pay a manager with responsibilities that go well beyond what is done behind the chair on a commission basis. The amount of the comp may make sense (depending on your production) but the basis of the pay makes no sense and sets you up to fail. The more you do as a manager, the less you do behind the chair and the less you earn. I recommend you set up a meeting with the owner to discuss developing a comp plan that makes sense. Don't approach it as if you are underpaid (maybe you are, maybe you aren't). Approach as it is - the comp methodology is not logical for job responsibilities. Make sure your job description and new comp plan are in writing.
Good luck.
Hello..I am thinking of the the best way on how to compensate my employees when it comes to service. My employees are both specialized in all fields of service in my salon,. I don't have the system of segregating their duties and responsibilities for their compensation. Please help me find the best system
ReplyDeleteGood Morning/Afternoon,
ReplyDeleteI'm a 18 year hair stylist. After raising my children I've finally been set free to open my first salon. I'm currently working with a client who has a Fortune 500 job as a HR manager. She is helping me put the employee manual together. So far it is going great.
I have come to a stumbling block. I want to hire two makeup artist. I just do not know how to compensate them. I do not want to purchase makeup, I would like the makeup artist to have her own products and tools. I've always worked in strictly hair salons so I don't know if that is customary. The nail techs I'm wavering between flat commission and base plus commission. My concept is to always have each staff member in the mindset of striving to do better and feel proactive in retaining clients.
With the hair stylist I'm doing base plus commission. I believe this would be fair. I've read up on TBP. I do not want to do this because I do not want the commitment. I really want to work behind the chair a couple of days a week. I'm actually proud of the way things are going. I'm just stuck on the compensation for the Makeup and Nails.
Any help you can give would be greatly appreciated.
Thank you.
Malissa Parker
The Powder Room (coming this September 2012)
Hello,
DeleteThe best thing to do is to buy the makeup, sell what every the client uses like foundation eyeshadow etc, then charge the client for your makeup artist to apply the makeup. I think you should get 40% of what ever your makeup artist is charging.
Hi
ReplyDeleteI am just wandering we close our salon at 5pm but obviously cleaning then takes place etc do we pay the therapist 9 till 5 and expect them to stay (as I did in a previous job) or do u pay until 5.30pm?
Hi, I would pay her from 9 to 4:30 this mean she has 30mins to clean and be out at 5pm. When I worked at a clothing store or any placed that paid by the hour,we had to clean at a certain time or you will be cleaning for free but, it had to be clean.If she works passed 5pm then she will not be paid.
DeleteHello I just open up a Salon it has been Five months now. I have a hairstylist that worked as a Booth renter for 3 months.Now she can not afford booth rent. What is the best option for her. She only works 2 days per week. I had her on commission 60/40 but the Salon is not making money off her chair. Her belongings are at her station weekly but she only work two day a week
DeleteHello I just open up a Salon it has been Five months now. I have a hairstylist that worked as a Booth renter for 3 months.Now she can not afford booth rent. What is the best option for her. She only works 2 days per week. I had her on commission 60/40 but the Salon is not making money off her chair. Her belongings are at her station weekly but she only work two day a week
DeleteShe needs to clear her belongings out of the station on days she is not there so you can rent it to someone else. Just charge her a daily rental rate.
DeleteAlso, if you are paying her commission, you are responsible for employment taxes. If you want her to be an independent contractor she needs to pay rent.
I’ve been a booth renter (skin care) for many years in a beauty salon. I own all of my equipment, chairs, etc. but receptionist rings up sales and sells some of my products. The salon is now under new ownership and they have greatly increased my rent and want a percentage of "all" my retail sales. Is it legal to do that? I thought it had to be one way or the other.
ReplyDeleteJeramiah,
ReplyDeleteI don't think there is anything illegal about this unless you have a written booth rent contract that this violates. I agree that it stinks, though. The owner's stance is either because of greed or realism (or a combination of both).
First on the retail - it's not unusual for the salon to get a % of retail sales by booth renters (actually it's probably more common for the salon to get the sale and pay the renter a commission on the sale rather than the other way around). This makes sense if the owner is purchasing the retail and managing the inventory. If you purchase your own inventory to sell (so it's your money at risk if it doesn't sell) I don't think the owner is right to ask for a cut. (Who is paying the sales tax to the state?) If the owner puts out their money to buy the retail inventory, and they are doing without that money while the product is on the shelf, they deserve to profit from the sale.
On the booth rent part of your question you really need to research your own part of the country to see what reasonable booth rent is for the type of salon you are working in. Just like a landlord can raise the rent, so can the owner of a booth rent salon as long as it's in accordance with your rental agreement. If you decide to stay, make sure you get a written rental agreement. If it's not in writing, it never happened. This is to protect both you and the owner.
Now, I want to clarify my comment that their actions come from greed and/or realism--it's possible that the rent you are paying is below market and they are being realistic about what the market is and what it will take them to make a reasonable profit. Remember that the owner has risked a lot to buy the salon and for accepting that risk, they deserve a reasonable profit. Bringing rents up to market and being compensated for services they provide their renters is not greedy, it's realistic. Perhaps they have plans to update the salon and want to increase cash flow first.
Not knowing the exact circumstances, it's also possible that the new owners are trying to take advantage of renters who, for the sake of their book of business, don't want to move.
You may want to set up a meeting with them to try to figure out what is motivating these changes. Meet outside of the salon in a neutral location, like a coffee shop. If you decide to leave, don't bad-mouth the owners to your clients or anyone else. Take the high road and just say it was time for a change. You will be respected for it. Good luck. Let me know how it turns out.
Re: paying staff for cleaning after business hours
ReplyDeleteI suppose if you are paying commission and have a written job description that indicates salon cleaning is part of their responsibility, then it doesn't matter when the cleaning is done - it's part of their job.
Of course most people are going to try to get the cleaning done during client hours so they can leave at 5. Is this a case of people needing to use down time more wisely during the day, or is there really no time to clean during client hours?
The real issue is going to be convincing the "team" that it's part of their job to clean, that their current compensation is paying them for that. That's one of the biggest problems with paying commission - when you pay them based only on butts in seats, why should they clean? It doesn't affect their pay.
You may wish to call your state's Labor Department to find out for sure what is required (you don't have to tell them your company name). You don't want a disgruntled former employee to file a complaint against you for unpaid time. My guess is that you are OK if you have it in writing that it's part of their job and they are all familiar with this job description. (Having a job description that no one but you sees is not going to help you if there is a complaint).
Here's an idea...maybe in a team meeting you can discuss this together. Tell them what you found out from the labor board. Ask them how they propose the cleaning gets done. I'm assuming you don't have it in the budget to pay a cleaning service or pay them an hourly wage for the cleaning. One solution would be to lower commission % slightly and hire a service. Another would be to block each person out for 20 minutes a day so they can take care of their cleaning responsibilities. Maybe they will come up with something better.
In response to Malissa, who does not want the commitment of TBP. If you do not want the commitment of TBP I think you should rethink being a salon owner--not because you don't like TBP - that's your choice. But being a salon owner requires an incredible amount of commitment to your business and your employees no matter how you pay them. If you are thinking that base plus commission is fair and will automatically motivate them to do well without your commitment, you are in for a very unpleasant surprise.
ReplyDeleteMOST of owning a salon is motivating your team. If this is the part of the business you don't want, go booth rent.
As for how to pay a make-up artist if you do move forward...you don't want the commitment of stocking make-up so you are expecting her to invest a great deal of her own money (or you will forever be out of stock on items people want to purchase). Really, what is in this for her? If she is supplying all product and taking all the risk of it not selling, she should just pay you rent for the space and control the makeup business herself. If you want the control you need to take some risk and responsibility.
Re-reading your post I am afraid that instead of your goal of "always have each staff member in the mindset of striving to do better and feel proactive in retaining clients" you are creating an environment of every man for himself. I see very high turnover in your future. Best of luck, but I think you are taking on more than you realize.
I have a question regarding down time in the salon / spa for commissioned pay therapits and stytlists..... i wish them to be more available and stay on site for a min amount of hours can i insist on this? we are a Florida based spa and salon.
ReplyDeleteI don't specifics of Florida wage and hour law. You can call your dept of labor for specifics. It is my understanding that commissioned employees (not 1099 contractors - EMPLOYEES) can be required to work specified hours, meaning they need to be on-site. You don't see commissioned furniture salesmen or car salespeople just showing up when they feel like it - they have specific hours to work. So I believe you can insist on this. Do your commissioned hairdressers leave at will or do they work their whole shift?
DeleteThe problem here is one of culture. Your spa employees are used to showing up when they have appointments and leaving if they are slow. That takes your ability to upsell out of the equation. If you have a slow massage therapist, every stylist in the salon should know there is an opening and should try to sell that massage. At my salon we offer a 20% last minute savings when we fill a spot on the fly like that.
And since you are commission-based, your salon employees don't really care if the spa is busy (what's in it for me if I sell a massage) and your spa employees don't want last minute appointments if they don't get full commission. Honestly, I'm not sure how you get past all those obstacles. We don't have those problems anymore because we pay hourly, not commission. For the salon/spa to earn bonus we need to do well financially, so everyone cares how busy everyone else is. I did have this situation when I first bought my salon/spa. The massage therapists would be on the schedule but only showed up if the front desk called them and told them they had an appointment. I finally go the nerve to tell them that we need them there for their full shift, whether they are busy or not, and committed to try to keep them busy (which is a lot easier when they are there). This is going to take some leadership and you may lose some people, but for the sake of the business you need to make this change. An advantage for them is they will make more money once you are able to increase their productivity. If you are going to do a last-minute savings like we do, make sure you discuss what the commission basis will be on those services. Will you commission on full price even though you discounted the service? Or commission on discounted price? If you can't get them to see that this is the best way to run a spa, find new employees. To get an instant boost to spa productivity, why not run a contest in the salon and have a prize for the stylist that sells the most massages.
One last thought that may help you get your point across. Can you work up a profit and loss statement on the spa? I'm assuming your spa is not busy enough and that is what is bringing this question up. If you can figure out your cost of running the spa (their share of rent, utilities, front desk, commissions, employment taxes, supplies) and compare that to the revenue you are currently producing, you may be able to show the spa employees that the spa is not profitable and something needs to change. My guess is your employees think you are raking in the bucks, getting rich off of them, and I doubt that is true. So you may be able to convince them with numbers.
Good luck and let me know how this goes!
Im a salon owner,have been in the buisness for 26 years, opening a salon now and hiring commission contractors.My question is does starting commission 45%,n 10 %commission on retail sales sound fare? Its been a long time since Ive delt with commission.
ReplyDeleteI OWN A VERY SMALL SALON IN A VERY RURAL AREA. I AM NEEDING TO INCREASE MY PRICES AND I WISH TO FIND OUT WHAT OTHER SALONS ARE CHARGING. I USE REDKEN COLOR, JOICO HAIRSPRAYS, FAROUK AND ALL NAME BRAND PRODUCTS. I AM WONDERING IF ANYONE OUT THERE WOULD SHARE WITH ME THEIR PRICING. I AM LOCATED IN COTTONPORT, LOUISIANA. I DO THE 'OLD LADY ROLLER SETS' AS WELL WHICH I HAVE FOUND THAT NOT TOO MANY OF THE LARGER SALONS DO ANYMORE. I WOULD BE GLAD TO SHARE MY PRESENT PRICE LIST WITH EVERYONE AS WELL. I DO NOT RETAIL PRODUCTS TOO MUCH BECAUSE THE CLIENTEL THAT I HAVE REALLY CAN'T AND DON'T WANT TO AFFORD IT. IF I DO SELL SOMETHING I MAKE NOTHING ON THE PRODUCT BECAUSE I JUST COVER MY COST. IT IS A LITTLE EXTRA FOR MY CUSTOMERS WHO ARE OF LIMITED MEANS. ANY REPLYS ARE APPRECIATED. I KNOW THAT IF MY CUSTOMERS WENT ELSEWHERE THEY WOULD HAVE TO PAY WHATEVER IS BEING CHARGED AT THAT SALON, BUT I REALLY DON'T WANT TO RAPE THE PEOPLE FINANCIALLY, JUST MAKE A LIVING. THANK YOU!
ReplyDeleteFirst of all, I want you to give yourself a little credit...you are a professional stylist providing a service that people need and cannot do for themselves. To charge market price for those services is not unfair. It is not your responsibility to subsidize the community by charging prices that don't pay you fairly for your services. You are a business and it's ok to make money.
DeleteOf course market price varies and to learn what it is in your neck of the woods you just need to pick up the phone or start checking out websites. Call every salon in a 2 or 3 mile radius (or whatever makes sense given your location) and find out what they charge for various services.
Another important step is knowing what your costs are. Add up your utilities, rent, receptionist if you have one...all the monthly bills you have (leave out the cost of color and other costs that are part of the service). Then calculate how many hours you are open in a month. Let's say you have $2,500 in bills and are open 5 days a week (22 days a month). Your cost to keep the doors open is $113.63 per day. If you are open 8 hrs a day, that is $14.20 per hour. And this is before paying yourself anything and assumes you are busy 100% of the time. What if you are busy just 6 out of 8 hours a day? Then your cost per hour you are productive is $18.93.
Make sure when you price your services you are covering your cost AND pays you a reasonable amount per hour AND covers the cost of the supplies used in the service. Remember it is YOU who took the risk to open a salon. YOU who does not have the stability of a regular paycheck. YOU who makes sure the rent is paid and the lights are on. YOU DESERVE TO MAKE A DECENT LIVING. PROFIT IS NOT A DIRTY WORD.
On the retail side of things, if you are not making a profit on the retail, don't carry it. You are paying cash up front to put product on the shelf. If you are not going to make a decent profit on those products, don't tie your money up in inventory. Now I do believe that every salon should carry retail and sell it, but I get the feeling you don't believe the products are worth it and aren't making an effort to sell it so you are wasting your money.
One last thing to remember - your pricing will to some extent determine who your clients are. If you are priced like Walmart you will get bargain hunters who want a $5 haircut. If you are priced more in the middle you will lose some of those bargain clients, but over time will gain mid-range clients if you provide a great service at a fair price and market yourself well.
Raising prices is always scary, but if you are under-priced you need to bite the bullet and do it. If anyone asks, tell them your cost of doing business has gone up and the increase is necessary if you are going to keep doing what you are doing. Expect to lose some. Don't waver or make exceptions.
Good luck and believe in yourself!
Hi! You seems very knowledgeable so I thought I'd drop this question here. It goes back to What "Malissa" said, Except I'm on the other end.. I am a hairstylist getting paid hourly wage at the moment, working towards commission. My boss has encouraged me to add Makeup Artistry to our service menu. I'm wondering how to go about this.. I've priced out the training and the kit. I am wanting to pay for the kit myself so it will be mine solely and I can take care of it as I please, and do the odd job for a photographer friend of mine without having to charge her salon prices... anyways! How would you recommend I get paid per application in salon? I've read a couple things some people say 70/30 or 60/40? But with me being hourly it makes it tricky. What is your opinion? Also Should my boss pay for my training? roughly $450
ReplyDeleteSo in your salon you will be paid commission as you become more established. What is the revenue split then? What is the price of the kit? I'm wondering if perhaps the owner should buy the kit for the salon and you should purchase supplies for personal use. You could split the cost of the class. Ideally this becomes a revenue stream for you and the salon and helps to differentiate your salon from others in the area. I'd like to see you go through the class and then train the rest of the team to do makeup touch-ups --not necessarily full applications, just touch-ups. Then start offering free make-up touch ups to every client who gets a cut or a cut/color...whatever makes sense. The touch-up could be done by whomever is free, not just their stylist. This will (1) provide a great service to your guests that sets you apart (2) introduces the guests to this new service.
DeleteIf you purchase the kit yourself you will want to control it and make sure no one else uses it - this limits the ability of the salon to develop this service. Since you want to do some side work, just purchase what you need separately for that business.
As for the pay, it does depend on who is providing the supplies. I would suggest the owner provide supplies and the split be the same as other services. Even if it is covered by your hourly wage rather than a commission on top of your hourly wage, remember that you are making yourself more valuable to clients and to the salon owner. If you remain hourly while doing the make-up I don't think a pay increase is out of line after you have proven yourself. And assuming your salon allows tipping, your income will go up from gratuities even if your hourly rate remains flat in the beginning.
Actually, as I write this, I'm changing my mind on who pays for the class. If this is a service the business owners wants in her salon she should pay for the class. Perhaps you agree that if you leave the salon within 12 months you will repay all or part of the tuition, as a protection to the owner. From an owner perspective, this is an investment in the salon and if she is serious about it she needs to get behind the idea. That said, it does need to be something that benefits the whole salon (like through the free touch-ups), not just a little extra revenue from one technician.
Just a few thoughts...hope they help. Good luck and keep us posted!
Hey Cindy,
ReplyDeleteFirst off I just want to say great blog!! Super informative! I've been a Hairstylist/Esthetician since '97 and recently had to quit due to severe pain running through my neck and head related to work. I still would love to be involved in the industry and am thinking about having my own small salon. I wanted to know if you think that it would still be profitable to own a salon even if you're not behind the chair? Also if I'm not behind the chair what would be the most profitable...booth rental, commission, or hourly/salary?
It obviously seems like there are pros and cons to all as you've stated. It seems like booth rental would be more stable in the slow times, right? What are your thoughts?
Thanks
Julie,
ReplyDeleteMost salons are technician-owned and would not be profitable were the technician to stop working in the treatment room or behind the chair. It can be done, but you have to really want to run the business side of things.
Would booth rental be more stable in slow times? I suppose it could be if your renters stayed on and kept paying you. But remember with booth rental you are just a landlord - you have very little control over the renters (quality, pricing, consistency, hrs worked...). The only way you can grow is raise rent and then you are at risk of a walk-out to the salon down the street that charges them $25 less a week. Client loyalty is to the renter not the salon. Personally, I feel like this is a very risky business model, especially if you are not a revenue-producer yourself.
Commission may be more stable for the owner than hourly during slow times because as sales go down, commissions to stylists go down. But if you've read my other posts you know I'm not a fan of commission either. Again, loyalty is the the technician, not the salon, so you are not building your own business, you are building theirs. You have more control than if they were renters, but you have limited ability to motivate staff, as they are only paid on one performance element. Want to get your spa busy? Why should a stylist help when they get nothing more? Want to offer a new client discount? Will you pay the technician full commission or discount it? There are just so many problems!
But hourly can be a problem too if you are not prepared for it. As a new salon you would need the capital to pay people until you became profitable. And to get the most out of your team you really need to lead and build a culture of cooperation. With hourly the team has the most incentive to work together to build the business because as the business grows everyone wins.
Let us know what you decide to do!
Hi Cindy. I love your blog! It's helping me as I consider how to pursue building a great team for my new business, including a long term outlook. Located in a major Midwest city, my home-based company is a hybrid of upscale personal and business services, including a mobile massage and spa division.
ReplyDeleteParticular to your blog are the mobile spa services. I am not a massage therapist, esthetician nor a nail technician, but am seeking several individuals, especially those with multiple disciplines. Using a non-solicitation agreement, I will market the business and schedule appointments based on services and availability.
I'm interested in the pros and cons of the different ways to pay those who can ultimately make or break my new brand. Under evaluation are hourly plus tiered commissions, but I don't want anything too confusing. I will use software to do the calculations. I also like your team-based bonuses, along with having contests to encourage goal setting.
I plan to offer VIP memberships and/or loyalty rewards to clients. There will also be an opportunity for each division to cross-sell, as well as bundled services, specials, gift certificates and packages at great prices.
I will value your input on the following. I plan to initially use independent contractors as service providers. I want to offer them a decent rate of pay so as to respect their skills, expenses and training. They will need to supply all of their own materials, including cosmetics, as well as maintain their own liability insurance and reliable transportation.
I am developing a handbook as a basic guide for expectations while representing my company, emphasizing sanitation, professionalism and confidentiality. I will be checking out organic and other cosmetic lines, but at this time will not stock inventory. (I can add ecommerce to the website to include favorite brands later.)
I look forward to your feedback and recommendations on the best approach for my sub-contractor fee structure?
Also, where are the best places to advertise my open positions?
Many thanks!
Adding to my previous post regarding the new mobile spa business in the Midwest, our target service area covers 15-25 miles. Perhaps I could factor in mileage as a part of their income.
ReplyDeleteThanks, again!
I am in a bit of a tough spot. I live in a city in Alaska where there is not currently a beauty school and there is a limited pool of stylists. I have an excellent location and I believe a great concept salon. My salon is organic and the reason I sought out my own location. There is a demand for the products and services in my salon but I currently have just one booth renter who is an excellent younger stylist. My trouble is that all other potential booth renters seem to be scared to change over to using organic products. I am carrying all the overhead as I am working as much I can and just cant seem to attract stylists. I have tried offering a low rental rate to get them in, but that doesn't work either. I have thought about hiring someone at an hourly rate but I am not sure if I could afford it or how to even find out about the employment laws. I have advertised the rental space in Craigslist and also with posters at the beauty supply places, as well as placing a nice poster in the salon window. Our salon gets lots of compliments daily on how nice it is that we offer organic hair care and products and how beautiful the salon is, so I know it isn't a personality or salon image problem. I am not sure which direction to go.
ReplyDeleteI have thought about selling the business, but hate to go that direction because I feel the community really appreciates what we do. I have thought about relocating, but I have a truly wonderful location and have put my heart and soul into getting it up and running. I have been open for a year and half. I am currently not losing money, but I am not making a living either. Fortunately my husbands income supports our family, but I would like to be a success also.
That is a tough situation. You say potential renters "seem" to be scared. Are you able to contact them again and try to pinpoint if you are right about that? I suspect you are right, but we want to make sure we are solving the right problem. In my experience stylists are very resistant to change so this can be a tough sell. You've tried lowering rent and that didn't budge them, so clearly it is not a money issue in that respect. It is a money issue in that they are afraid they will lose their client base if they change anything.
DeleteIf organic really is the problem, would it be possible for your to brand your salon as having "organic options" instead of being 100% organic. That way other stylist could come in using what they are used to, and may transition over time. Certainly once you get someone new in there, their clients will see the focus on organic and want to know why they are being doused in chemicals while your clients are using organic products.
If you go this route I would require the new renters to be educated on the organic products even if they are not (yet) using them, and I would make it clear that they are not permitted to bad-mouth the products to their clients in any way (they will get questions and we don't want them answering with "well I don't use those because the color fades too fast"). They should respond honestly with "I've been using these products so long and my clients like them so I didn't want to change." Likewise, with your clients, you can say that not all stylists are ready to make the leap to organic so you are giving them time to get comfortable with the idea.
Not knowing how you have branded the salon, I'm don't know if this is feasible, but there's a good chance you are the only one with a sizable organic "option" so I think you could still keep your edge.
OK, that's one idea. Now, about hiring...do you have enough business for someone coming in with no clients of their own? Do you have a good number of new clients every month? (If you don't know, you need to track this!) I can tell you like the simplicity of booth rental so you don't have to worry about employment issues. And yes, it is a little complicated, but certainly not impossible. You could bring someone new on commission. You would have to pay them at least minimum wage, so they would get the greater of minimum wage or commission. When they are not busy they should hit the streets and pass out business cards and sing the praises of organic. An accountant or bookkeeper could get you set up for an employee and explain the record keeping to you. I'm sure you could find a bookkeeper that would prepare the payroll for you and prepare all the tax returns - it's not that time consuming once you know what you are doing.
The key would be getting the new stylist busy as quickly as possible. You would need to assess their technical ability to make sure they are capable, then do a little marketing. I'll do post on Style Labs, a technique a friend uses in his salon to build clientele - it should work very well for you.
Good luck and keep us posted!
I stumbled upon you blog when I researched "working in a salon with comission", great blog, by the way! I just relocated to a new city and I have a hard time finding a salon, finally I found a newly opened salon and she told me that the first 3 months she is paying me hourly, after that, comission 30%, I thought she is joking! I have worked in salons before but it was 50-50, with them providing everything.Do you think is low 30% ? Is there a law that makes the salon owners have to pay minimum wage even though I am a contractor with 30% comission?
ReplyDeleteThank you very much for your time!
My first thought is also that 30% commission seems low but you need to take into account a number of factors. Is the salon upscale and in a high rent area? Does the salon owner supply the clients and spend money on advertising? What are salon prices? Does 30% equate to a reasonable wage? Are all supplies included? How well-run does the salon seem to be? Is there a professional, responsive front desk team? Is the salon using current technology? Does she provide continuing education to the stylists? All of those things are valuable to you as a stylist and cost the owner money so they could justify a lower commission scale.
DeleteI know many stylists are used to 50/50 or even 60% to the stylist, but that rate will not support a financially healthy salon. Yes, you want to make money, but a high commission does you no good in the long run if the salon is not financially viable. Things go down hill fast when there's not enough money left to replace old equipment, freshen up the paint, make necessary repairs, replace ratty towels, properly staff the front desk...even at 50/50 you are squeezing the salon's margins pretty tight.
Your final question about minimum wage for a contractor leads me to more questions. First - just because you are paid commission does not necessarily make you a contractor. A contractor is responsible for her own taxes and is not an employee. You can be an employee and still paid commission. In that case, yes, you still need to make minimum wage. Check your state department of labor to find out the rules in your state. You should be able to get their phone number online and give them a quick call. If the salon owner wants to pay you 30% AND treat you as a contractor responsible for your own taxes, that is a really bad deal and probably runs afoul of wage and hour laws.
I wrote a previous post on employee vs contractor that you may want to read for more information on that aspect.
http://www.blogger.com/blogger.g?blogID=4871565048534100354#editor/target=post;postID=6159701807481793478
Hello Cindy, I appreciate your fast response, to answer a few of your questions:
Deleteuspcale-no,
high rent area-middle,
she spends the money on advertising, yes,
all supply included-yes,
prices-on the middle high( 50$ a haircut, 15$ eyebrow
waxing)
Front desk team-nobody yet,I am her first person to work there, it is a newly open salon, basically it is not oficially open)
continuing education-I did not ask her about that, thanx for remind me :)
And, yes, I will be a contractor paying my own taxes, that is why I thought this is not good for me, even though I am new to town and I don't have any clients whatsoever.
Thank you very much for your time!
OH and I forgot to tell you that I couldn't open the page you gave me, I don't know why.
DeleteThank you!
The link was supposed to be to another post on employee versus contractor. You can search on contractor to find related posts.
DeleteI think to be an independent contractor in a salon that has no clients yet and only get 30% is too low. If a woman's haircut takes 1 hour and you get 30% of $50 you are getting $15 per hour plus tip. Which isn't terrible, but you are getting nothing for any unbooked time and it's not realistic to expect to be 90% booked at 3 months. So if you are only 50% booked you are only making $7.50 an hour plus tips AND you're paying your own taxes! What hourly rate has she offered you and is she planning on treating you as an independent contractor even while paying you hourly? If so, she needs to read the contractor vs employee posts I wrote because she could get into trouble with the IRS.
She offered me 12$ for the first 3 months, as an employee, not contractor.She told me that I can't be paid hourly and to be a contractor in the same time, so I guess she is aware of the laws. I just still can't get over 30%, I will have to tell her how I feel and probably find a better place to work, because I honestly don't think she will increase the commission, she has told me before that she wanted to give me 20%........
DeleteWell the $12 starting out with no clients is not a bad deal. The issue is what happens after 3 months. By the time 12 weeks are up you will have seen most clients only one time so you won't yet have a feel for what your book will be.
DeleteWhat is this owner's background? Is she a stylist? What are her goals? Does she really just want to rent spaces out but hasn't found anyone yet so she'll consider hiring instead? I'm sure since it is a new salon she is concerned about taking on the obligation of paying you whether you are busy or not. At full-time, that $12 an hour is costing her over $500 a week and she's probably a little scared, which is understandable. It's actually good that she's not over-committing in what she promises you.
I think you really have 3 options. 1) look elsewhere 2) take what she has offered 3) only do this one if you like her and think could enjoy working together and building the business...talk to her again and this time instead of the conversation being strictly employee/employer pay-based talk, talk about her plans for the business and how you may be able to help grow it. If you see her side (I'm taking all this risk and I don't know what I can afford to pay you and keep the lights on) and she sees your side (I have talent and will do a great job but I need to make a decent living) maybe you two can agree on something that will work for both of you. This won't work if you don't like and trust each other, but if you feel like you could have a good relationship maybe the two of you can grow the business together in a way that benefits everyone.
You might want to recommend my blog to her too! Starting a salon (or any business) is ridiculously stressful and maybe this can make it a little easier.
First, thanks for this blog! I am finally opening up to the idea of growing my business and looking to hire some extra hands. I own a small boutique style eyelash and makeup studio in Houston. After a very long search for a certified lash tech, I have decided that I will train someone from the beginning. I am wondering about the pay structure - I of course want to do what is best for my business but want to treat them fairly. I am offering paid training and advancement opportunity (I will open another location and need a manager) I was thinking that a 90 day training/trial period would be paid $13/hour wage. I am convinced that offering raises and incentives is the way to keep people happy in their job, I am just unsure how to do it. At what point should I cap? I do not want to exceed 45% commission but would rather stay hourly with retail commissions (what is that average? 15%) I will pay for all marketing, supplies and handle scheduling. Is there any way to keep them "contract" or 1099 employees? Any advice is greatly appreciated!
ReplyDeleteFor info on whether they should be W-2 or 1099 please read posts tagged with "contractors." I think you will find from a legal perspective, you want the control you only get with a W-2 employee. From a simplicity perspective, you want 1099. You can't (legally) have both so you will need to decide.
DeleteIf you are taking someone with absolutely no skills or experience in this industry and training them, I feel like $13 an hour is extremely generous. We pay apprentices right out of beauty school $9 (plus tips) until they pass their Master's license test when they jump to $10. Of course with gratuity they make significantly more than that. If your technician will not be receiving tips I agree that you need to pay more.
Personally, rather than pay 45% commission plus retail commission, I would try to find a way to pay hourly with incentives for goals met and company financial results. You want this person focused on growing the business. What does your service cost and how many services can be done in an hour (what is your revenue per hour if fully booked)?
Just as an example...a stylist in my salon has key performance indicators they need to meet (or being making steady progress toward) in order to get a raise.
- Rebooking % (what % of people they saw in a month left with their next appt.)
- Retail % (retail sales as a % of service sales)
-New client retention (what % of new guests came back within 90 days)
-Repeat retention (what % of all other guests came back within 90 days)
If I paid a retail commission someone could basically opt-out. I don't like selling, so I will just live without the commission. In my shop they sell or they don't get the pay increase they want. Retention requirements make them focus on the entire experience so the client will return. Rebooking helps us stay busy. Set a monthly goal for each of those and establish a reward if they are hit. Have a total sales goal and if it's met they get a bonus. Make sure they always know where they stay with regard to these goals. (My team gets a notecard with their month-to-date numbers each Monday).
Also, I hate to bring this up, but if your employee will be working alone, make sure you have systems in place to ensure all revenue is counted. You need to have a system that doesn't allow them to provide a service and pocket 100% of the money without ringing it up. In your line of business this will have to be primarily inventory control. (How do you prevent an unethical employee from pocketing a cash sale).
Cindy,
ReplyDeleteI have worked in the same salon for 16 years as a manager. I have a license but do not do hair I do however do manicures and waxing procedures. The Salon Owner has decided that she no longer wants the day to day responsibilities of running the Salon, but would like to continue on as a stylist and has offered the salon to me. We have always worked just 3 days per week and currently have the owner and one other stylist behind the chair as well as one nail technician. We have agreed that we would like to run the Salon as we have in the past because it works very well for all of us. The other stylist currently works on commission and the nail tech is a booth renter. I would like to rent out the salon chairs on the 4 days that we are not there to independent contractors. I see in your other posts that you are not really in favor of booth rental. I was wondering about your thoughts if booth renting would be a good idea in this case since I don't really want to be a Salon Owner but want to keep the days our original girls would work but make some extra money from booth renting to enhance our business.
A few things come to mind as I read your comment...
DeleteYou currently work 3 days. Which ones? I would guess you work the busier salon days (Thursday, Friday, Saturday) which would only leave Sunday - Wednesday for booth renters. If that's the case, it's not likely you will find renters who are ok with not having space on the busier days.
Before you go forward, think about what it would really be like to have other technicians using your space while you are not there. A lot of things could go wrong (not that they will--just go into it with eyes wide open and a clear, written agreement). When I say things could go wrong I'm thinking of the conflict that would arise if the salon is not properly cleaned in your absence, how is supply usage handled, etc. Would the renters be using the same stations used by the current people?
I love the idea of generating more revenue out of the same space - right now it's being used less than half time--but I think your hands-off approach may not be the slam dunk you are hoping for.
The salon I work at keeps changing our pay structure. We have been told we are now commission. I receive 45%. When I received my first two week paycheck, I discovered that prior to paying me the 45%, they first subtract an hourly wage of 7.50 per hour for all of the hours I worked, and then pay me 45% of what is left. Is that right? Why would I pay them the hourly rate?
ReplyDeleteMy guess is that they are trying to pay you either $7.50 per hour OR 45% commission, whichever is greater. I'd take another look at the pay stub and see if that could be what's going on. Definitely ask a manager to walk you through it if it doesn't make sense to you.
DeleteI am having this same issue.When I was hired I was told I would be getting paid tipped employee min.wage+tips OR 40% commission whichever was higher.And my checks are the same way.My commission will be higher for hrs.worked at that wage but they subtract my hours from commission and pay me the difference.In the 3 months that I have been there I have NOT once made minimum wage, including my tips.I brought it to managers attention and was told to get my ic license. But even the ic's aren't being classified right or being paid correctly.
DeleteI don't understand how they are calculating your pay. By law you need to make at least minimum wage (when your tips are included). If you are not, you are working for an unscrupulous owner and should find another job. I recommend you call your state's Department of Labor and have them investigate your pay. As a salon owner who pays team members fairly, it really makes me mad to hear stories like yours.
DeleteGo look for a new job. Don't mention the pay issue as a reason for leaving. You can say you are looking for an opportunity with more earning potential than your current job, but don't throw the owner under the bus with accusations of illegal pay practices. It will give the potential employer cold feet. You really should contact the state about this--if they are truly paying less than minimum wage, they should not get away with it.
Anonymous again. I have 25 years experience and a large clientel base. Is there any such thing as a salon where I can get benefits and make decent $. Several years ago my weekly pay was alwasy near 1000.00. At JCPenny now I am getting 400 for two weeks. Is there a type of saloon that I should focus on hourly/salary etc to make the most money for an experienced stylist.
ReplyDeleteOK, let's do some math. To earn $1,000 per week, you need to make $25 per hour for 40 hours. That should be doable, with gratuity. After mandatory taxes are taken out and any optional deductions (like insurance or 401k) you would be below $1,000, but to shoot for $1,000 gross pay per week does not seem unreasonable to me for a 40 hour work week.
DeleteIf you earn a 45% commission, you need to have sales of $2,222 per week to gross $1,000 (before tips). If we are counting tips in the $1,000, sales could be lower. $2,222 of sales per week for a 40 hour week means you need to be doing $55 per hour in services for all 40 hours. Whether you can do this is going to depend a lot on what your prices are and how many of your clients receive color services.
I agree that $200 per week is low, but I don't know how many hours you work and what your sales are. You say you have a large client base, which seems to me should support a higher paycheck than what you describe. A large client base, by the way is about 200+ regular, repeat customers. And for 200 to be enough, they need to be multi-service customers...color clients.
More math...200 clients each come in every 8 weeks. If they come in every 8 weeks, they have 6.5 visits each per year. 200 clients times 6.5 visits = 1,300 visits per year. How much do they spend? If your average service ticket is $65, your annual sales are $84,500. Weekly sales are $1,625. Commission is $731 per week. If you also get a 16% gratuity ($11) per visit, you will hit your $1,000 target.
But what if your average service ticket is only $45? Annual sales are $58,500. Weekly sales are $1,125. Commission is $506 per week.
To summarize - I do believe it's possible to make good money in this business. I think you need to understand your own numbers. Make sure someone explains the pay structure to you in a way you understand. Then track important numbers like your average service ticket, your weekly sales, number of clients served and frequency of visits (how often your clients come in). Do your best to improve those numbers and your income will rise no matter where you are working.
One last thing...remember that benefits are a form of compensation so if you work at a salon that offers benefits (even if they are only part-time), that is a significant cost to the employer and it does justify them paying a lower commission than a shop with no benefits. When evaluating other opportunities, don't be too quick to jump ship for an additional 5% commission. Make sure you look at the full package.
Good luck and feel free to comment again if you want to continue this discussion.
Anonymous again. I originally move to JCpenny as they pay benefits...... or so I thought. In reality you don't as the bar is such that you will never get more than part time benefits. I love what I do and am so good at it, after 25 years in my late 40's I many need to find different work. The constant change of JcPenny and of course each change is basicaly taking more and more from the employee. I would guess they are about ready to close down all JCPenny saloons as they are apparently not profitable, I doh't think they factor in store sales related to customers coming into the saloon. Boo hoo no such thing anymore as a decent saloon job. Is this all the econly to go from 1000 per week to 400 in two weeks, or is it possible to find a saloon that has a win/win set up.
ReplyDeleteHELLO! I have question that needs some professional advice, I have been behind a chair for 10 years and have moved quite a bit. I recently move to Missouri and I work at a great family owned salon, but my question is before I started working there they started a groupon, being new to the area they gratefully started me out hourly. when my 90 days are up they will probably put me on commission, I'm worried that with the duties that they are wanted me to fulfill( opening, closing etc with having management experience)that I really wont be making that much with the groupons. starting 40% capping at 60% what is a accurate amount that I should request? the owner has already talked with me about being her "backup". what is a great way for me to sell myself and up my commission rate from a hr. base start? thanks!
ReplyDeleteHi, I own a commission base salon. What is the best way for my stylist to make a product incentive?
ReplyDeleteHi. Honestly, a commission on sales is probably not going to motivate your stylists to sell product if they don't really want to. I say this because you probably can't offer them a high enough commission to make them do something they are not comfortable with. For example, a $20 retail shampoo costs you $10. If you give them a 15% commission on retail, they get $3 and your profit is then $7. Does $3 really motivate someone to sell a shampoo? Of course, with multiple sales, there could be significant commission earned, but it's also very easy for them to rationalize by saying "I'm a hairdresser, not a salesperson."
ReplyDeleteThe key, I believe, is to get your team to see that recommending appropriate products to their guests is a part of great customer service. To properly care for your client you need to make sure they can recreate their look at home, and that they are using products that won't damage their hair. For clients with color on their hair, it's an important part of helping that client protect their investment. This requires a change in how they think about retail. It is part of their job to INFORM their clients about the products that will work best for them. It is up to the client to decide whether they want to purchase. But doesn't that client deserve the information? Why would a stylist withhold information about a product that could make a client's color last longer? Or keep fly-aways at bay? Or add shine? As a client, I want to know about these things and I want my stylist, whom I trust and respect, to tell me about them. Retailing is a client service issue, not a selling issue!
Back to incentives...if you have a tiered commission schedule you could require a certain retail percentage in order to rise to the top tier. Maybe they start at 45% commission, but to reach 50% commission they need to have at least a 15% retail percentage. You could recalculate the retail rate every three or six months and that rate would determine their commission for the next 3-6 months. If someone dips from 50% to 45% I forsee quite an issue though.
You could also do a basic commission on sales, but without the change in thinking, a sales commission will not change their behavior. Do you have regular staff meetings? How about doing an activity in a meeting talking about customer service experiences in other businesses. How would it feel to go into a jewelry store to purchase a piece of jewelry but no one will educate you on diamonds? Or go to a boutique and not get the help of a salesperson? Or a restaurant where no one knows anything about the dishes served? A home improvement store where you're left figure it out for yourself. Since stylists are always worried about being pushy you can work in examples of pushy salespeople contrasted to helpful ones. Have people share their experiences of receiving bad customer service, then bring it back to our industry. Not educating people is a form of bad customer service. Would they return to a business that was not helpful to them?
Opening a new salon... unsure if I should get an accountant to do payroll?? Does the salon software generally do all of that for you?
ReplyDeleteYour salon management system will help by calculating commission or by tracking hours and wages, but I'm not aware of one that actually processes payroll. You can process your own through Quickbooks or other small business accounting programs, have a bookkeeper or accountant do it, or hire a payroll service.
ReplyDeleteWe use a payroll service that also takes care of all our tax filings including our state and federal unemployment and local payroll taxes.
A word of warning...If you decide to do you own DO NOT GET BEHIND ON PAYROLL TAXES! Those guilty of not remitting payroll taxes withheld from employees can be held personally liable (even if you are incorporated). If cash flow is tight, don't shortchange the IRS!
If you are in a trade organization (like Professional Beauty Association) you may be eligible for a discount with certain payroll providers.
Hi Cindy!
ReplyDeleteGreat Blog!
I am considering having several Nail Apprentice at my professional nail bar. The nail apprentice will not provide any professional services until sufficiently trained by licensed cosmetology instructor. Do you think having non-licensed staff working at the nail bar will be a conflict? Do you have any suggestions on a smooth transition?
Secondly, several makeup artists and braiders requested commission based employment at my nail bar. The space is 900 sq feet. I can easily add (4) salon chairs and one shampoo basin and chair. We can definitely use the increase revenue and traffic. My concern is about the noise. (Mainly hair dryer and the increase in traffic). Do you think this is a good idea? Any suggestions on a smooth transition?
On nail apprentices - check with your state licensing board to make sure you understand exactly what non-licensed staff are permitted to do. In my state, unlicensed staff cannot perform any work. The key to using apprentices is to make sure they are properly supervised and are getting the training they need. You don't want your clients to feel like they are being practiced on. I recommend you draft up a training program that covers everything they need to learn and have a check-off that indicates when they are certified by you to do each item. Apprentices can help you grow your business or they can be a waste of money--it's all in how much time and attention you put into developing their skills.
ReplyDeleteOn the make-up artists and braiders - only you can determine if adding four chairs will make your space too crowded. The danger is that you alienate your current client base by ruining the atmosphere they come to enjoy. Perhaps you could survey your clients to see if they would like to see added services? As for a smooth transition - this would be like adding an entirely new department to your salon. Your goal should be to get everyone (nails, hair, make-up) working together, not competing with each other or becoming cliques. If you decide to go forward I recommend you start with a staff meeting of your current employees (you may want to ask their opinion on whether to expand in this way before just doing it). They key is making everyone understand how expanding will help all of you. Note: make sure expanding is something that will benefit everyone. Will your nail techs be busier and therefore make more money? Will you pay out profitability bonuses? They need to understand why it is good for them for you to get their support. Then you should have a full staff meeting with ALL the departments. Have an ice breaker so everyone can get to know each other. Have experience employees talk about what they think is great about your salon - what they want to preserve. Use the meeting to bring the entire group together as a team. You want them to work together so you may want to have a salon goal (for total sales, weekly sales, number of guest visits...whatever makes sense). Track progress toward the goal daily and when they hit the goal they earn something - could be a cash bonus, ice cream social, gas card...whatever will motivate them.
Lastly, schedule regular one on ones with each employee to see how things are going and address any problems while they are small.
Good luck and let us know what you decide to do.
Thank you so much for your reply! I will follow up and let you know our progress!
ReplyDeleteI am a hairstylist and the salon I work at is hourly or commission which ever is greater. But the thing is we have to meet a PPH(production per hour) of 19.5 or greater and if we do not then we get paid waitress pay. Now when the salon is slow and we have no clients our PPH starts dropping which I don't feel it is right because it's not our fault its not busy so we shouldnt be punished for it. Now is this something they can get away with doing
ReplyDeleteI just found a link that you may find helpful.
Deletehttp://www.dol.gov/whd/state/tipped.htm
It shows your state's minimum wage, including the "waitress" minimum (tipped employee minimum). What state are you in?
well who's fault is it that the salon is not busy? why should it fall on the owners? what are you doing as a stylist to fill your books?
DeleteI need more information. What do you mean "waitress pay"? Isn't that, like $2.10 an hour? You need to be making at least minimum wage (which varies by state but Federal is $7.25). Your declared tips would be included in that. So if you worked 30 hours in a week your gross pay should be at least $217.50 (including tips). If waitress minimum wage + tips does not = at least $7.25 (or your state's minimum, if higher), then your employer needs to make up the difference to get you to $7.25.
ReplyDeleteYour salon owner should be able to explain the calculation to you. If they are not helpful and/or you are not convinced that you are being paid properly, you should contact your state department of labor and ask them about it. Also, your salon should have a wage and hour poster somewhere onsite that explains some of this.
I'm in Florida. I believe our waitress pay is 4.23 hr here. An no I don't always make the 7.79 including tips an hour because people tip cheap here and in an hour I might get a $2 tip if its slow
DeleteCindy, when you say declared tips, could you speak more about this? I'm looking to restructure my pay system, as of now, most of my stylists get handed their tip in cash by the client. How do I keep track of their tips in order to figure a fair hourly wage. I can forsee resistance if asking them to divulge their fully tipped income. ty
DeleteThis comment has been removed by the author.
ReplyDeleteok thanks ill send it shortly
DeleteLove your blog! I just came across it while trying to figure out the industry average for deducting for backbar. I currently own a salon and I am thankful to have a great team to work with! I have always treated my team with fairness and how I want to be treated. With the cost of doing business going up considerably I am re-evaluating how I have been deducting backbar for my team. I feel that I need to deduct more than what I have been, but don't want to lose my team over it!
ReplyDeleteI am currently only deducting backbar for colors, perms and straightening ($5 for each of those services). I am debating on changing to a percentage deduction of what the employee's services are per pay period. What are your thoughts on this? And if you could share what you do now for your employees. Thanks!!!
We no longer do a backbar deduction because we are a Team-Based Pay salon where everyone is paid hourly/salary. That eliminates the need to offset commission with a product charge.
ReplyDeleteBack when we were commission, I did implement a backbar charge for all services (except kid's cuts and brow waxes, I think). We did a charge of $2 (men's salon, so not much color cost). Of course I was also worried about alienating the team so we implemented the service fee at the same time we put in a price increase. We increased most prices $5 and added the $2 fee so they were still being paid on a $3 increase.
What commission rate are you paying? Backbar charges are generally necessary because we pay so much in commission we can't make a profit any other way.
I'm glad you enjoy the blog!
I just checked this blog out today and I must say I am so excited that people in my industry are talking business and not just design. I opened my salon Jan 2011 and I implemented a salary system that included both salary as well as commission. Me being a cosmetologist for 17yrs and I have always been an independent contractor when I opened the salon I wanted to have a better financial support system for new stylist without a clientele following. My Tier system starts at an assistant level making $9hr plus 15% commission on services and 10% commission on retail sales, next level is Jr. Stylist making $4hr plus 35% commission and 15% commission on retail sales, Designer Stylist make 50% commission only with 20% commission on retail and my highest tier is a Master Stylist that make 65% commission with 20% commission on retail. I researched for months before I opened my salon with this pay structure and I really thought that it would be profitable for both my self as the owner as well as my employees, however this has not been the case. I think my biggest problem is the amount of product I supply at the salon. I do not charge a product fee and I supply everything needed for a service including gloves, pins, processing caps, etc.. I didn't feel like this was a problem but now that the business is still not making any revenue I have to find a way to cut costs or increase business. My staff is what I call 1/2 and 1/2. I have some workers dedicated to building not only their business but building for the salon as well. Then I have some that only do the bare necessity. I use to require the staff to keep full hours, but since the salon isn't making any money I now only require just 2 people to be on staff full time and the rest of them can come in if they have clients on the book. It helps prevent me from covering to much payroll, but I know it keeps them from growing business. And im pretty sure that they are not advertising/promoting themselves when they are off of work. Im so torn as to what to do because even though I am the owner, I am also a working stylist as well. My personal business has never been better. Im doing at least 50 clients a week and I get great comments on the salon environment and the new setup (which is not common where my business is). I wish I could be happy about this but I cant since I cant afford to pay myself but 20% of my services. If I fired everyone and just kept a receptionist and 1 assistant I could cover all my expenses and pay myself, but I got into this business to solidify a future for my son and my retirement. Please help me with some new advise or at least some direction for this problem. Im waiting with open ears and heart.
ReplyDeleteOh dear, this is such a complicated situation. I like that you have a tiered system to help new stylists get started, but you are paying too high a commission on the established stylists to afford the hourly people. A salon cannot be profitable paying 65% commission.
DeleteYou are going to have to change your pay plans. Changing a pay structure in a way that favors the salon is always risky, but the plan you have now is not sustainable. I would make the top tier no higher than 50% and even then you may need to add in a product charge that goes to the salon before commission is calculated. You can offset some of the impact of these changes to your stylists by implementing a price increase at the same time. If you haven't had an increase for a while you are probably due anyway.
From what I have seen, apprentices and assistants typically do not earn commission in addition to their hourly rate. Most are also receiving gratuity so they are making well over $9 per hour. Our new stylists start at $9 but make closer to $14 with tips.
Your retail commission is a much less significant problem but you may want to change it at the same time. A stylist doesn't deserve a higher commission rate on retail just because they are at the Master Stylist level. They deserve a higher rate if they sell more product. Consider paying commission monthly based on their retail %. For example, if their retail as a % of service is less than 10% they get no commission, 10.1% to 15% is a 15% commission and over 15% is a 20% commission.
You could consider advancement through the levels to require a certain retail %. So to advance to Jr. Stylist may require selling x% or $x of retail per month. No retail performance, no promotion. It makes retail a priority not an option.
You don't talk about your salon culture and the relationship you have with your team, but I think you need to share the situation with them. You bear the risk and responsibility of salon ownership but you are not seeing the rewards. You designed your pay plan in good faith thinking it would support everyone, but it doesn't. You need to take home more than 20% of your service revenue and a salon on the brink is not good for anyone. Somewhere in the blog I describe an activity using pennies that helps the team understand the financial position of the salon. I'll look for the post.
I hope these ideas help.
I too need advice on stylist pay scale. I am not a hair stylist; but I am an owner. My girls are paid 50% commission, I do take out 10% product charge. I wish I would have started out paying a lower commission and receive a higher commission with retail %. How should I be paying the girls. Not having a background in hair I feel holds me back from knowing the right way to pay the girls. They all want higher commission but none will sell retail, the complain about cleaning. And a couple are late to work 5 out of 10 times. Help!!!!
DeleteYou are not alone! If you read through the comments you'll see a lot of similarity. As salon-owners we do what everyone else is doing, as though we will be able to succeed where they failed. Unfortunately, the expectation exists with the technicians that they should get 50% or more, even though it creates a very unstable work environment because the salon is left on shaky ground.
DeleteWhat I've recommended to some readers is to revise your compensation structure so the commission goes down, but do it along with a price increase so the technicians stay whole.
Of course, as a fan of Team-Based Pay I feel like the real solution is to quit paying commission, but that is a big step. You are experiencing all the problems that come with commission - no consequences for being late, for not cleaning, for not selling retail--they still get their 50% so everything else is optional. With Team-Based Pay I can reward a team member's full behavior - everything from attitude, cleaning, retail, technical ability, punctuality, leadership...and these behaviors lead to growth of the business so everyone wins. TBP is not a tricky way to pay less - it's a new way of thinking.
If you're not ready to go that route (it takes a great deal of time, leadership and trust within the group) then consider having levels of commission where to earn high rates they need to perform at certain levels. So to make 50% (or 45 or whatever), they need to sell 15% retail and be on time.
Your challenge is getting the girls to see how retail and timeliness and cleanliness help all of you. Do you know what your new client retention is? If it's low you can have a meeting talking about why you (as a group) think people aren't coming back. Define as a group what makes the Ideal Guest Experience and talk about how to deliver that and about behaviors that damage the experience. The key is getting your team engaged...getting them to think beyond their chair.
You can also start having daily huddles before work and start some goal setting (daily sales figures, retail $, prebook %) to get them more aware.
There are some great salon consultants that can help you with this. I've personally worked with Strategies and Live, Love, Be and they are all great folks. Coaching is not cheap but very helpful! You may want to consider attending the Incubator program with Strategies.
Thank you Cindy I did have a conversation with my staff and they were receptive about some change because they don't want to see the doors close. I'm going to make some changes and do a slight increase on the base rate for a Cleanse & Style and change some of the Pricing on the chemical services because i realized the flat rate wasn't benefiting the salon and the stylist.
DeleteTBP Question - sounds like a great way to go. Im opening a full service men's grooming facility and wondering how I should pay team members. I thought I would start everyone at $9/hr for first 6 months then $10/hr. Would I then apply the key performance indicators, that would be the same for all stylists, whether they were making $9/hr or $10/hr?
DeleteIn other words, if I forecast next months service sales to be $50,000 and retail sales to be 15% ($7,500), for a total monthly revenue of $57,000, would I then set a team based goal of perhaps 3% over the total monthly revenue?
If the salon hit the goal and increased revenue by 3%, would I then pay that 3% to my staff? Say I have 15 team members and 10 of them were responsible for meeting that goal, the other 5 not so much? Does the 3% still get divided equally between all team members?
Look at the blog post tagged under ACTIVITIES for the penny exercise.
ReplyDeleteHi Cindy -
ReplyDeleteI have enjoyed reading your posts for the past few months. I am in the process of opening a start up specialty salon in Texas. I am not a cosmetologist and do not want/plan to get a license to do hair. I would only like to own and manage the salon. Because it is a specialty salon, I am interested in paying my stylists commission. For a salon that only focuses on one type of service (ex. hair cuts or hair extensions) do you have a recommendation on how to pay the stylist commission that will afford them and me a living?!?
Also, do you have any recommendations on how to pay stylists when they sell products or have a client that just happens to purchase a product and will be sitting in their stylist chair later? Lastly, what are your thoughts on how to pay myself since I am not doing hair at all? Any help /guidance you can provide will be greatly appreciated. I dont want to fail before I even start. Thank you
Nikki,
DeleteIf you're in Austin I'll come see you this winter! I'm going to guess that you are starting a blow dry salon because that's all the rage in specialty salons, but my advice will hold true whether it's blow out, lashes, waxing...
Starting out from scratch, commission is going to be a challenge for the reason you identified - there may not be enough revenue for everyone to make a living. You may want to start out paying them hourly and switch them to commission when a certain level of productivity is achieved. I know this puts the burden of payroll on you, but in order to attract talent you are going to need to commit to a certain level of pay. You could also do a greater of hourly wage or commission. Even if you are commission based you need to make sure they at least make minimum wage. If not, you must supplement their pay up to minimum wage.
Is is necessary for you to take a paycheck immediately upon opening? That is probably not a realistic expectation. Most new businesses run at a loss for at least several months. You need to have the capital to get over that hump. If you are working in the salon (at front desk) you can pay yourself sooner than if you are simply "managing" and you are hiring someone else to do front desk.
Generally, whoever assists with the retail sale gets credit for it. If a stylist assists a walk-in customer with retail, you can credit them with it whether or not there is an associated service.
I assume you have run some numbers on what you think this business can do in revenue. You should model it out, by month, and use various assumptions for pay. As an owner not providing services, you are going to get paid only out of profits. Decide what percent of profits you want to reinvest in the company and what portion to take out. It's ok if your pay varies by month. When you have steady cash flow you may want to set up a regular monthly amount.
The reason most new companies fail is that they are under-capitalized. You need to plan on carrying this business twice as long as you think it will take. If you don't have the money to pay the bills while you work toward profitability, you will subject yourself to an incredible amount of stress, and quite possibly failure. Run those numbers! I don't want to discourage you, but I want you to have realistic expectations. I would rather you be over-prepared and cash flow sooner than projected than be unprepared and run out of money.
Good luck and let us know how things are going!
Cindy,
ReplyDeleteMy name is Donny. Me and my wife just opened a hair and tanning salon 3 weeks ago. We are very new to this business and were not sure what to pay the employees. We did a little research and decided that we wanted to pay the girls well, but did not really know what that needed to be. We thought the tanning would immediately take off, since we are only one of two companies and the other company has only two beds and they are old and in very bad shape. We have just had trouble getting our name out there even though we have done a lot of advertising. So we decided to pay our stylist 70 percent and we get 30. And we buy all the product. They also do not get commission for anything they sell. But we have soon realized that this is completely unreasonable. They are making all the money and we are making nothing AT ALL. The few dollars we do make goes back into the product line. So at this point we cannot pay any bills. We need a solution on what to change and how to change it. I have talked to the stylist and told them we have to change things or we will go broke. They got pretty pissed because this is what we had agreed on, but we are not going to make it another month at this rate. We do have one stylist who everyone wants and she came to us because of the pay. She is also bringing in the most amount of business. And knows a lot of people and we are in a small town. But even though she brings in a lot of people we make nothing. Can you help us with some ideas to keep it fair for them, where they don't lose much but allows us to make some money. Because we are not going to make it and I don't want to just fire them. I am afraid that the one girl will destroy us if we just let her go, so I want to give her a fair option and part on good terms if she does not take that option.
When I read that you gave them 70% I couldn't help but cringe. As you have learned, you cannot keep the doors open with that arrangement. Typically a salon's overhead is going to run about 30% when it is established. During the build-up stage it will be way more than 30%.
ReplyDeleteClearly right now we need to go into survival mode. No more traditional advertising - and no promoting hair services until you are making a decent margin on the service. Seems like your margin on tanning should be pretty high so I would focus on that to get some cash flowing. Maybe inexpensive fliers with a good offer. Give them something extra when they buy a certain quantity - Like "Buy 10 visits, get 2 free". When they come in for the first visit have an offer that is only available if they buy now. Like if they sign up for monthly tanning they 2 guest passes or a free lotion or a free hair service. Only do the free hair service if the stylists are willing to do the service free in exchange for the chance to win a new client.
My salon does not offer tanning and I do not tan, so I don't know what offers would be attractive to potential customers. Maybe look at some tanning websites from other cities and see what the successful places are doing. One guideline, though, try to give them something extra rather than take $ or % off. Also make sure your fliers highlight your point of difference - new beds, hot bulbs, clean...whatever makes you a better alternative to the other place. Try to avoid competing on price alone.
OK, as for the hair stylists...the issue is bigger than the commission. Now it is an issue of trust. You're going back on your word just 3 weeks into this deal so your stylists will no longer trust you. Not that they will think you are bad people or intentionally misleading...they just won't trust you to lead and guide the salon to success - they will doubt your ability. And you are now in a place of desperation where you are afraid to lose the one busy stylist. I honestly doubt if you can save the relationships with your current staff. You are overpaying them so much, that it's probably not possible to get that down to a workable level. And by workable level I mean the commission absolutely should not exceed 50%. And even that will be tight financially unless the tanning business subsidizes the hair business (in which case you might as well just have a tanning business).
Would it be feasible to switch to a booth rental model? How much rent would you need from the styling chairs to break even? If you haven't done so already, list out all your overhead costs (receptionist, electric, rent, insurance, loan pmt...everything that is not part of providing the service). Maybe you can rent your chairs for enough to break even (they provide their own supplies and they pay advertising/promo on hair) and you can profit from tanning. You could pay a small commission on any tanning packages the stylists sell (small = less than 10%). Or maybe you can switch the commission on the not busy stylists and have the busy one booth rent. If you do this, don't undercut rent! Check around and charge market rate.
Good luck. I hope this helps a little.
Hello Cindy,
ReplyDeleteI am so happy for getting to know your blog here. I haven't have time to read all the comments on your blog because i guess they may have someone has the same experience as me. I have a question for you today. I start working in my Salon 3 months ago. I pay by day as an assistant or Junior Hairstylist. My main job is assist my boss since i do not have a lot of appointment. My boss took off her 2 hours to train me on my model but i took about 5 hours to finish my model hair. Its take almost half. My boss want to pay me only half of my payment for today because i do not really assist her today. Do you think she is right? I think she suppose to pay me for the training. Please let me know if she is right or not and what is my right. Thanks
I found this link that explains when training time must be considered "work hours" and paid.
ReplyDeletehttp://hrdailyadvisor.blr.com/2013/01/21/when-are-employers-obligated-to-pay-for-training-time/#
The key point seems to be whether the training is to improve performance in your current job (paid time) or to train you for another job (not required to be paid).
After reading through this a couple of times, I'm not convinced that your employer is required to pay you for this training. Here is the section that makes me think this:
"Where a training course is instituted for the bona fide purpose of preparing for advancement through upgrading the employee to a higher skill, and is not intended to make the employee more efficient in his present job, the training is not considered directly related to the employee’s job even though the course incidentally improves his skill in doing his regular work."
It sounds like the work you did on the model was to prepare you to graduate from assistant to stylist, so she may not be required to pay you. You can alwasy call your state's Department of Labor when you have a question about whether certain time should be paid or not. They will know the specifics of the laws in your state.
If a reader with knowledge on this topic wants to chime in, we'd love to hear your take.
Some owners are hesitant to pay for training time because of high turnover - they invest time and money in an employee then they leave the salon after benefiting from the training. Others may be squeezed financially and feel they can't afford to pay training time. Owners may also feel that a "good" employee should be willing to train on an unpaid basis because, ultimately, you benefit from the training more than anyone else. They also may feel like if you are not getting paid for that time you will work more diligently to improve your skills so you can begin making money. Your owner did block out 2 hours of her day to train you, which cost her money since she wasn't seeing clients during that time.
My recommendation is you talk to your owner in a calm, non-threatening way and ask her to explain what time will be paid and what time will not be paid so you don't have future misunderstandings. Tell her you would like her to clarify what is paid time versus unpaid time so you can plan your budget accordingly. Good luck in your career!
Hi Cindy,
DeleteLove, love ,love your blog. I have a stylist (40% comm.), if the assistant mixes and applies the touch-up to her client(color and go) and she has no contact with her client that day, does the stylist get that comm? Also, we have a couple of clients (that are very well off) that have stopped tipping,I don't feel I should ask them why, It would be rude, but the girls are upset about it. What do you do? I also would like to know what you think about the fact that my salon has stayed a $2000 a week salon for 6 years we gain and loose clients like everyone else, sent out 'WE MISS YOU DISCOUNT POSTCARDS'.
, I don't get it ,but we do hold our own. Also, what do you think about groupon., , From my experience, they look for the next salon with a coupon , or do you think it's worth the small chance of keeping one or two client's. Some salons are selling 2,3,400 of these discounted offers, do I inundate my stylist with this discount? I look forward to hearing from you!
Hi. I'm going to work through your questions one at a time and see if I can come up with anything useful.
Delete1) The assistant performs the entire service - who gets commission? I'm assuming the assistant is getting paid hourly and the stylist is busy working on another commission-based service at the same time. A full commission doesn't really seem fair, given that the stylist is not performing any of the service (although it is probably the stylist's color formulation being used). What about a reduced rate? Maybe a flat fee or reduced commission to the stylist? The stylist won't like it, because they'd rather double dip and get paid twice, but they are not performing the work. The danger is that you could get into a situation where a stylist is trying to schedule all her touch-up color at a time when she can do the work herself so she doesn't miss out on commission. That would mean the client is working around her schedule instead of visa versa, so watch out for that.
2) Well to do clients who quit tipping sounds like a red flag to me. They are still coming in, but they are displeased with something because they no longer feel the experience deserves anything extra. Take a close look at the experience you are providing your guests...everything from appointment booking to checkout and look for areas you may have dropped off in. Also, don't be afraid to ask the clients "What could we do differently that would make your time with us more enjoyable?" This doesn't directly address the tipping issue but gives them an opportunity to tell you what's up.
Reply Contined in next Post...
Reply continued from above...
Delete3) No revenue growth for six years is frustrating. Admittedly, the past six years have been tough ones, but I think you should address this and get your gross sales up. Since you send out "miss you" postcards, you know who is not returning. There are some key numbers we want to know. How many new clients are you seeing each month? Do you know your New Client Retention %? If you are computerized, your software will do this, otherwise you need to spend some time calculating it manually. Here's how you calculate it: Choose a month from earlier in the year (it's October now, so I would use June). Make a list of every client whose first visit to your salon was in June. Then look forward through July, August and September and see how many of those guests had a second visit within 3 months. New Guests that Returned divided by Total New Guests will give you your rate. National average is in the 30's...our goal is 60%.
Once you know your new client count and your new client retention you can start to figure out why you're not growing. A low new client count means we need to get more bodies through the door. A low new client retention ratevmeans we need to fix things inside before we even worry about getting new clients because we are running them off. Your software will also calculate Repeat Client Retention. If it's lower than 85% you will have difficulty growing. Again, it goes back to looking at the experience you are providing the guest.
4) Groupon. We did one back when they were new. I would not do another. You will get bargain shoppers who will be hard to retain. You and your stylists will be doing services for next to nothing, and these bargain shoppers will get in the way of you taking care of your regular full-pay clients. Instead, I would make sure you have a good referral program in place. We just changed ours and we now pass out New Client Gift Cards to our existing clients. They give them to any of their friends and associates that are not clients and they think would enjoy our salon. The gift card gives the new guest $15 off. When the card is redeemed, we mail the referring client a Thank You gift card for $15. When doing a referral offer make sure the reward for the new guest and the referring guest is equal.
In summary, your lack of growth could be caused by a lot of different things, but since you mention that some well-off clients have quit tipping, it really makes me think your salon is not providing a top knotch experience. This will keep them from tipping, keep them from referring others, and make them much more likely to look elsewhere. I would have a team meeting and, as a group, describe what the Ideal Guest Experience should be. Write all the ideas down on flip chart paper and talk about what you already do well, and what you can do better. I guarantee there will be at least a few things you can change immediately that will improve your guest experience.
Good luck and please update us!
Cindy, when doing the New Client Gift Cards is the salon eating the $30 or is that subtracted from the stylist end?
DeleteThanks! Kelly
Hi Kelly. All our technicians are paid hourly since we are a Team-Based Pay salon so their is no "stylist end." The stylists make their normal hourly rate plus gratuity, and any promotions that we offer are the salon's responsibility (this is one area where team-based pay makes things sooo much easier!).
DeleteIn a commission situation you need to decide how to handle it. I believe the stylists should share at least a portion of the cost because the salon is spending money to bring clients into their chair.
I'd love to hear how other salons handle this. Anyone want to share?
HI cindy,
ReplyDeleteSo glad I found your blog! I have a question about when to allow your staff to do their family and how much to charge them . Tying them up during business hours is hard, but if they work full timeI I Iet them, but take them off the clock, but what to charge is a dilema. Also, I was wondering how often you raise your prices? I raised them about a year ago (after not increasing for 2 years) , but only 5-6%. Our pricing is competitive with other high end salons in our area,but still slightly less, what do you think about being the same as the highest in the area or should I not be afraid to be slightly higher maybe this could be the phycological edge we need. We are a very talented staff and well educated constantly. That's it for now, look forward to hearing from you.
You've got a lot of options on how to deal with family. The key is to decide, communicate it clearly, and enforce it consistently. You might want to discuss it at a staff meeting and let the team decide what makes sense. This will only work if they have an understanding of the business side of things (ie. it's important for the salon to have paying clients in order to make money).
DeleteOne option is to tell each stylist they can have 2 VIP clients that they can do during working hours and only charge a supply fee (on or off clock? you decide). We let our team choose 2 people at the beginning of the year for VIP status. Other family members (define...immediate family only? cousins, aunts, uncles?) can get a discount. We offer a bigger discount on Mon, Tue, Wed and a smaller one on Thu, Fri, Sat.
Of course you want your stylists family members coming in because they become walking advertisements and can refer new guests to you. So work with your team to find a system that makes sense for everyone
As for prices...we haven't had a price increase in a while. Some owners swear by raising prices a little bit every year (October is a good time because you get the higher price on the holiday rush). Others do it less frequently. Personally, I feel like our prices are at the high end of what our market will bear so we have held steady for a while, but honestly, that's probably not a great business decision. We should probably be increasing at least a bit each year. Small increases aren't noticed as much and you avoid a big "catch up" increase down the line that really gets noticed. Also, the consultants we have worked with have told us not to announce a price increase in advance. The plumber doesn't announce an increaes 60 days in advance. Nor does the grocery, the gas station, the doctor, or pretty much anyone else. Don't give people a reason to complain...just do it. Our last increase was a tiny $1 on our lowest level cut (4%). It was only mentioned by a few people out of a several hundred.
What is a fair commission rate for a nail tech? She purchases her own supplies that she uses directly on clients and the salon owner purchases all of the furniture and provides other supplies which are used throughout salon, such as towels, paper products, cleaning supplies and beverages served to clients.
ReplyDeleteIt varies by your location, but a general rule would be that want the salon's gross margin (Sales minus costs directly associated with the service) to be 50-55%. Since she is paying for many of her supplies, you need to make sure that after you pay commission, payroll taxes and towels, etc. (not overhead expenses like front desk, utilities, insurance) you have 50-55% of the revenue left. Sounds like the supplies you are providing are minimal so the commission may be close to 50%.
DeleteHi Cindy,
ReplyDeleteWith a new hire (Stylist, without following,new to this state), what should she be doing to promote herself? How long do I give her to have nobody coming in for her? Should I be building her? Also she was late (10 min.) on her 2nd day of work. She will be given a warning of ,if you are late you will be sent home. She is salaried, a stain for me right now ,but I need to have another stylist as my only other one will be moving out of state in a few months. I think she needs to prove she can also promote herself before just haning over the other stylists following of about 275 clients, I think it goes to her character and how much of a go getter she is. thank you so much, waiting to hear.
Late on second day is a big red flag as far as I'm concerned. I would think you would get your best behavior in the first 2 weeks. When we have had people that started out that way, it didn't work out.
DeleteHow or whether you have a new stylist promote herself is up to the salon. At our salons we want a culture of OUR salon clients, not MY client, so we do the marketing at the salon level and we bring in the new clients. Other salons do expect the new stylists to hit the pavement and show that they have the work ethic to build their business. Neither way is wrong.
I know one owner who will not give new stylists any non-requests until they fill a day behind the chair. He puts them on the floor one day a week (assisting on other days) and expects them to book it. It works for him. I understand your reluctance to hand her a full book before she proves herself.
Looks like you've got a little time to figure out if she's a good fit before the other stylist moves.
You might want to start with an honest sit-down talk and tell her your concerns. Give her a chance to step up, but if she doesn't, cut your losses and find someone else.
I was wondering what do you do when the employees get their hair done? Do you charge them for the product used ? Right now, I don't charge them anything because there is only 3 of them, but it can get a little pricey with color, foils... Am I looking too chincey? The only thing I do is take them off the clock????????
ReplyDeletecindy?
ReplyDeletewhat do you do with your employees getting thier hair done? Do you charge for the product, take them off the clock? Right now I just take them off the clock, because we are only 3. But it can be costly to me. with t/u, hi-lites,...Also what kind of "discount do you give family members"? And also should I take the chance and be = to or slightely higher in price as my competative salon?
ReplyDeleteWe don't charge for backbar and supplies like foils, but everyone needs to provide their own color. We want the employee receiving the service to come in on their day off and we will bump them for a paying client. We allow each team member 2 VIPs that get haircuts for free. Immediate family can also get 50% off Mon-Wed and 25% off Thu-Sat. We prefer that family be scheduled at off-peak times.
ReplyDeleteThanks for the great service provided through this blog. I am not affiliated with hair salon business yet, however, evaluating opening a new one as an entrepreneur. Could you please tell what is the population base that could justify taking the risk of opening a new store. Specifically, I am looking at a new suburban town which does not have any hair salon and the residents travel about 10 minutes to next town which has such services established. The current population is estimated to be about six to seven thousand and may slowly grow. What could be the inherent risks to consider before venturing in ? Also, I am considering non-franchise to be able to offer a slightly wider range of service beyond basic cuts. Is it too ambitious for a newbie to think beyond basic cuts to start with as well as thinking non-franchise ?
ReplyDeleteI have read through your complete blog and took valuable notes. I hope to formulate these in concise questions and look for continued guidance from you.
Thanks so much.
-Anthony
I'll give you some food for thought but you'll have to decide for yourself whether you can make a go of it in your town.
DeleteMen get their haircut about every 4 weeks. Women go longer in between...may be 6, 8 or even longer between cuts. More frequent if they have color that needs to be maintained.
Because you will only see each guest once a month or less on average you need a large volume of clients to keep the chairs full. A full-time stylist needs about 250 regular clients.
As a non-technician (as I am) you have have some obstacles that hairdressers don't. Primarily, you've got no business credibility with the staff. You may get push-back when you get into conversations about product or color lines, service times, etc. You also aren't qualified to evaluate candidates from a technical standpoint so you need to rely on an experienced stylist to do technical interviews. Also, since you are not generating revenue yourself, you desperately need your team...if they go you literally have no business. It's not like a retail store where you can just step behind the counter if you lose an employee. Finally, even if you open a superior salon with incredible talent, there's no guarantee that people will quit seeing their stylist in the next town. People develop a relationship with their stylist and tend to be very loyal.
In a town of just 7,000 people, I think you would need a very small shop...2 or 3 chairs. Honestly, with such low volume I'm not sure it could be profitable enough to be worth the trouble and risk. My answer may be different for a stylist because they earn money from both the services they provide and the salon profits, but as a non-technical owner you need to get enough from profits alone.
One last point...a salon does not run itself. If you are thinking that you will be an absentee owner, I would definitely advise against it. Like all businesses, a salon requires a lot of attention and so do its team members. I hope this helps and I'm glad you found the blog useful. Keep us posted.
Thanks for your insight Cindy.
DeleteThis helps a lot in putting things in correct perspective. I knew the business had to be built around an experienced stylist, however, was not sure how to evaluate the required customer base numbers. Your guidance not only helped with the tangible numbers, but it helped me learn the intangibles that are specific to this particular business domain.
I will reevaluate the plans. And thanks again for providing such a valuable service for so many people.
-Anthony.
I own a salon with a business partner. Our commission structure is 50, 55, 60, 65. with most stylist on 55-60 and a 10% service fee off the top. We are loosing money and barley breaking even. We offer the best products on the market, health insurance, paid week vacation, and option to participate in a matching IRA. We are looking to restructure our commission but need some ideas on what will work and on what to do when letting employees know the structure has changed with out loosing them. Its hard to get employees to understand the back end of what goes into owning a business. We want to maintain a great place to work but also want to be profitable as salon owners.
ReplyDeleteYou don't mention whether owners are behind the chair or not. You are not alone in your situation. Many salons only break even because the owner is also a service provider. It's easy to see why you are not profitable. Paying that level of commission (even with the 10% off the top) does not allow you to pay the benefits you are offering. Your team should be very grateful to have such generous benefits and should want you to be profitable. To help them understand where the salon stands financially, I recommend the penny exercise.
DeleteI describe the exercise in this post:
http://salon-owners.blogspot.com/2013/04/open-book-management.html
(if the link doesn't work, use the search bar and search on "penny")
This will help them see what you're dealing with. Then you can introduce your solution. To determine your solution, you need to run some different scenarios. You may want to consider Team Based Pay (see Strategies white paper on TBP here
http://www.strategies.com/team-based-pay
If you want to stay commission-based, re-run your financials using different assumptions. I'm sure you will want to try to revise your commisssion without it being a big take-away so you may want to incorporate a price increase at the same time that takes the sting out of it.
Another option is to cut benefits (although I still think your pay structure must change). You could drop the health insurance and let people purchase on the exchange (unless you have over 50 employees).
To help figure out what needs to change, look at your Profit and Loss Statement with a % of revenue column. Look specifically at you technician labor as a % of sales. This number should be no higher than the mid 40's. If you want me to look at this with you, complete the contact form and we can discuss your specific situation privately.
As a fellow salon owner, I fully appreciate what you are trying to do...you are rewarding your team well, with generous pay and benefits that are rare in our industry. But you can't do this at the expense of the financial health of the salon and your own personal finances. Your team should understand this and be willing to change things for everyone's future benefit.
If you do not already share monthly financial information with your team, you may want to consider adopting open book management. My team knows our numbers. They know what our sales are and they know how much cash flow we had at the end of the month - it really is a shocker for them at first when they realize what razor thin margins you operate on. Sharing the numbers helps them understand what you are doing and helps them take some ownership. They can start to see how their individual actions can help the salon succeed.
I'm glad you are actively looking for a solution to this problem because it will not go away and it is putting your business at risk. The good news is there is a solution and your business can thrive. It's tough to face the team and lay it all out, but you will be glad you did.
Thanks so much.
ReplyDeleteHello, I really enjoy reading your blog and I need advice. I'm a stylist of 7 years I have been at my current salon for 3.5 years. Only changing from my first salon due to my husbands relocation. The salon owner very much believes in a team effort salon and I would like to say I do to but here is my concern. I came to the salon fully trained and ready to build. I have consistently reached my goals and added $25,000 in sales consistently every year with my goal this year of $100,000 in service sales and $20i,000 in retail. I am paid a commission of 45% with 10% product fee taken out. I stay my full scheduled hours reguardless if I'm booked or not, help with email marketing, Facebook marketing, front desk duties, cleaning, opening and closing & training of new staff. I do not receive any further compensation after my commission but continually go above and beyond ... It's getting frustrating and I'm loosing faith in the "team approach" with all the extra effort without compensation (3 years of it). When I say these things to my owner she thinks that I think it's all about "me" and I'm not a team player....
ReplyDeleteHi Cindy,
ReplyDeleteI came across your blog looking for help with how salon owners pay out employees tips. I am hoping you can help me and give me some insight on how you handle paying your employees their tips.
Do you give it to them at the end of their shift, or do you keep track of it for them and include it in their pay check? Also, do you take off any percentage for tips that were given by credit card or just absorb it as a business expense?
I look forward to seeing how you handle this!
We used to pay out credit card tips at the end of the shift, in cash. We stopped doing that for a couple of reasons. For one thing, it backed things up at the front desk when someone's shift ended. Clients are checking in and out while you've got a departing technician waiting for their tip money. It was disruptive and unprofessional. It also became a problem having enough cash on hand to pay out the tips. Most of our sales are credit card sales and we only keep $300 in the cash drawer. There were days when we really couldn't spare the cash from the drawer to pay out the tips.
DeleteOver time, we switched everyone to getting their tips on their check. We didn't make it mandatory for a long time (which was a hassle for me and the front desk, but we decided it wasn't important enough to raise a stink over). We had a couple of individuals request their tips on their check and we made it mandatory for new hires. Over time, the hold-outs voluntarily joined in. When I was down to one or two taking tips daily, I gave them ample warning and switched them too. Since the employees were not used to waiting for that money we did ease the pain of the switch by paying a portion of tips out in cash on their transition pay period so they wouldn't run short. Only a couple of people needed that.
We don't deduct for credit card fees -- I consider it a cost of doing business. Some salon owners do, which is fine, but my experience has been that technicians see this as very "cheap" so it should be accompanied with a thorough explanation so they understand you are just recouping your actual cost. For salon owners that are saddled with a heavy commission structure (50% or more to technician) you may be forced to do this because your labor cost is too high to enable you to "eat" a cost that is directly tied to the tip income.
Thank you, Cindy! Your experience is exactly what I have been running in to and I have thought that it was time to convert everyone to getting their tips on their paychecks. I appreciate seeing how you handle similar situations!
DeleteHi Cindy!
ReplyDeleteI am so happy that I came across your blog and have spent many nights reading all of the great questions and your insightful answers. Thank you for being so willing to share your experience and expertise with so many people. It is rare for a business owner to be so willing to do this.
I am at a crossroads in my life and am looking at possibly embarking on a change of career, namely the beauty field. I have no experience in this and realize, that if my ultimate desire is to have my own side business (working for myself) or later try more lofty goals of opening my own salon, I first must learn more about what I am getting myself into. One approach is to do something on my own on the side, and to attend beauty school, acquire my license and start small this way. Another thought is to team up with someone who already has years of training, knowledge and experience and partner with them to open a salon. I have 10 years of business and management experience, and though I do not work for a salon (I work with a preschool), I feel that many of my skills could transfer over. I have 2 specific questions.
1. Do you think the eyelash extension trend we are currently seeing, is a bubble that will burst or has long term value? I am considering putting all my eggs in one basket, getting my aethestician license, becoming lash certified, and then acquiring my own clientele while keeping my day job. Side note: in SF, there is an amazing lash/makeup salon (lashfully.com) that would be my dream salon to figure out how to own something like this someday...! Sometimes I wonder if it works because it is in SF.
2. Do you think owning a salon that offers childcare has any merit? As a mom of 2 young ones, it is an intriguing idea for me to think I could go get a beauty treatment done and have the convenience of my children being taken care of (beauty and childcare wrapped into one) not needing to wait for husband or babysitter... (thus the idea of blending my childcare background and partnering with someone with salon background and experience). Side note: I have only come across one salon that offers this service in the Bay Area. Not sure if this is a good thing or bad thing...
Any thoughts from you are greatly appreciated! Thank you for taking the time to read this! I look forward to your response. :)
I have been in the beauty industry for 22 years, prior to that I was playing in hair since I could reach and twirl my hands in peoples hair (as my mom said) I cut my bangs at 4 years old, and played makeup and makeovers as a favorite pass time circa 1980. My point...many of us did not choose, the life of cosmetology, as well as doctors, singers, etc. Opening a salon, or Makeup bar, etc, sounds lucrative and exciting, but believe me in the 20+ years in the business, I have seen salons fail because owners/management did not "get it" lacking passion, knowledge or training. We have a whole different culture in the beauty industry, it looks like fun on outside, you have to love what you do, and make money from it. Sounds to me that you have are more intrigued with the idea, of Lash salon
Delete(which is a trend that will die off, it causes lashes natural lashes to permanently fall out over time) so that is a short term investment. Sounds to me that you have experience in business, and with children, maybe you should consider opening a daycare, and going to a salon as a getaway, from all those little noisemakers! ;)
Thanks for your kind words. I'm glad you've found the blog helpful. I agree that skills gained outside the beauty industry transfer over - that's what I did. A big part of our industry is people skills and a desire to nurture people (team members and clients). Coming from the world of daycare you probably have all that covered. Don't skimp on the business skills though!
ReplyDeleteHonestly, I have no idea what tomorrow's trends will be and whether lash extensions will stay in favor. Fortunately, an aesthetician can do a lot more than lash extensions so as fashion changes, you can change with them.
The childcare within a salon is an interesting idea. I don't know if it would be a hit or not. From a business standpoint you probably have licensing issues to deal with for the childcare part. Plus you are dedicating square footage to the service so you need to make sure it pays for itself (would the space be more profitable as a treatment room or additional styling chairs)? You may just need to do some market research to see if there is a need/desire for this. For many women the salon is an escape from childcare responsibilities so they may prefer to leave them at home.
Here's a variation on one of your scenarios that you laid out above...you could get your aesthetics license (or not), and rather than open a salon with a stylist, find a salon owned by a technician who is tired of trying to do it all while being behind the chair. A lot of salon owners are technicians who either aren't really cut out to be business owners, or who hate that part of salon ownership. You may be able to partner with an existing salon owner by taking on management while they focus on technical aspects of the business.
Good luck!
I
Thank you for your feedback and detailed answer! I really appreciate the food for thought. I am going to dedicate this year to deciding what is the best option to take or not. I have much to consider and as exciting as it is to think about starting an entirely new career, it is also scary. I will enjoy continuing to read your blog. :)
ReplyDeleteHi Cindy,
ReplyDeleteI have read your blog it is really helpful and I am really like it, I can imagine how much stresses can get off the shoulder when a salon owner decided to switch commission pay to salary pay.
- How can we convince our seniors stylists switch their commission to salary?
- if they are not agreed with the change what should we do?
- Also do you offer benefits like vacation, sickly, healthcare....etc for salary pay?
Thank you so much and hope to hear from you soon.
As the salon owner it is your choice how you compensate your team. It is, of course, their choice to stay or to go. So you don't actually "convince them" to switch. You switch and try to convince them that it is better and they should stay. When we switched, we lost 2 very busy stylists after 3 months, plus a busy massage therapist. One year later we lost another busy stylist. Honestly, though, they were the kind of people who could not see the benefit of working as a team. They were "me, me, me" people who put their own well-being above the salon and above the client. We are a better place without them. BUT it did hurt to lose those sales.
ReplyDeleteTo do a pay conversion you really need to have the trust of your team (I didn't really have it at that time, but I do now). How successful a conversion is depends on your leadership and your relationship with the team. It's not something to be done without careful consideration.
And honestly, it's not necessarily a huge relief to switch. When you pay commission if sales are down your payroll is down. With hourly, you are paying them no matter what. That's why it's important that you don't just change how you pay them, you change how everyone thinks. The common goal has to be that we will together grow sales and make the salon more financially successful so we are all more financially successful and secure. Changing the pay without changing the culture will do no good.
As for how to convince them it's a good thing...technicians need to understand that as a commissioned stylist their earnings are limited by what THEY can PERSONALLY do. If they are working at capacity, they really can't earn any more without a price increase, and the market may not bear one. When you are team-based, as long as the salon is growing, wages can grow. There is no cap. And it takes some of the pressure off because instead of competing with the other stylists for clients you are now working together to keep every client happy. There's more security for stylists who take time off for a baby, illness or injury. Basically, the team has your back. And as an owner you can reward the WHOLE person. They don't get paid on a single factor ($ in the chair). They get paid on their performance as a whole and what they contribute to the success of the salon. Team based pay does not have any room for prima donas who don't sweep or are rude to people. People like that do not get rewarded like they do in a commission salon.
To answer your last question - the benefits offered will vary by salon but need to be affordable to the business. We offer paid vacation/sick pay, training and disability insurance. We don't offer health insurance, but thanks to the Affordable Care Act it is now available to everyone!
I'm glad you enjoy the blog!
Cindy
Hi Cindy! I have been running my own one woman nail salon for the last 6 years. I have been very successful. I am booked out months in advance and have to turn away clients all the time. I have decided to expand and hire other nail technicians. I have 2 women joining me in the next couple of months. I am waiting for them to finish school. I plan on investing lots of time training them and getting them to work in a team concept. I want to use Team Based Pay but I am not quite sure how to implement it because I have no numbers to base their pay off of. I have read the white paper from strategies and I get the concept but I am stuck on the actual implementation. If you point point me in the right direction I would really appreciate it. Just a little background about our area...small town of about 10,000. Huge summer resort area and winter ski resort. I charge $40 for pedis, $40 for gels fills, mani $25 and shellac manis are $35. Any help you could offer would be so great! Thanks so much! Heather
ReplyDeleteWe are on the same boat i get the concept but when it comes to implementation i get all confuse..
DeleteWhat's up, always i used to check web site posts here in the early hours in the dawn, as i like to find out more and more.
ReplyDeleteHere is my homepage ... raw food diet
I am looking to start a blow-dry bar + brow bar in the Burlington area. As I am still doing my research I have a couple of questions:
ReplyDelete1) how do you charge eyelash extension stylists if you provide the training fee + supplies?
2) I am thinking to pay blow-dry stylists at an hourly wage of $12 + commission on retail sales + tips: is this a good plan? I would need about 30 blowouts/day to make it profitable.
3) Do I need some sort of license if I were to do the eyelash extensions? I wanted to do the Xtreme Lashes training in Toronto and work from the salon as an owner/employee.
4) Any other licenses needed for owning such a salon?
Thank You So Much!
It is a nice information. It is also important to review the support services offered by a payroll provider. Often they can also assist you with benefits management and human resource-related activities.
ReplyDeleteRegard
Hello Cindy, I am a boutique owner but I also offer other services. You have great insight I was wondering if I could get some advice. I do offer other beauty services for example a guest for the day and a ladies night out where I have guest beauticians come in and do quick expressions ect... But I am looking into having a makeup artist permanently located at my boutique. I'm just wondering how should they be compensated. Being that they would be located here permanently should booth rent be required? Should I go the commission route or should I pay hourly? Your advice and blog helps out so much. Thank you.
ReplyDeleteHello Cindy, I have a salon business and I rent booths to stylists and nail techs. One of my nail techs wants to get a recent nail tech graduate that she knows, come on board as her assistant. She plans on paying her a small commission. Should I charge an additional booth rent to my nail tech and if so, should I charge my normal rate or a fraction of the booth rent? Thank you
ReplyDeleteHello Cindy, I am a salon owner, I have a few payroll questions, I have two new stylist starting next month that have great books, we have agreed to a 55%-them 45% salon split with them adding the cost of extra color or product that would be used during the customer's service so that the salon doesn't lose money out of the 45%. We do not sell a lot of retail product so that is not an issue. But here's the complication that I need advice on, they would like $200 on the payroll, and the rest of their commission in cash, for example: say they do $1000 for the week, $550 for them, $450 to the salon, $200 of their $550 would be on the payroll, and any taxes the salon has to match, say $30 would be taken out of their remaining $350, so they would receive $320 in cash. My question is the salon responsible for reporting their cash and issue a 1099, and is this legal? Would the salon be responsible for the taxes on the cash portion. Or is that up to them to report their cash side of their commission? I really don't know how some salon's pay their stylist like this because it sounds like they don't want to report the cash side of their commission, and I don't want to do anything illegal. Thank you
ReplyDeleteTHAT SOUNDS SO ILLEGAL!! It is illegal to 1) Charge them for product use, taking out of commission, that is what commission is for, you should have just done a 50/50 split. Second, IRS takes tracks all money, even when you think you are hiding, If you agree with paying them cash and only documenting 200 on check, you can be fined by government and also shut down by State Board. It sounds like your stylist are unaware of the law, or just do not care about you getting into trouble. :/
DeleteHello I am a small spa owner where I am the esthetician and have a massage therapist who rents from me. We have worked together for about 4 years now. She is wanting to slow down a practice and have a someone work for her under commission. I am a little confused on what I should do with this situation. She pays rent, so I am thinking I need to charge her more. So if you have some suggestions please help me out! I want this to work for both of us.
ReplyDeleteSorry I didnt proof read :S
DeleteSince she is booth renting, you are her landlord. You should charge an appropriate amount of rent for the space she is leasing. Her ability to make more money out of that space doesn't mean she owes you more money unless your lease agreement states that.
ReplyDeleteIf you don't have a written agreement you should formalize the arrangement and put it in writing. This is for both your protection.
I'm not sure why you think you are due more rent just because she is succeeding in growing her practice. If times were slow and her sales were down would you lower her rent? As a renter she has taken on the risk of loss - she owes you rent whether she is busy or not. It seems like you want to have your cake and eat it too. You want her to have the risk of loss - you get rent whether she is busy or not - but also want more rent if she does well.
If you want to make more money when service providers are busier, perhaps you should be hiring employees and paying commission or hourly wages. More risk, more reward.
The flip side of that argument is that her current rent amount was based (presumably) on the room being in use a certain number of hours per week. If her having an employee means the room is now in use more hours, you arguably have a reason to increase the rent. As landlord your operating costs are going to be somewhat affected by the room being in use more hours. I think this is a pretty weak argument, but you may be able to use it to justify a small increase in rent.
I am curious what rights a salon owner has when a booth renter continuously bad mouths you and other stylists, complains about everything and slams things around the salon when she does not get her way. The stylist has started to be extremely disruptive to the work environment, and has started to gain more and more attention from clients (not in a good way). What are my rights?
ReplyDeleteIf you think you can salvage the relationship you can talk to the person one on one. Tell them based on thier comments and complaints they seem unhappy with the arrangement. Try to have an open dialog. I think ultimately you need to get rid of this renter. If you have a written booth rental contract, check it to see what your rights are. Without a written agreement, you probably have a lot of options. I would consider notifying them in writing that you are terminating their rental agreement effective on (date). I wouldn't give any more than 2 weeks notice. You want this toxic person out of your salon as soon as possible.
DeleteIn the future, always have a written agreement.
There is not a written contract.
ReplyDeleteHi Cindy,
ReplyDeleteI am looking into opening a hair salon and am astounded to see that most salons pay a 50% commission. I own another small business, a local bar, and there is no way there would be any money left over for me, after paying all the bills, if I started out by paying out 50% of the gross. No matter how much money the salon makes, that percentage is much too high to survive. I would rather see a hair salon pay it's employees a salary, plus commission possibly, instead of a 50-50 split. But if all stylists are accustomed to earning 50% commission, how do you hire and retain stylists that feel like they are getting a bad deal? Thanks for your help! -Rob Ryan RobRyan321@yahoo.com
Hey Rob,
ReplyDeleteI can tell from your question you have a head for business. You're right...it's crazy. What you have to realize is salons that are paying 50% usually are owned by someone who is behind the chair. Most salons just barely break even (if that) and wouldn't if the owner wasn't also a service provider.
A lot of salons that pay 50% institute "service charges" that come off the top before the commission split. It's to cover supply cost etc. So they may take $3 off the top for every haircut and $5 for every color service. The end result is the effective commission rate is lowered below 50% and the P&L becomes manageable. It's just a shell game but since no one wants to work for 43%, they do 50% with a service charge.
An alternative to all that is what we've done, which is Team Based Pay. It includes hourly pay for everyone, but really, TBP is more than a pay structure. It's a way of thinking. Go to Strategies.com and download their white paper on TBP. Also, consider attending their incubator seminar before you open a salon, especially since it sounds like you are new the the biz.
Hiring is more difficult than retaining. Once your culture is in place and team members see the power and advantages of TBP they don't want to leave. But it is a tough sell because the schools really talk up this whole "build your book then take it anywhere and set your own hours" bit. It's just not that simple and it gives young stylists unrealistic expectations. It comes down to you as a leader being able to sell your vision. That working together we can build a business that will allow everyone to grow and earn more (remember with commission they are limited to earning what they can personally produce...with TBP everyone benefits from salon success so their earnings are not capped).
One thing I do when hiring experienced stylists (who are on commission, or a sliding scale of some sort) is have them bring in their recent pay stubs. I use those to convert their pay to an hourly rate. I use that as a guideline in setting their rate. A lot of times people think they are making $13/hr and it calculates out to $10.50 or so. So we can actually be very competitive and offer them a lot of upside on their compensation.
You can also try to hire people who want a step up from a chain salon. Great Clips, Fantastic Sams, Supercuts, from what we have seen, have very low pay rates and they have some good people. They will require some additional training and polishing so you will need someone who can do training and manage the team.
I don't have any experience in the bar business, so I don't know how hands-on you need to be with that type of business, but I will warn you that a salon is not something that runs on auto-pilot, so I would not recommend trying to do this on a semi-absentee basis.
I hope this helps a little bit. I really encourage you to check out the Incubator if you are serious about doing this. It will be money well spent.
Hi Cindy,
DeleteThanks for the thorough reply. The way these salons are run from a business perspective is preposterous. I see that the salon owner also cuts hair a couple of days per week. As you said, that is probably the only money they are personally making. Also, you can not effectively run a business while you have a job as a stylist. There is no time for both and you can make better use of your time improving your business. But enough about that.
I have read some on the team based pay vs commission. As an owner, commission not only is expensive, but I have seen how it makes stylists non-employees. They have no care at all for the company's success, only their own bottom line. Then there is the fear of being a business owner who worries the stylist can leave and take their customers with them. This is such backwards thinking. The customer should love the salon, not the individual stylist. This mentality is counter productive.
I understand what you are saying about stylists making their money over many hours of work and realizing the hourly rate. If they continue to make the same money, and feel like they can earn more, then they could be converted to team based pay. I need to understand more about the incentives built into this pay model.
Please send me any links/info on team based pay to my email. I appreciate your time.
thank you,
Rob Ryan
RobRyan321@yahoo.com
I am a salon owner and I need your help on how to motivate my stylist by pay to sell more products and to up sell services. We are a newer salon (going on 3 years) with 6 stylist. I pay my stylist 10hr and they make great tips but I get less than 2% in product sells from them. They see on average about 70 customers a week with a average ticket price of $22.00 working 30-35 hr work week and we are open 7 days a week. I pay all backbar and supplies and always keep the shelves full of stock. Can you please help me on what I can do to increase revenue without losing money?
ReplyDeleteEither way being an owner is frustrating with todays workforce. I have owned a nail salon for many years and even had a full service high end day spa that I sold from the frustration of running it while putting my family on the back burner. I realized my family was more important and now that they are doing good, I dont regret it. Finding good reliable "hungry" staff is always the consistent issue.
ReplyDeleteThe first thing owners need to realize is: are you a good caring customer service provider or a cut throat money maker?
Customer pleasing service providers that go out of their way to please their clients usually make bad bosses. They work better alone to make money. They have a tendency to try to please their employees too. Employees need to be lead, rewarded and reprimanded. Good care givers have a hard time doing this. So they end up caring for their employees "and clients" to get burnt out physically and financially.
Cut throat service providers make money. They put personal feeling issues aside to ensure that employees are doing their jobs or else. They have employees that help their business run. They care about their employees but money always comes first! Sometimes its a manager no one likes but that person ensures the door says "open".
As a woman it is hard to divide 100% of your life between a husband, children plus a career and/or a business. Any woman you meet you can tell where her attention went. Whether she is divorced, has unrully problematic children or a successful or struggling business. Oh yeah forgot to add some percentage for herself for her health. We make our choices and deal with the consequences.
I never saw consistent profit with employees. Offering 40% was the best but they dont last. But even that, a top week for a busy full time nail Tech is $500-800 in a high traffic area. Add $200-400 if your pedis are priced over $40 and manis over $20. If they dont have exhisting clients then it is less for up to a year. They could end up stealing your clients if you leave the shop for any vacations. Many Techs I had steal tools, polish and files or buffers.
So lets go with a $800 week in a busy location with a lot of walkins. Subtract $400 for 50% commission. Subtract $40 for payroll taxes and accounting costs. Subtract $100 for supplies on a Tech that does not waste products or steal and you buy in bulk at a good price. Subtract about $30 for credit card fees on the tips and sales. The tech takes home $400 plus about $120 more in tips=they made about $520. You have about $330 per week to go towards rent, electric, water, cam fees, licenses, taxes, paper and cleaning stuff. Or 0.00 if they take a vacation or less if you pay vacation or have benefits.
If your are not in a busy area and the owner has all the clients it can be about $100-200 per week for new techs for about a year. If your space is designed to separate, booth rental would be better.
Thanks for sharing this perfect information about "bestpayperhead",..This is really a great software provided,..
ReplyDeleteHi! I just found your blog and I love it. You have so much great information here. I have a question- I'm a stylist of almost 10 years, incredibly busy working 10-13 hour days 5 days a week. I rent my station at my current salon. With my work load being as heavy as it is I've asked my owners how they feel about me getting an assistant (there aren't currently any assistants or receptionist in the salon) they're fine with the idea but said she would be my own employee. My question is what is the appropriate pay scale and schedule for an assistant?
ReplyDeleteAn assistant would allow you to be even more productive and the increased sales should more than cover his or her pay. Often assistants seem to start at a fairly low pay rate, but that is a trade-off for the education they receive. Are you willing to coach and train someone or do you just want someone to shampoo and clean, etc.? Give some thought to what you really want this person to do and make sure you are up front with them in the interview process. Also, talk to a competent accountant or bookkeeper and do it legally! Legally they will be an employee...don't try to beat the system and call them a contractor. That is very expensive if the IRS catches up with you. Good luck!
DeleteCindy,
ReplyDeleteJust found your blog, great information. When looking at all the responses, it seems like there is no real great option. Commission, everyone goes broke; chair rental, lack of team motivation; hourly, can get very expense if the cash flow is not there.
I've been thinking of flipping all my stylist to independent contractors, and allowing them to be their own business owners, they can rent a chair on a transactional basis and pay the salon. There will be an additional transactional fee if they want to use products or the backbar. We the salon will keep everything clean and organized for the fee they will be paying. It does two things 1) they are now accountable to growing their business, we can push walk-in or call-in appts to help them grow their business 2) We the salon can make money, they are basically paying us a commission for the use of space, but not tied down to weekly or monthly commitments. We would also be able to pick more great stylists than chairs, because we would be assigning chair to them the day they came in,or they can ask for a preferred chair. ( maybe we charge for that too)
Trying to think outside the box to keep the salon profitable, but also give everyone the flexibility they want.
Would love to hear thoughts.
First let me say I'm sorry that what you got out of this post is so negative. I'm not saying that commission salons can't be successful (but the commission has to be reasonable). And yes, hourly can be expensive if cash flow isn't there, but so can any other expense. Rent can be expensive if you don't have the sales to pay for it.
DeleteBut to answer your question...
For years salon owners have been trying to call stylists independent contractors, but still have some control over them. The gist of it is - if you control their work in any way they are an employee. Setting things up as you suggested is misclassifying employees as contractors. If the IRS questions it, there is no doubt in my mind you will lose and be liable for payment of back employment taxes and penalties. You can't charge them rent based on their sales. That alone would make them an employee. You can't provide their appointments (or front desk support). You can't assign them to a chair daily. Each of those behaviors makes them an employee.
And I'm not sure how this is really any different from any other commission plan except you are reversing the flow of the payments. Instead of the salon collecting 100% of the sale and passing some % to the stylist you have the stylist collection 100% and passing some % on the the salon. Please, please, please don't do this. All it takes is one disgruntled employee/renter to make a phone call to the IRS or your state labor board and you have a huge, expensive mess on your hands.
Well-run commission and hourly salons can be very successful. With booth rental/independent contractors you are a landlord collecting rent.
It sounds like you are torn between a commission model and a booth rent model. If you go with commission, the stylists are employees. Set your commission rates up at a level that lets you afford all the obligations of being an employer. There's no reason why you can't also offer the flexibility you suggested. If you want to hire people who just want to work a couple days a week, go for it, as long as it works for you financially.
If you go with booth rent and want people to be able to rent daily - that's fine too. But make it a daily rate - don't tie it to their sales. If they rent for the day and do zero in sales, you still get rent.
Hello,I am working in a Fort Myers Fl salon. I am a previous business owner in another state which was successful. The owner of the salon has put the fear into her so called employees because she pays us on commission and we pay our own insurance and recieve a 1099 . What has been happening is the head charges and service fees has gotten so outta hand that we are all losing hundreds of dollars monthly. She pays the commissions and than snags out all kinds of charges after the commissions. Leaves us pretty broke at the end of the work week. Also if a credit card is used she keeps 30% or adds it to our services and takes out from that which usually brings our checks between 28% to 34% . This is wrong but how do you approach a nasty salon owner to break down the service fees without being scolded or told to leave after you have been building up to only lose more money each year.thankyou.. Love your articles.
ReplyDeleteYou are working for an unscrupulous owner who is breaking the law. She can't pay commission AND give you a 1099. I don't take throwing someone under the bus lightly, but you need to report this owner to the US Department of Labor and the IRS. Oddly, Florida has no state agency that enforces wage and hour laws so you need to go to the feds. It looks like the nearest office is in Tampa. Here is their info:
DeleteU.S. Department of Labor
ESA Wage & Hour Division
Tampa District Office
Austin Laurel Building
4905 W. Laurel Avenue, Suite 300
Tampa, FL 33607-3838
Phone: (813) 288-1242
Fax: (813) 288-1240
Get as many pay stubs together as you can, along with any backup information for those pay periods (hours worked, sales, fees, etc.). Call the DOL and tell them your salon owner is giving you a 1099 as if you are an independent contractor, but she is paying you based on commission and deducting salon charges from that commission. Believe me, when they tell her to provide detail of the service fees, she will deliver.
Dishonest owners like this hurt the entire industry. They create distrust among employees and owners and make it harder for law-abiding owners to compete. In her defense, my bet is she is barely scraping by. She probably offered you a huge commission that she can't afford so she tries to have it both ways by making you pay your own taxes and hitting you with service charges. But this is no way to do business. Report it.
PLEASE let us know how this turns out.
I have a up scale hair salon in Orlando and pay 50% commission to my stylist. I looking to bring a barber on the team and what to know what commission would be fair to pay him as he would only probably bring in $32 a hair cut...
ReplyDeleteI don't see the reason to have a different scale for barbers unless the product cost provided by the salon is significantly different. If you are saying the barber will have cheaper haircuts, I would ask why are they cheaper? Is the quality lower? If it's the same quality as the stylists, price it like a stylist cut. You really can't afford to go higher than 50% on commission. You are already paying out too much in service provider pay.
DeleteAre employees on commission splits still responsible to bring in their own product/supplies or does the salon provide?
ReplyDeleteThat varies with the salon. If you are providing your own supplies you should get a larger commission than if the salon provides.
DeleteGood article. I like the article and post. Thanks for sharing this post.
ReplyDeletebusiness for sale by owner
Hi There, I currently own an all Organic Color Salon in Portland Oregon. I order my color from a U.K. company so i can not drive down to the local supplier and buy it. I would like to set up a booth rental at my salon. I have a 2 person salon that I share with my biz partner who is near retirement; so i would like to bring on someone to take some of my clients and have them have their own. Problem is my salon is all Organic color and the stylist would have to be comfortable using our product line. I can't have any other line in our salon. So i dont know how to go about advertising and or hiring with a glitch like that.
ReplyDeleteI would charge a booth rental fee for pt or ft but i would also need them to help pay the cost for ordering and using our color line. We have won awards with this color line and have very happy and healthy clients I can't switch for my own health and my clients. I have done the research and this is the best option we have.
Please any advice on how to have a booth renter who also would LOVE TO BE PART OF OUR FAMILY here using healthy color.
Thanks in advance...confused but healthy in Portland
Hi.Cindy I am currently a barbershop & salon owner and charge by booth rental.I am looking to franchise out my companies name and trying to convert my future facilities to hybrids half booth rental half commission.I have worked in a barbershop and only know booth rental I want to better understand the concept of commission and the equipment I may need to have a successful store.I have noticed over the years the more talented barbers prefer booth rental obviously because it's more pay for them.and the less talented barbers would be will to take the opportunity but wouldn't do well enough to continue to draw customers back in.non the less I want to produce more income through my store an i assume commission is the way.I have a big lease contract ready to be signed so need to get it together quick.help.
ReplyDeleteHi Dan here. I am trying to understand this business as my daughter in love newly licenced has recently started to work in a salon as a nail tech. She has a commission split with the owner and appears to be a commission employee but receives a 1099 not a w2. She would like to take tuesday's off (turns out she has never done any work on a tuesday) but the owner says no ... just in case a walk-in shows up. I'll mention she is working with out an employee handbook or contractor agreement. Seems if she is a 1099 she should be able to take the Tuesday but if she was receiving a w2 she would have to stay. Thoughts??? any help would be appreciated. Dan
ReplyDeleteCindy ... tx ... I see you answered this question on February 10, 2016. Commission employees are employees and thus receive a w2. The fact that my dinl is receiving a 1099 puts her in the contractor catagoy. However the shop owner treats her as if she was an employee... preforming basic shop maintenance functions of clean-up of stations she has not used, answering telephones, making apts for other shop employees, running errands (uncompensated for gas and time) such as picking up shop materials and most importantly the owner acts as her direct supervisor setting a very rigorous work schedule greater than 40hrs/week. Seems like it is time for a change... tx again ... Dan
DeleteDan,
DeleteYou are right. This is so common in this industry but totally inappropriate and illegal. What city/state is your daughter working in? She may want to seek out an employee-based salon. Owners have a very hard time finding good, reliable nail techs. I can put word out on a FB owner's group and see if anyone knows of a good place in your city.
She can report the owner to your state workforce commission or dept of labor, but it will certainly end her career at that salon so she will still need a new home. Good luck. She's lucky she has you looking out for her.
Hi Cindy!
ReplyDeleteThank you for providing a great resource for our industry. I have a question regarding backbar, I have seen in previous post that B.B. charges are a way of business and that you no longer offer commission at your salon, I understand that taking off 10% of the a stylist total service is normal to account for back bar, however, my salon owner charges a different price per service, I do not know how she factors it but for example:
Single color cost $54 with a back bar of $7.25
The client pays $54 the BB is not factored into the clients service total.
I pay the owner 50% commission on the $54 service and an additional $7.25 which makes my take home about $23. ($54-$7.25 = 46.75 / 50% = my take home before tips and taxes)
I have never experienced this in other salons and something about it doesn’t feel right, is it just me?
Thanks you for your time and energy!
From the wording of your question it sounds like you are paying the owner commission, not the other way around. Normally with backbar charges it works like this:
Delete$54 service - $7.25 BB charge = $46.75
$46.75 * 50% commission = $23.38
The salon owner collects the $54 and pays you the $23.38. They are paying you, not you paying them.
So if that's what's actually happening (Salon collects $54, pays you $23.38) then part of the problem is your mindset--you feel like YOU are paying the salon part of YOUR service revenue. And in a commission salon that is not at all what is happening. The $54 belongs to the salon and the $23.38 is your compensation.
The way that is structured is very common. I'm not aware of it being illegal, but I've heard some people claim it is illegal practice in some states. The logic behind it is simple--a salon can't succeed paying out a 50% commission. So by adding in this backbar charge, they have effectively paid a 43% commission ($23.38 / $54 = 43%), which is more realistic from a business perspective. So why don't they just pay 43% and have no backbar charges? Because then you wouldn't take the job if they offered 43% commission.
As for where she came up with the $7.25 amount, she probably just estimated the cost of color based on what the salon pays for a tube of color. We all know color is expensive so she is trying to get that covered before splitting the rest of the sale with you 50/50. Using 10% ($5.40) would not cover the cost of color in a service so she went with $7.25.
Personally I don't see anything "wrong" with doing it this way as long as everyone understands what the charges are and are comfortable their pay is being calculated properly. But wouldn't it just be easier to pay 43% commission?
Hello,
ReplyDeleteI am looking forward to starting my own salon which I want to specialize in hair care, nail care And facials and was wondering for all of my techs would hiring them as employees would be feasible aswell as what the pay rates should be for each tech in different fields! Also as a private business owner and I required to be there all day from open to close or if I hire a receptionist can that be her job and what should her base pay be. I was looking forward to hiring techs out of school but have no time to train with the hopes that they have experience! How would I find out their worth ethics and skills before hiring or do I just see when it comes to clientele? Please help! I am not a license tech I specialize in braids which doesn't require me to be licensed.
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