More on Commission versus Hourly

So my salon-owner friend made a good argument for commission yesterday, which I outlined in my last post. I'm going to describe his system as well as I can.

He hires only from the beauty schools - new grads only. Apprentices start out at $8 per hour. As an apprentice they do a lot of cleaning, learn time management, watch color formulation and apply color in addition to their technical training.

When a stylist graduates from the apprenticeship program they get one day behind the chair. The other days they still assist. This is because they have been so busy up to this point, he doesn't want them to have too much down time - it's demoralizing. They are required to fill their own book - he gives them no client at all, even walk-ins or new client calls. Once they demonstrate they can hustle and bring in clients, he will add on another day and start giving them clients. Usually within 4 or 5 months they are on the floor full time. During this time they earn the greater of $8 per hour or commission.

This salon pays a 40% commission. Now I know many of you are thinking that is terribly low, but you need to take into account what they get in return. Once they are busy, they have assistants to apply and remove color and shampoo. That frees up their schedule to take on more clients and increase their sales. Forty percent of their higher sales number is more than 50% of their lower sales number, so financially, the stylist wins. In this particular salon, the ongoing training is also exceptional, as is the level of professionalism. They are also given the opportunity to participate in professional photo-shoots. They have full front desk support so they don't spend their time booking or checking out clients. Sure they may have peers down the street making a 60% commission, but I would bet it's 60% of a lower-priced haircut, on a book that's not as full, in a salon that lacks professionalism. So make sure you look at the full picture.

As a stylist gets busier they will have a price increase and grow into an assistant. First they will have an assistant take down their colors, then shampoo for them, and eventually apply color. A stylist working on their own can handle a book of about 250 customers. Working with an assistant they can handle 350. So clearly, it's good for the stylist to work with an assistant. And it's good for the salon because assistants are their pipeline for stylists.

I've made it pretty clear in other posts that I prefer team-based pay to commission, but the salon I describe above is very happy with their choice of commission. What makes me cringe a little when I think of that scenario is that I see each stylist with a me-me-me attitude. They are responsible for building their book and only get paid based on dollars produced, so it seems to me it creates a conflict between what's best for the client versus what's best for the stylist. I wonder if a stylist is going on vacation if she encourages her guest to come in and see someone else while she is gone. Or is the guest expected to come in a week early or a week late at the convenience of the stylist. It also seems like jealousy is more likely to creep in and that stylists are rewarded for being territorial. I say that, and yet, I know that his salon is a lovely and ridiculously successful salon with a great reputation.

I suspect that the reason some of my expected negatives don't come into play there is that it flat-out isn't tolerated. At his place you do things his way. Expectations are high and if not met, you are out. For example, each stylist is expected to have $12 of retail sales for each client. If you see 10 clients in a day, you'd better have at least $120 in retail. You are required to host at least 4 after-hours promotional events per year (You invite a client to invite their friends for an evening of refreshments and beauty tips). Each employee must follow scripts. They answer the phone a certain way, they greet clients a certain way, they ask for referrals a certain way, they present the retail products a certain way...you get the idea. And it really is his way or the highway because 1) it's his salon and 2) his way is proven to work.

What do you like or dislike about commission? Readers often ask what the going rate is for commission, so feel free to include your city/state along with the going commission rate in the comments.