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).
Just 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.
Most 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.
Hi 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.
ReplyDeleteread my reviews about Technician salaries and medical assistant salaries
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'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.
DeleteI’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!
I 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.
DeleteAnonymous 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!
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