When it comes to running a hair salon, one of the most important decisions you’ll make is whether to hire employees or work with independent contractors.
While each method has its perks, each also comes with its own set of downfalls.
Here are the major differences between commission-based employment and booth rental agreements.
What Is The Commission Salon Model?
The commission-based setup is one in which you, as the salon owner, hire employees to take care of your clients. This is a performance-based model, meaning pay is based on results. Salon employees who work on commission don’t receive a base pay.
The good thing about the commission model is that you’re getting what you pay for. There’s no dishing out money for someone to stand around and look pretty. It’s a great way to encourage your employees to help build your client base and provide excellent service.
As an added bonus, hiring employees instead of independent contractors builds company morale. Everyone’s working toward the same goal, which leads to growth for your salon.
With operation costs continually rising, it’s difficult for many salons to offer a competitive commission-based pay. This means it may be a challenge to find quality employees, and turnover is often higher with the commission model. Employees leave to start their own businesses, believing they’ll make more money independently.
What Is The Booth Rental Salon Model?
When you offer space in your salon to beauty professionals on a rental basis, you’re hiring independent contractors. These people aren’t your employees but, rather, your colleagues.
Independent contractors are responsible for handling their own taxes, clients, paperwork and supply needs. This saves you money because you aren’t paying salaries, and the overhead costs don’t land solely on you. It also prevents you from needing to supply benefits like health insurance and retirement plans.
Additionally, you can rest assured that your salon will stay busy, because your stylists are business owners themselves and want to grow their own client bases. In fact, it was reported in 2014 that nearly half of all beauty industry licensees are independent contractors.
While you can certainly implement general salon-wide guidelines, you aren’t able to control exactly what goes on between stylists and clients when you rent booth spaces. This type of setting can also occasionally lead to a competitive environment within the salon, rather than a teamwork-oriented one.
Whichever method you choose, be sure you have a thorough understanding of the differences between employees and independent contractors. The Salon by Lora Brown is a commission-based salon. Our salon culture encourages healthy competition, teamwork, dedication, and most importantly, education.
To inquire about becoming a successful stylist, contact The Salon by Lora Brown and see what our own stylists have to say about working in commission salons and booth rental salons by visiting our Employment Page.
See the pros and cons of booth rental salons and commission salons by downloading our free infographic!
Lora Brown is a master stylist and the owner of The Salon by Lora Brown. She has worked in the salon industry for 30 years.