Stylists have two options when starting their careers.
1) Renting a booth or a chair from a salon owner or being employed on a salary or commission
2) Be an owner and own your own salon suite workspace. Both are viable options when starting a career. Let us look into the pros and cons of booth rental versus the commission-based structure.
What is a booth rental stylist job?
A salon that offers rental booths is one where stylists rent a booth or chair in an existing salon. It is also like co-sharing, where several stylists share the rent and each has their own workstation. One of the pros of working in a salon booth is that you set your working hours and rates.
The drawback of this model is that you pay for building upkeep, you do not have your own space, they get a percentage of your sales, and you lack marketing benefits from the employer.
What is a commission-based stylist job?
A commission-based stylist job is a career path in which a person is employed in a salon. The stylist is scheduled to work and receives a set salary or commission-based remuneration.
The benefit of this salon setup is that you have stylists helping you grow your business. You may not need to sell products to increase your income. You can offer advanced training to stylists, which enhances service delivery and increases price charges.
If you are looking for full independence and being your own boss, a commission-based salon is not the best model for you.
Figure out whether a commission-based salon or booth rental is the right choice for your career path. Many stylists find commission-based salons to be the best choice for career-building, but you can make a different choice.
Working on commission
In a commission-based cosmetology job, the employer provides a work schedule. You are remunerated through a wage and commission or a straight commission. A commission employee keeps a percentage of the services offered. A salon may offer a 50 percent commission for revenue generated and a 10-15 percent commission for products sold.
The pros
- Managing the business is the least of your worries, and instead, you focus on service delivery
- The salon handles marketing for the business, so there is no pressure to bring in new clients
- A team of employees helps share experience
- You grow the clientele base with the help of the salon
- When you grow a strong clientele base, you can negotiate for an improved commission
- You enjoy vacation time, health benefits, and sick pay
- You can get structured education and advanced training paid for by the salon
- Stylists can get benefits such as 401(k) plans and health plans
The Cons
- You can only use retail products offered by the salon
- Prices are set by the salon
- Working hours are dictated by the employer or salary owner
- You either receive a salary or commission-based income, but not the full profit
- You are not your own brand
- A commission-based structure is one of the best options for beginner stylists who need a steady influx of new clients. The collaborative and team environment is ideal for stylists because it helps them mature and perfect their craft as stylists.
How the salon suite model works
In booth rental salons, every stylist is an independent contractor and not an employee of the salon owner. The salon owner is not responsible for any stylist benefits. Each stylist is also accountable for their bookkeeping and federal taxes.
Renting a salon suite is like renting an office or an apartment. It involves entering into a contract with the salon owner, who leases or rents the workstation and booth to independent stylists. In this type of arrangement, you own the cosmetology business, but you are not an employee of the salon owner. According to the law, you are a self-employed independent contractor.
A stylist must pay a monthly rental fee to the salon owner in exchange for space, but not the hard-earned money you make from your customers. The stylist oversees buying other products and items necessary for the business. Some stylists also sell styling products to their clients to supplement their income.
The Pros
- Escape salon drama
- You become a salon boss. You are not answerable to anyone but your clients
- Greater flexibility and independence in your career trajectory
- You can create an executive salon culture
- You use your favorite styling products
- All the money left after paying rent is yours
- You earn more money than being employed in a salon
- You can easily grow your business brand and your customers
The Cons
- You must purchase all the tools, products, and equipment you use (some salon suites do provide equipment)
- You need to account for all incomes and expenses for your business
- You are eligible to pay state and federal taxes
- You must have a sales tax license and collect sales tax
- Networking and promoting business expenses are on you
- You pay for your own benefits, such as health insurance, disability insurance, and life insurance
The Verdict
An experienced cosmetologist with a strong client base has the best chance of success with the salon suite model. It is easy to set up your business and move some clients to the new salon. To effectively run such an independent business, you need a strong work ethic, discipline, and administrative roles for your business.
A cosmetologist with these values is better equipped to start and run their own independent salon. They have higher success rates.
Looking to start your own business? Contact us for available suite spots today.