60/40 Commission Split Salons - Pros, Cons, & Strategies for Stylists & Owners

In this article we will be covering a lot of information about 60/40 Commission Salon Split, including strategies for stylists and salon owners, both. And the pros and cons of commissions in a salon.

To make it as simple and understandable as possible, and to help you decide how to set up your salon for success or choose whether working for commission is worth it for you.

Here are the things we are going to discuss –

60/40 Commission Salon Split
What is a 60/40 Commission?
What is a Commission Split Salon?
Other Types of Wages in a Hair Salon
How does Commission Work in a Beauty Salon?
What is the Commission Scale for Hair Stylists?
What are the Pros and Cons to Working for Commission?
What’s the Difference between Sliding Scale Commission and Regular Commission?
What is Booth Rent vs Commission? What’s he Difference and What are the Pros and Cons?
How to Do Taxes for Hairstylists that Work on Commission
How to Strategize Commission Rates for Salon Owners – What are the Best Commission Rates?
How to Set Up Commission Structure in a Successful Salon
What are Some Guidelines for Salon Owners to Follow in Regards to Commission for their Employees?

60/40 Commission Salon Split

how to strategize 60/40 commission split salon

What is a 60/40 Commission?

A 60/40 commission split is a popular payment structure in the beauty industry. It refers to the way salon owners and hairstylists divide the revenue generated from services provided to clients. This way, the hairstylist receives 60% of the income from each service, while the salon owner gets the remaining 40% which is used for space rent, insurance, and other overhead expenses.

What is a Commission Split Salon?

A commission split salon is a salon where the hairstylists are paid based on a percentage of the revenue they generate. Instead of receiving a fixed salary, hairstylists earn a commission for every service they perform. The commission split is the percentage of that income that goes to the hairstylist.

How does Commission Work in a Beauty Salon?

Commission works in a beauty salon by providing an incentive for hairstylists to perform well and generate revenue.

Hairstylists earn a percentage of the total price clients pay for the services they provide. This can include haircuts, coloring, styling, and other treatments.

The commission is usually a predetermined percentage agreed upon by the hairstylist and the salon owner.

Other Types of Wages in a Hair Salon

Simplified summary of wages in a hair salon by Tarzan Tips.

Commission-Based

Many corporate salons operate on a commission-based system. Stylists earn a percentage of the total sales they generate. The percentage can vary depending on factors such as experience, seniority, and the salon’s policies.

Hourly Wage

Some corporate salons pay stylists an hourly wage, especially for the time they spend on non-client-related tasks, such as cleaning, training, or attending meetings. The hourly rate may vary based on factors like experience and job responsibilities.

Salary

In some cases, experienced and senior stylists may negotiate a salary instead of or in addition to commissions. This can provide a more stable income, but it might come with certain performance expectations.

Tiered Commission

Salons may implement a tiered commission structure where stylists earn a higher percentage as they meet specific sales targets or achieve certain performance levels.

Product Sales Commission

Stylists may receive additional commissions on retail product sales. This encourages stylists to promote and sell salon products to clients.

Bonuses and Incentives

Corporate salons might offer bonuses or incentives for achieving certain milestones, such as reaching sales targets, bringing in new clients, or participating in promotional events.

Team-Based Compensation

Some salons adopt a team-based compensation approach, where the entire salon team works collectively to meet goals, and the rewards are shared among team members.

Education and Training Compensation

Stylists may receive compensation for participating in ongoing education and training programs provided by the salon.

What is the Commission Scale for Hair Stylists?

The commission scale for hair stylists can vary depending on various factors. It is determined by the agreement between the hairstylist and the salon owner.

The most common percentages generally range from as low as 30% to as high as 60%.

Factors that can affect the commission scale include –

The hairstylist’s experience
Skill level
Client demand
And the services they provide

What are the Pros and Cons to Working for Commission?

Working for commission has its pros and cons for hairstylists.

Pros

☑️ Potential to earn more income, especially if they have a large client base or specialize in high-priced services

☑️ Commission-based pay can also provide motivation for hairstylists to upsell additional services and products

Cons

🚩 Risk of unpredictable income during slower periods and the pressure to constantly generate revenue

What’s the Difference between Sliding Scale Commission and Regular Commission?

The difference between sliding scale commission and regular commission lies in the way the percentage is determined.

With a regular commission, hairstylists earn a fixed percentage of the service price, regardless of how much revenue they generate.

In contrast, a sliding scale commission adjusts the hairstylist’s percentage based on the total income they generate. For example, if a hairstylist reaches a certain revenue milestone, their commission percentage may increase.

What is Booth Rent vs Commission? What’s the Difference and What are the Pros and Cons?

Booth rent and commission are alternative payment structures for hairstylists.

👉 Booth rent refers to the hairstylist renting a space or booth within the salon and paying a fixed fee or percentage of their income to the salon owner. This allows the hairstylist to operate as an independent contractor and keep all of their earnings.

👉 Commission, on the other hand, means the hairstylist is an employee of the salon and earns a percentage of the revenue they generate.

The decision between booth rent and commission depends on various factors such as individual circumstances, preferences, and salon policies.

How to Do Taxes for Hairstylists that Work on Commission

Taxation for hairstylists working on commission can be complex.

It is crucial for hairstylists to keep detailed records of their income and expenses throughout the year. They should ensure they receive accurate and timely commission statements from the salon owner.

Before being hired on in a commission salon, ask the owner if they offer a 1099 Form, W-2, or W-4 tax paperwork for their employees. Each business owner can choose to do it differently, but it’s important to know ahead of time which one to expect so that you can consult your CPA (tax professional) to ensure that you won’t be getting taxed twice on some things.

It is recommended that hairstylists consult with a knowledgeable tax professional to understand their tax obligations, deductions, and any specific rules and regulations for self-employed individuals in their location.

How to Strategize Commission Rates for Salon Owners – What are the Best Commission Rates?

Salon owners can strategize commission rates to attract and retain talented hairstylists while ensuring the salon’s profitability. They need to consider factors such as –

The local market
Competition
Salon expenses
And the hairstylists’ (employees) skill levels

It is important to strike a balance between offering an attractive commission rate that motivates hairstylists and allows the salon to cover its operating costs and make a profit.

How to Set Up Commission Structure in a Successful Salon

When setting up a commission structure in a salon, there are several steps salon owners can follow for success. These include:

Research and analyze the local market: Understand the average commission rates offered by other salons in the area and determine competitive rates that will attract talented hairstylists.
Define different commission tiers: Consider creating different commission tiers based on performance levels. Reward hairstylists who consistently generate higher revenue with higher commission rates.
Consider additional incentives: Apart from the base commission rate, consider offering additional incentives to motivate hairstylists. This could include bonuses based on reaching revenue targets or incentives for selling retail products.
Communicate and document the commission structure: Clearly communicate the commission structure to all hairstylists, ensuring they understand how it works and what is expected of them. Have a written agreement or contract in place to avoid misunderstandings.
Regularly review and update the commission structure: As the salon grows and evolves, it is important to review and update the commission structure periodically. This can ensure it remains competitive and aligns with the salon’s goals.

What are Some Guidelines for Salon Owners to Follow in Regards to 60/40 Commission Split Salon for their Employees?

Salon owners should follow some guidelines when it comes to commission for their employees –

Be transparent and fair: Clearly communicate the commission structure to hairstylists and ensure it is fair and reasonable. Avoid sudden changes or hidden fees.
Provide support and proper training: Invest in continuous education and training for hairstylists to enhance their skills, which can lead to increased revenue. Offer guidance and support to help them succeed.
Implement a feedback system: Regularly provide constructive feedback and performance evaluations to help hairstylists improve and succeed. Recognize and reward their achievements to boost morale.
Create a positive work environment: Foster a positive and supportive work culture to motivate hairstylists and encourage teamwork. Promote open communication and address any concerns or conflicts promptly.
Offer growth opportunities: Provide opportunities for career growth within the salon, such as promotions to higher-level positions or additional responsibilities. This can help retain talented hairstylists and maintain a motivated team.

Conclusion for 60/40 Commission Salon Split

In summary, understanding the 60/40 commission split and the overall commission structure in a salon is crucial for both hairstylists and salon owners. By –

👍 Setting fair and competitive commission rates

👍 Providing support and growth opportunities

👍 Maintaining transparent communication

Both parties can benefit from a successful and rewarding partnership.

60/40 Commission Split Salons – Pros, Cons, & Strategies for Stylists & Owners