Booth Rent vs Commission Salon

Booth rent vs Commission Salon? Which makes more money?

Is one better than the other? 

Which one is better for you, booth rent working in a commission salon?

What’s the difference? Booth Rent vs Commission Salon?

Booth renting means that you, the renter, are paying monthly for the space. Sometimes it is just a chair on the salon floor. Or it’s a suite, or a room to yourself.

Usually, booth renters are sole proprietors or self-employed individuals who work for themselves. In most booth renting situations, you get to set your own hours and set your own prices.

When working in a commission salon, the owner of the shop pays you a percentage of each service that you do. So instead of being on hourly wages, or a salary, you get to take home whatever your commission is.

Commission salons always have the set percentage already agreed upon before you start working there. But more on that below.

Booth Rent vs Commission Salons – Booth Renting

What are the benefits of Booth Renting? 

Booth renting means that you, the professional starting out on your own, pays for the space that you use. 

You, now being self-employed, supply all of your own tools, supplies, products, retail (some booth rent establishments offer their own for you to sell), insurance, and your own prices and service menu.

On average, in the United States, salon or barbershop booth rental ranges anywhere between $100-$500 per week. I have seen many personally, that are about $300 per week, yet some are only $300 per month.

A ‘booth’ can be either a suite all to yourself, a shared suite, or just a chair and a station in a salon or barbershop.

Pros of Booth Renting

👏 Being your own boss.

👏 Make your own hours.

👏 Setting your own prices.

👏 You can choose what kinds of product lines and retail you carry in your booth. For suggestions on how to sell more retail products please see The Exquisite Find’s article on How to Sell Retail in the Salon

👏 All of which enable more flexibility for family life or school.

👍 With the owner’s approval, you may sublease your booth, or share the expenses with another stylist or barber.

Realities (not all cons) of Booth Renting

You pay rent regardless of how many hours you do or don’t work, and regardless of how many clients you saw during the week, and how much money you did or didn’t make.

There are no benefits included.

It’s necessary to keep yourself supplied with your own tools and products.

Your clients make all of their appointments and transactions through you, which means you have clients contacting you at all hours of the day and night, with no breaks. And you handle all of the client complaints, conflicts, bad reviews, and refunds if any are to come up.

You must keep yourself accountable to the schedule you set for yourself. Working when you schedule yourself to work and going home when you schedule yourself to go home so that you don’t burn out.

Work-Life Balance in the Salon- Preventing Burnout

In the United States, all self-employed, sole proprietors or independent contractors pay 30% of taxes. Of all of the money you make for yourself, 30% should be set aside for the end of the year’s taxes.

You have to find your own motivation to work.

Ensuring that you have your own small business insurance.

You must market your business for yourself to build your clientele and business. It is easier to booth rent when you have an established clientele already.

If you struggle with this or would like to learn 11 tried and true ways to build your clientele in the fastest way possible please read The Exquisite Find’s How to Get Hair Clients Fast

You MUST consider all of the above when deciding if working in booth rent vs commission salon is better for you.

Booth Renting vs Commission Salon – Commission Salon

Working in a Commission Based Salon or Barbershop

What is commission?

Working for commission means that the total of money earned in services and retail from you, a percentage of it is kept by the employer or owner of the shop.

Commission percentages can change throughout your time at the shop, and the percentages earned often vary shop per shop.

However, the average commission percentage earned by stylists and barbers is generally in the 40%-60% range.

Taxes are not always excluded in your paycheck from your employer, so always prepare and set aside tax money for yourself so that there are no unpleasant surprises for you come April 15th.

Usually, but not always, in a commission-based salon or barbershop the owner supplies all of the products, retail, utilities, and insurance, as well as the chair.

Pros of working for commission

👉 Your employer is marketing the business for you.

👉 There are no overhead costs.

👉 Retail and products are provided for you. You are not responsible for supplying inventory.

👉 Your employer handles all of the client conflicts, refunds, bad reviews, and carries the reputation of the shop (of which you carry your own reputation but if where you are has a good reputation it definitely helps).

👉 Sometimes benefits are included (insurance benefits).

Cons of working for commission

You do not have control over your schedule.

The prices are set for you.

Commission percentage is decided for you before you are hired.

You do not choose the products, retail, or inventory.

Break it down – Booth Rent vs Commission Salon

When is paying Booth Rent not worth it, and Commission is better?

On commission

On commission, you’ll pay at least 30% or more per haircut (meaning you get to keep 70%, which is generally high for commission).

So if you charge $30 per haircut, at 30% that you owe the shop or your employer per haircut, which is $9 per haircut. And keep $21 for yourself BEFORE TAXES (generally 30% federal taxes in the USA), meaning subtract another $9, which will leave you with $12 per haircut.

Say you have 8 haircuts in a day, and based on the math above you get to keep $12 per haircut, you would only make $98 for your pocket every day not including tips.

If you earn 70% commission (which is very high) the shop keeps 30% and you do 8 haircuts per day at $30, you owe the shop $72 every day. If you are in the shop 5 days a week, on commission you have paid your employer $360 every week. Yet you kept $840 per week, equaling $3360 every month BEFORE TAXES (generally 30% in the USA).

Calculate how much money you need to make per month.

Is that enough for your bills?

My first and second commission-based shops were both at a 45/55% commission. I only kept 45% of all that I earned, and the shop kept 55%, and that was an average and good percentage in that city.

When is Booth Renting better than Commission?

When is commission no longer making you enough money and inhibiting you from reaching your fullest potential?

Booth Renting

Let’s say that rent is $300 per week for your booth.

But you get to make your own prices and hours.

The same math from above applies here as well.

But as a self-employed individual, you must calculate for taxes as well as other bills and expenses.

So if you charge $30 per haircut, and you have 8 haircuts in a day, that is $240 every day BEFORE TAXES. Subtract 30% for taxes ($72 from the $240), and leaves $168 for your pocket every day, not including tips. That’s over $840 in your pocket every week, and $3360 every month from booth renting.

Say you have 3 colors in one day at $100 per service (that is a low price for color, but just for the sake of simplicity for this article). In one day you have already paid rent!

How many services do you need to do per day, per week to cover rent? Are your prices affordable for your clientele AND enough to pay your bills?

Conclusion Booth Rent vs Commission Salon

Math is hard. Calculating bills is stressful I know, but is absolutely necessary to see if booth renting or commission is better for you.

Entrepreneurial life is not easy. There are hundreds of decisions to make that will impact your business long term and short term, and there is no one responsible for it but yourself.

But working for myself was the best financial move I could have made. It’s hard but becomes easier.

Being an entrepreneur is worth it to me, I have no regrets!

I hope this breakdown was helpful for you, and I encourage you to do the math! Do hard things! Be brave and reach for your highest potential dear Reader!

Commission vs Booth Rental isn’t just for barbers and cosmetologists, but for massage therapists, nail techs, tattoo artists, and other personal trade professionals. Is the work to own your own business worth it or not?

Is commission or booth rental better for you?

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