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What is the Best Commission Rate to Pay Salon or Spa Staff

What is the Best Commission Rate to Pay Salon or Spa Staff?

What is the Best Commission Rate to Pay Salon or Spa Staff?

Whether you’ve owned your salon or spa for years, opened a new salon, or are rethinking your existing business operations, you must determine how you want to compensate your employees. The commission structure you choose will impact your business operations, profitability, business model, and your company’s long-term growth.

Let’s look at the various commission rate options to pay your staff.

Most businesses in the GCC and specifically in the UAE have employees. A team you recruit to work in your salon during a predetermined shift. They represent your brand and your business. Your employees most probably are working on a full-time basis and as the business owner, you’re required to pay payroll taxes and business fees associated with your salon.
Since not all workers are paid the same, based on experience or unique skills they may be bringing to your operations; you have to choose how to stabilize this with a value-added commission structure that works best for your business.

Salon commission structures

A commission structure is a great way to grow your business. It can prove beneficial for both you and your employees. Commissions entice your staff to bring in more business to your salon and work to increase sales of your products and other services. For example, you could pay your stylists a commission on any retail products purchased after services rendered.

Flat-rate commission

Some salons pay their stylists and service providers a fixed commission rate. This can be based on the service rates provided by the salon or the service rates provided by the stylist. For example, a stylist on a 10% commission rate would earn 10 AED on a 100 AED service (the salon would keep the other 90 AED).

Incremental-rate commission

Some salons choose to pay their stylists on tiered rates commission, on their services or retail separately or services and retail sales combined . When salons use this structure, they may pay a higher wage with a lower commission rate, or vice versa. It’s also common for commissions to be based on performance or benchmarks, such as selling a specific amount of products or bringing in a specific amount of new clients.

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Average Salon Commission Rates

What are the average commission rates for salons?

If you opt to compensate with a commission structure, you’ll need to decide whether you will use a flat commission structure or a tiered model. Generally, a flat structure commission rate for services ranges between 5% and 10%. The flat commission rate for selling products ranges between 7% and 15%.

Tiered commission structures are more complex, but they provide stylists with more incentives to do their best. There are two ways a tiered commission structure can work:

  1. Stylists are placed in a tier based on their total earnings throughout the month.
  2. Stylists can earn a tiered stacking rate for all services until they reach the next tier. In this scenario, each level is paid a higher commission rate.

Which is best for your salon?

When it comes down to it, you must choose the compensation package that works best for the specific needs of your salon. For salons who are starting and need an influx of cash, commissions and bonuses can help grow your salon as your staff builds their client loyalty. It’s also important to consider your staff expectations and how your competitors compensate their staff. If you want to attract the best stylists, you’ll need to be competitive with your compensation packages.

While there is no one-size-fits-all approach to spa or salon compensation, the above guide should get you started in the right direction. If you still have questions or concerns, the consulting experts at Royal Metis can help. We take pride in helping salon and wellness spa entrepreneurs to develop their businesses. We’ve got you covered, from concept creation and market analysis to design to branding and everything in between.

Regardless of where you are in your spa business journey, we can help. Contact a member of our team to learn how we can help you.