If you still work behind the chair, then 9% will be surplus above and beyond your commission, assuming it’s 40% of your service dollars.Ī lot of commission stylists think their salon owners are swimming in the Scrooge McDuck pool of coins at the end of the night. If you are a commission salon owner and stick to this budget, your annual salary is 9% of gross sales. Payroll taxes – 8% of payroll (this varies but 8% is a good number to judge by) Open your ears, because it will shock you when you hear how expensive it is to run a commission based salon. Let's talk about the commission salon owner’s budget. Commission Salon Owner’s Budget Breakdown These are your only two options if you want to be more profitable. If you're not even keeping 51%, look at the way you spend your money, and market your booty off to get more clients in your chair or raise your prices. Once you take out taxes of your business’ $100,000 gross income (it will vary a little bit state to state), your take-home money is $34,000 a year/just under $3,000 a month.įor most stylists, you’re hoping to keep at least 51% and then take taxes out. If you stayed on budget, you could take out all of those expenses - the booth rent, back bar, software charges, marketing, that kind of stuff - and you'd be left with $51,000.ĭoes that mean you made $51,000 this year? Nope. That means enough balayage and root touch-ups to equal $100,000. Let's say you made gross $100,000 working behind your chair this year. That doesn't mean you need to move salons it means you need to find a way to increase your income to get these ratios where they should be: by charging more or getting more butts in your chair. More often than not, the cost to rent a booth is closer to 20 - 30% of gross earnings, meaning you're not making enough money because the price of your booth is too high. Your take-home would be 51% of gross on this budget, and then taxes are deducted. All of that is 49% of your gross earnings if you are running a lean business. The cost to rent your booth, maintain your professional supplies and back bar, your marketing, your phone, your software, your bank charges, interest, your insurance. Your pre-tax take-home pay is 51% of your gross income. If you stay on the above budget, all you’ve done is pay to run your business you haven't even paid your taxes yet. For some of you who see a surplus in your take-home pay, it's probably because some of that should be invested in retail. Retail is a little bit of a separate calculation. Software (like an online booking system) - 2%īank charges and credit card interest – 2% Here’s how you should split your income as a booth renter if you want your take-home pay to be about 50%: But even today's top booth renters - the ones who run it really lean - are making 50% of their gross income. Lots of stylists go from commission to booth rent because they want to keep more of their money. Here are some hard numbers to compare your business to so you can see if you're on the right track. People usually don’t realize the financial commitment they're making until it's already done and they have to work their way out. Or when the water heater goes out, you as the salon owner have to pay thousands of dollars to get it repaired. Now the trouble is that we often underestimate what things will cost, like moving into a suite that costs $1500 more than you budgeted or paying more taxes as a booth renter than you did as a commissioned stylist. We're going to get way into the numbers so you can know if you’re budgeting correctly. Today, let’s talk about what it looks like financially as a booth renter or salon owner.
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