Booth Rent vs. Commission
You’re a licensed nail tech; new to the scene looking for some action. Where do you begin? How do you get your foot in the door to a thriving salon business and on your way to making that sweet stack of cash? What kind of nail business should you get yourself into? It largely depends on your personality type and the size of your rainy day fund. Are you a control freak or do you prefer to operate on cruise-control? Are you a natural risk-taker or risk averse? Do you have any cash reserves and/or access to any angel investors who believe in your nail tech dream? The answers to these questions can help you figure out your path.
There are two basic entry points into salon work to consider: Booth Rent or Commission.Here we lay out a simple outline to help the nail tech weigh their options. Each state is different so make sure to be informed of your State Labor Laws. (For example, here in California, you can be either a booth renter or work on commission. In New York, the only option is to work on commission or open your own salon). State laws have started cracking down to insure the ethical treatment of people working in the salon profession. As a result, there is now a clear distinction between being an independent contractor and a salon employee.
Booth Rent This literally means to pay money to someone in exchange for “real estate” in a salon. This space or booth is where you operate your very own nail business. You will be self-employed and an independent contractor. The key thing to know as a Booth Renter is that the person you rent your space from is NOT your employer. They are your landlord.
What can you expect as a Booth Renter? As an independent contractor, you will be the big boss. Being the one in control comes with a lot of freedom and a lot responsibilities. With your cosmetology license on full display, you choose your own schedule and menu of services. You determine the pricing. You purchase your own products. You create your own marketing and generate your own client base. You will have to take on some financial risks like shelling out your own money to finance overhead expenses like rent, products/supplies, and marketing. You do all the work and there’s no limit to what you can earn. The business with all its highs and lows PLUS 100% of the earnings will be yours (except for the taxes you’ll owe Uncle Sam).
Booth Renting appeals to the nail tech who is eager to build her own business and has the confidence to call all the shots. This nail tech understands that success won’t come overnight but the long-term rewards, potential profitability, and independence far outweighs the risks. With a budget in mind and some cash on reserve, this nail tech is not afraid of the details and embraces the hustle. The Booth Renter is often a seasoned nail tech who runs her own booth like mini-mogul; raking in the money after a few hard-working years on commission. On occasion, the Booth Renter might be a brand new nail tech who is big on vision and has a healthy financial position which allows her to wait out the awkward in-between stage of growing a new business without too much anxiety.
Commission This term means that a percentage of the total money charged for a service is split between the nail tech, who is an employee, and the salon owner. Commission splits can vary. For instance, a nail tech just starting out could expect a 40-60 split commission (that breaks down to 40% of the total service fee to the nail tech and the other 60% to the salon owner). As nail techs become more experienced and their services more in-demand, the commission agreement can be adjusted in favor of the employee.
What can you expect if you work on Commission? As an employee, your schedule, menu of services, and what you earn will be determined by the salon owner. The salon owner decides whether to hire or fire you. You may be required to wear a uniform and follow company standards. You may be challenged to meet certain sales targets. In addition to your stock-in-trade nail services, you may be asked to help around the salon and provide upkeep or front of house customer service. In a nutshell, the salon owner will be in charge of key business decisions like when you come and go; pricing; the kind of services provided; the quality of products being used; and most importantly what kind of clientele walks through the door. They’re also the only party responsible for paying the overhead expenses like rent, utilities; supplying all the product; marketing and generating new business. Taxes should be deducted out of your commission paycheck.
For the nail tech on commission, it can be a huge relief not to have to bank roll your own supply of product and other overhead costs. The commission pay structure is nice for someone who prefers to work in a more structured environment with less financial risk involved. A new nail tech can work on commission and think of it like a fully paid apprenticeship. If you’re someone who doesn’t already have an extensive salon background or someone who needs a little time to build up their own personal savings before going it alone; this is ideal. It’s like a scenic detour where a nail tech can learn the ropes and get an unfiltered behind-the-scenes look at salon operations. Before you sign on, try to find out if the employee turnover rate runs high. This can give you a heads up if the environment is a positive or toxic one. A great way to see how the salon owner values and incentivizes their team for success, is to check if the salon offers any special education pop-ups or advance education seminars for its staff.
From
our point of view, the huge difference between the two is how much
control you want to have over your business. We can definitely see the
merits of both depending on where you are in your life as a nail tech.
Always,
Habib Salo, CEO Young Nails
*Please remember the opinions discussed here are our own. Note that we are not legal experts. We’re experienced business owners and nail industry veterans interested in passing along a few helpful tips. Ones we wish we knew starting out. We’re based in the state of California and can speak to only to our local laws. Before you make any employment decision, you should make it a habit to do your own independent research and keep well informed of the local labor laws intended to protect your work environment. As they say, knowledge is power. Don’t give your power away.