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Booth rent vs. commission vs. employee: which one pays more?

There is no setup that is always better. Each one trades how much you keep per service against how much you must pay whether or not you are busy. Here is how to compare them with your own numbers.

The three setups in one line each

• Booth rent: you pay a fixed amount every month and keep what you earn from clients.
• Commission: the salon keeps a percent of each service and you keep the rest. The salon usually covers the space.
• Employee: the salon pays you an hourly wage and covers most business costs, and the salon sets the prices. (Some salons pay differently, such as a mix of wage and commission, so check how yours works.) The calculator treats an employee as an hourly wage and shows what you really earn per hour once unpaid time is counted.

A worked example (illustrative numbers)

Take a $65 service, and ignore product and card fees to keep it simple. A booth renter pays $800 a month. A commission stylist keeps 60%, which is $39 per $65 service.

• Booth renter keeps $65 per service but must cover the $800 rent first.
• Commission stylist keeps $39 per service and pays no rent.
• They earn the same when 65 × n − 800 = 39 × n, so n = 800 ÷ 26 ≈ 31 services a month, about 7 a week. Fewer than that and commission pays more. More than that and booth rent pays more.

That break-even point moves with your rent, your commission split and your prices. A busy, fully booked stylist usually gains from booth rent. Someone building a clientele often does better with commission until the book fills up.

What the simple math leaves out

• Who pays for product and card fees. Under commission this is often negotiated. It can change the answer a lot.
• Everything else a booth renter pays for: insurance, software, marketing, supplies, and booking fees.
• Slow weeks. Rent is due even when the book is empty.
• Taxes and paperwork. These differ between the setups. Ask a CPA, and ask a professional how your state treats each arrangement. Nothing here is tax or legal advice.

Before you switch

Run your real numbers for the setup you have now and for the one you are considering, and save them as two scenarios to compare side by side. Look at your true hourly earnings, not just the total.

The numbers in this guide are examples to show the math, not advice for your business. This is an estimate, not tax or legal advice. Ask a CPA.