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Old 03-12-2012, 10:23 AM   #1 (permalink)
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Commission Split for Booth Rent

Quick question - I have a very busy tanning salon and we are looking to being in an esthetician. She cannot afford monthly booth rent as she is new to the area and would rather do a split commission to compensate for that. What is an appropriate commission split if she is not paying rent on the room?? She suggested 80/20 with me taking 20%. I thought that was rather low since she is not paying any rent on that. Thoughts please on what is normal to ask! I am new to this type of agreement.

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Old 03-13-2012, 02:36 PM   #2 (permalink)
 
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Re: Commission Split for Booth Rent

I am pretty sure there are other threads on this. But at any rate, depends on what you are supplying. Just a heads up, a tanning salon is WAY too loud for facials etc. I tried it out of my old salon and people complained that they couldnt relax w all the different music, peeps talking etc.

If you are supplying all supplies etc and she is just labor, i would do 60/40 with you taking the majority. If she is supplying everything then flop it. Also make sure you get a good IC contract. Also remember she will be independent so if she is flakey, it will reflect on your business.
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Old 03-13-2012, 05:25 PM   #3 (permalink)
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Re: Commission Split for Booth Rent

^^^Like delany said, If this person is not dependable, it reflects on your business. Ie: If a customer of yours has an appointment for one of her services, and the est. doesn't show for the apponiment, that customer will hold you responsible and will be peeed at you. If you do it, a 60/40 split with you getting 40% is fair.
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Old 03-14-2012, 08:42 AM   #4 (permalink)
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Re: Commission Split for Booth Rent

I know for a fact that most salons cannot pay more than a 50% commission and make money; if the salon supplies the goods used.

On top of that, you must also deduct the product costs before tabulating the commission. Otherwise you are paying a commission on product used (for the service) that you paid for.

IE:
Facial $80
CoGU $15 (Cost of Goods Used)
GM $65 (Gross Margin - direct service costs, not overhead)
50/50 $32.50

vs.

Facial $80
50/50 $40 (no CoGU deduction)

You just paid her $7.50 commission on products YOU bought. The service portion of the bill was only $32.50. Do you think the Chevy dealer is paying the mechanics a commission on the total bill, or just their part (the labor)?

Furthermore - Who pays the building lease, the equipment leases (or buys), the utilities, the office supplies, the front desk receptionist...

You carry all the costs, she is just a worker. You need to make sure you are making money also.

That 80/20 split she suggested is a HUGE red flag. Do not work with her. If she can't afford booth rent, she is not good nor is she a go-getter. She will drain you.
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