I'm hearing about different commission structures for new hires. 50% commission has been the standard, but now I'm hearing 40% to start. How do you go about this? Has anyone tried this?

More spas and salons are turning to true employee models-as the the IRS and the State Boards of Labor crack down on misclassified employees. It is critical to determine if the individual is truly an IC or an employee. That being said I personally am seeing more hourly or hourly plus a % of the service fee. It would seem to be very difficult to be profitable if you are sharing 50% of the service fee.

The hourly/hourly plus % is becoming a popular model. I may be considering that very soon.

I moved to an hourly plus sliding scale commission compensation structure with benefits and counted tips as income so I could provide reporting to the IRS. This has been the best business decision I have ever made!! It has helped us to manage our payroll and to my delight we experienced increase employee loyalty and team work. The big plus was that the spa became profitable for the first time since opening the business. I would never go back to straight commission!

Ross, Can you share your hourly and scale commission? Independent contractors are a big headache in my opinion. Nothing better than having employees and the control of your business.. and as you said, it's more profitable.

I agree Martha. It has become difficult to run a business, while trying to manage IC's, both financially & schedule wise. Ross, I too, would be interested in the details of your compensation model. It makes profit and control achievable, allowing me to put my energy into education & growth.

I'm doing a 50/50 split with an IC and it's working great. She buys all of her own products and stocks the room as well.

I'm curious, if your Esthetician is purchasing all her own product and it's her room, why don't you charge booth rental?

I’ll tell why she doesn’t charge for booth rental..probably because she wants her cake and eat it too.. meaning, she wants to still have full control over the money. I’m willing to bet she 1099’s the Esti’s and still has full control of the money, has full control of their schedule, and has full control on prices. Just a guess, but I’m willing to bet money I’m right.