It’s no surprise that compensation is a hot topic. A lot of stylists wonder if they’re being paid properly, if their commissions are too low, or if their compensation style is illegal. Salon owners, on the other hand, want to know how to keep their team motivated.
Confession: when I graduated cosmetology school, I naively thought the only compensation method was booth rental. I didn’t realize that some stylists were employees at their salons. Over the years, I’ve done the hourly and commission pay thing and have seen a lot through my years as director of a blended salon.
But there are some pay models I didn’t experience myself, so I sent out a survey to get the perspective of salon owners and stylists on compensation structures.
You all definitely delivered. There are over 500 incredibly detailed responses, and I will break down that incredible feedback today.
If you’re a salon owner looking for a pay structure that motivates your team or a stylist wondering if you’re in the right model, read on.
The Survey Breakdown
The survey was 10 open-ended questions. Everybody selected whether they were a stylist or a salon owner so we could know where the feedback came from and what their model looked like.
Commission, blended, and team-based pay salon owners as well as commission, hourly, and team-based pay stylists (no salary-paid stylist responded to the survey) were surveyed. Booth rental model feedback was excluded because this survey was about compensation plans for employees.
As you read through the feedback, pay attention to the difference in perception of compensation style between salon owner and stylist. Often, a salon owner feels like everything is great, but their stylists are resentful. Or, on the flip side, stylists think it’s awesome and salon owners feel out of control.
Read with eyes wide open. I hope through opening up this conversation and hearing more about the different pay models, we’ll be more educated to make great decisions for our business.
Salon Owner Feedback
Blended salon owners
Blended salons have employees and booth renters. Employees are either hourly or commission stylists who fill out a W-4 on their first day and get a W-2 at the end of the year. Booth renters submit a rental payment and give the salon owner a 1099 at the end of the year to prove they were a contractor.
When it comes to their current pay structure, blended salon owners
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47% love it
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5% can’t stand it
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48% think it’s okay
When asked why they chose a blended salon model, they said:
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“To accommodate both new and more senior stylists to create a career growth path.”
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“This was an inherited structure to me. I’m just rolling with it.”
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“It’s all I know because I’ve only worked in salons that were set up this way.”
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“All of the other salons in my area do it this way.”
What is most important when it comes to compensation?
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“Fairness with profit.”
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“Fairness without greed.”
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“I want to win, but I want my stylists to win, too.”
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“I want to maintain a talented and committed team.”
When asked why they couldn’t stand their current pay structure, they said:
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“I started with just booth rent, but I’m realizing it is fully impossible to maintain any kind of standard in the salon having this mix of booths, renters, and commission stylists.”
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“Nobody is on the same page.”
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“I’m trying to build a team of employees.”
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“As soon as I start making any kind of profit on a commission stylist, they decide to booth rent.”
If you don’t like the blended model as a salon owner, chances are the culture piece is missing. A great culture makes a huge difference. It comes from the leader because if you, as the leader create that sense of community and provide freedom and flexibility, you won’t lose people.
Commission salon owners
Of the commission salon owners surveyed,
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37% love it,
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2% can’t stand it,
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61% stick with it because they don’t know what’s better
When asked why they chose this model, they said:
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“I previously worked in a chair rental salon environment, and it wasn’t a healthy team environment.”
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“My future goal is to build a team so that I can one day become an absentee owner.”
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“Being a commission salon owner, I chose commission because I wanted to grow stylists and make a profit.”
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“Commission pay structure is the only type of compensation I’m familiar with, and I wanted to have some control over the team.”
What’s most important to commission salon owners when it comes to compensation?:
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“I want win-win.”
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“I want my team happy [and] I want to be profitable.”
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“That everybody is making good money and that there is money to pay a good support staff, money to make constant improvements.”
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“Keep up on the latest supplies and equipment, keep a fully-stocked supply of everything needed.”
When asked why they hate their current pay structure, commission salon owners said:
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“The administration on having employees is very heavy. It’s a lot more work to manage all of the behind-the-scenes when you have an employee-based business then people choose to talk about.”
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“We’re switching to the team-based pay model in October, and I’m excited to have a structure that includes consistent payroll targets each month [and] gives my team the ability to move up in the company without having to work more hours behind the chair. It pays them for their time, not just what they do with their hands.”
Team-based pay salon owners
The team-based pay salon owner and stylist are less common models, so their segments were the smallest in the survey. When asked how they feel about their current compensation structure, team-based pay salon owners
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68% love it
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0% stick with it because they don’t know what’s better
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32% can’t stand it
Why did team-based salon owners choose this model?
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“Most businesses outside of the salon run this way.”
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“It made so much sense when I learned about it. It takes out the drama [and] builds an incredible team.”
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“Culture creates systems create structure to promote proper behaviors.”
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“I like guaranteed paychecks for my stylists and control of payroll taxes for myself.”
What’s most important to team-based pay owners when looking for compensation structure?
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“Everyone gets paid well and the salon stays profitable.”
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“I believe in providers. They should be paid for their time being trained, going to classes, being a trainer with the salon. I also believe in fair compensation, not just for your hands while you’re doing work, but compensation just for being a part of the company.”
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“I like the team-based pay stays within a certain percentage of my overall budget and I can take home pay even if I don’t work behind the chair that week.”
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“I need the freedom to focus on the business instead of being chained to the chair.”
This was the only model where people were either all in or all out. Those who were all out said:
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“I’ve already lost some stylists after making the shift. I know that that’s common. I’m just not worried. I’ll be able to weather the storm.”
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“I’m having a hard time attracting new stylists who want to work within this model.”
Commission, hourly, even booth rental, are socially acceptable because they have been around for so long. Team-based pay is a different model compared to what we’re used to. It’s like how a more traditional business would run, which is comforting to the salon owner but can cause confusion for stylists.
Stylist Feedback
Team-based pay stylists
Let’s hear what team-based pay stylists think about working in this structure.
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20% love it
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20% can’t stand it
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60% stick with it because they don’t know what’s better.
When asked if team-based pay stylists are motivated by the pay structure:
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20% said yes
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80% said no
Of those who said yes, this is what they love most about it:
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“I’m able to travel and pay my bills with peace of mind because I have a stable paycheck.”
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“I work more hours than anyone in the salon. When you pull an average and that’s what you make, it doesn’t feel fair. I’m all about teamwork, yet I feel you should be compensated there per service performed.”
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“Because no matter the pay scale, flexibility and individuality are what is most important to me.
Stylists who aren’t motivated by it said:
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“I think I’ve always wanted to be in control of the cash flow that comes in. So when I do a service that is $800, I get sick to my stomach when all of that goes to the owner, and I get a very small percentage.”
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“I’ve always loved being a team player, but I don’t understand why my income is now dependent on other stylists.”
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“I like the team culture, but I think it can be obtained without the money compensation bonuses being tied into that team culture piece.”
They’re saying it’s not about the money; it’s about flexibility, being in control, and how the leader chooses to show up to deliver their selected model.
Commission-based stylists
How do commission stylists feel about their pay structure?
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22% love it
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11% can’t stand it
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62% say it’s okay
When asked if they are motivated by a commission pay structure, they said
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51% yes
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49% no
Commission stylists motivated by this structure love this most about it:
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“I have some control over how much I make. The more hair I do, the more money I make. I feel like the harder I work, the more money I make.”
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“Basically, I make as much or as little money as I want to.”
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“I receive a great commission rate at 50%, and I checked into owning my salon at this rate, and I can’t make more money without a bunch more work. So at this point, I’m pleased with my race but not always.”
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“Because commission gives me the motivation to always do better, and I feel rewarded and compensated for hard work. It also gives me the freedom of going to work and going home, not worrying about bookings, supplies, taxes, etc. I only have to worry about social media or whatever I’m working on in Thrivers society. It gives me more time to do other things that align me with my family versus worry about my business 24 hours a day.”
If they’re not motivated by this level of compensation, commission stylists find this to be most frustrating:
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“In addition to commission-based pay, the owner charges additional fees for products.”
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“I feel like it’s unattainable to reach a higher percentage of pay. I used to be motivated, but I’ve reached a point in my career where I’m at the top. I’ve been offered to buy a location or opened a franchise of theirs but declined. The numbers don’t make sense to me.”
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“I feel I’m not getting paid my worth.”
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“I can never make more than 50%, I cannot raise my own prices. I do not feel in control. My earning potential is capped. It is incredibly demotivating.”
Hourly paid stylists
How do hourly paid stylists feel about their current pay structure?
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20% love it
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16% can’t stand it
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64% say it’s okay
Are they motivated by this pay structure?
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34% said yes
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66% said no
What do they love most about this pay structure?
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“Although I only receive an hourly check, I feel that the way to give myself a raise is to build up the salon clientele list, and in return, I earn more tips every day.”
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“The salon owner doesn’t pay commission on products but uses that money to fly us all over the world to go to incredible education.”
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“I am motivated because hourly feels more secure to me. I know how much I’m making every single paycheck, and I like it.”
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“I am fully at the forefront of how much money I make fully in control, and I like it.”
Here’s what those who are not motivated by hourly pay said:
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“It is set up to have the salon owner get rich and keep us stylists poor.”
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“Well, I can make commission. It is so challenging to hit that mark and maintain my service per hour rate that I don’t find it super motivating.”
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“It feels like a carrot dangling that I’ll never be able to reach.”
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“I don’t see opportunities for growth. I don’t see I will ever make the amount of money I want to earn at my current job.”
Top 4 lessons from the survey
Salon owners are (mostly) on your side
Your salon owner is not ripping you off. They are doing their best to keep profit margins high so they can keep the doors open and be able to pay for their family.
There’s this dynamic where stylists feel like their owners should be indebted to them. That’s not how it works. The responsibility of the salon owner is to create a phenomenal space and great culture where you can be motivated, successful, and offer opportunities for growth.
If those things aren’t valuable to you, that’s cool. You can work in a studio suite down the street or open a salon across town and do it the way you want. That’s totally your prerogative.
But the owners who are busting butt to make an incredible culture and have the best salon in town should make money. They’re making it possible for you to do that beautiful hair you’re doing, not robbing you blind.
Are all salon owners run beautiful, well-led businesses and showing up as incredible leaders? Not even a little bit. For the owner who half-asses it, but wants to make a paycheck, think again. If you want to take home a great paycheck, you better have the best salon in town with the happiest stylists and the best culture. If you’re not doing that yet, that’s what you should aspire for.
There’s no perfect pay structure
From the survey results, there was no standout pay structure. Most of them had a 60-ish percent split of, “I don’t really know what I’m doing” and “I’m not that sad, so I’ll stay here for a while.”
People want to feel like they are in control of their income, that their work directly correlates to the money in their bank account, not like they’ve capped out. Once they’ve capped out, they’re leaving unless you provide a place for them to grow, make more, and do more (or less) work, whatever it is they want to do.
It doesn’t matter what the compensation model is. You will lose your high-performers if you cannot keep them motivated.
There were pros and cons called out on the survey for each compensation method. There were a few I wanted to highlight:
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Our industry either loves or hates team-based pay.
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To the owner struggling to find stylists motivated by team-based pay, you are fishing in a smaller pool because many stylists want freedom and control.
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But if you’re a stylist who wants freedom and control, but aren’t so great at being organized, marketing, managing time and money, or ordering color, team-based pay might be a great option.
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People are fine with being paid commission. It is not about the money; it is about leadership.
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If you pay your stylists hourly, make sure that the hourly potential is exponential. Stylists want to make what they feel like their time is worth.
Stylists and salon owners both want a fair pay structure
“The value of fairness is about the processing of decision making, not the outcome.”
Fair means the business can make good business decisions without hurting employees or customers. Not that the owner and the stylists both make the same amount because it’s “fair.” Their risk of investment is not the same: the owner’s risk is much higher, and the possibility for profit is much lower.
If you’re a stylist who thinks it should be fair, it’s already skewed to you. If your salon owner is “making money on you,” it’s less than 10% of whatever you produce. The vast majority goes to keep a roof over your head.
Get rid of product charges
Many stylists felt like product charges were sneaky. They don’t like that the salon owner deducts things behind the scenes, and they can’t say exactly what it is and not having a full breakdown of paycheck deductions.
Just pay what you can afford to pay instead of having these second-hand product charges.
Don’t pay 60% commissions with a product charge and a 3% credit card fee. Just pay the commission because wouldn’t it be easier if your stylist could look at how much they did behind the chair this week, multiply by 0.35, and know how much commission they’ll make?
If you’re a salon leader, don’t be afraid to have open conversations with your staff about how they feel about your pay structure. If you’re a stylist, explore all the compensation structures that are out there. There is something out there for you.