What’s the Best Commission Rate for Salons/Spas?

June 20, 2021 | By Neil Ducoff | 2 Comments

THE DANGEROUS QUESTION:I own a salon and I’m hiring a stylist. I was going to do a 60/40 split, with me getting 60% and providing the supplies. Is that accurate or favoring one party over the other?”

OK, on the surface, 60% going to the salon — even with the cost of providing supplies — seems straightforward.

But the problem with the “what’s the best commission rate” question is that it demonstrates the massively oversimplified approach that many owners take concerning their single largest business expense. So much so, it’s created a history of devastating results.


As simple as, “What’s the right commission rate?” appears, it is a very complicated question to answer. Here’s why:

  1. There’s the financial reality of your business: Only a review of your financials and expenses can determine what your ideal payroll % should be. But that ideal percentage changes as your expenses, productivity rate, and pricing change.

    The problem is that once your commission percentage is set, any change in operating expenses, product cost, productivity rate, and more — you are stuck with your selected commission rate. Simply put, once commission rates are set, they are extremely difficult to lower without upsetting or losing employees.... Read More

Why Do You Pay Commission?

April 11, 2021 | By Neil Ducoff | 2 Comments

This is not a simple question. Commission has been the defacto pay method at salons/spas forever. For most, “commission” is the way it’s done.

The most common response to the question is, “Commission motivates them to perform and sell.” But does it really?

Commission’s origin is actually in sales-based businesses and industries. If you sell something, you get paid a percentage of that sale. Products, cars, equipment, systems, real estate, services, etc.. The key difference is that the one earning commission doesn’t make or deliver the product or service being sold.

The salon/spa industry is very different because the individual doing the “selling,” or providing the actual service, gets the commission. That seemingly simple difference is far from simple — it’s massively different.

Stylists, estheticians, barbers, massage therapists, nail techs, and other service providers are primarily attracted to our industry for its creative and therapeutic aspects — not because they’re passionate about “selling” or making a commission on what they sell.... Read More

The Great Salon/Spa Tipping Debate

March 21, 2021 | By Neil Ducoff | No Comments

Tipping in salons/spas has always been an emotional topic.

When doing business seminars, I would ask attendees, “How many of you feel there is something unprofessional about tipping in salons/spas?” Just about all hands would go up.

Then I would say, “Keep your hand raised if you would eliminate
tipping in your business to be recognized as truly professional.”
Every hand would go down.

Tipping becomes super emotional when it comes to tip processing, proper reporting of tip income, professionalism, and especially, the thought of going no tipping.

There are many owners and employees that believe that tip income should be tax-free. Or that only reporting a small percent of service revenue is good enough. Or that only tips on credit cards should be reported and taxed. Sorry, all tip income is taxable.

And then there are salons/spas that try to eliminate the processing
fees on credit card tips by implementing “no tips on credit cards”
policies. Some even install ATMs. Many say, “Clients don’t complain,” but in those situations, clients really don’t have a choice.... Read More

Is Your Salon/Spa Business Flawed By Design?

February 28, 2021 | By Neil Ducoff | No Comments

A salon/spa business begins with an idea that quickly evolves into a vision with amazing opportunities.

Once that entrepreneurial seizure grabs hold, you’re willing to “bet the ranch” on building your vision.

If you were an experienced service provider at another salon/spa, it’s likely that part of your plan involved clients following you to your new business.

You hire some service providers, some with followings, and pay them some form of a commission (straight, sliding scale, level pricing, product charges, etc). Why? Because that’s the way it’s always been done.

From the day you open the doors, the prime objective is to “build” your service providers. The reasoning is simple. The faster you build “them” … the faster your company grows.

The energy of a newly opened salon/spa is exciting and empowering. Sustaining that energy is the biggest challenge — especially for owners that are more skilled at doing services than leading a business.... Read More

Why “Who Gets the Credit” Hurts Your Salon/Spa Culture

February 21, 2021 | By Neil Ducoff | 2 Comments

The salon/spa industry’s longstanding approach to compensation is built on one seriously simple method: If a service provider delivers a service, or sells a product, he or she gets a piece.

In order to get that “piece,” the salon/spa must determine “who gets the credit” for the service or product sale.

Here are the four most common “who gets the credit” challenges:

  1. One or more service providers work on one client and each expects to get “a piece” of the ticket.
  2. A front desk/guest services employee sells a retail item to client at checkout. The service provider has a fit because he/she didn’t get the credit.
  3. Front desk/guest services employees disengage from closing or selling retail because the credit and commission automatically goes to the service provider.
  4. A service provider says, “I’m not doing [insert service/product sale] unless I get a piece.”

These four challenges may seem extremely basic, but they’re far from it. Why? Because the moment an employee feels short-changed or cheated, it contaminates your culture and spreads like wildfire.... Read More

One Salon Owner’s Journey from the Fiery Pit of Hell to Giving Back to Those Less Fortunate

January 11, 2021 | By Neil Ducoff | No Comments

Every business goes through good times and bad. Sometimes, the bad times get so excruciatingly painful, the sleepless nights, and feelings of hopelessness so debilitating that some owners lose all hope.

No one opens a salon/spa expecting his or her business to fall into the fiery pit of hell. Yet, many owners find themselves there. The fiery pit of hell is real, it’s ugly, and emotionally demoralizing. So much so, many businesses never emerge from it.

In this post, we put the spotlight on one owner that found herself in the most unimaginable situation a business could be in.

This owner’s name is Lisa Cochran, owner of The Studio in Hattiesburg, MS, and R3 in Laurel, MS.

Lisa is the winner of the 2020 Team-Based Pay Coach’s Choice Award.

We first met Lisa in 2006 at her first Incubator seminar. Her business was in the deepest point of the fiery pit of hell. She was over $700,000 in debt, most of which was back taxes to IRS.... Read More

How One Salon/Spa Did a Complete Turnaround During the Shutdown

December 27, 2020 | By Neil Ducoff | No Comments

What exactly is a business turnaround?

The answer is simple: It’s when a business reengineers its systems, compensation, tipping policy, employee benefits, and pricing to pull itself out of the fiery pit of hell to operational and financial daylight.

In this blog post, we showcase the winner of the 2020 Team-Based Pay Turnaround Award, Kayla Bartholomay Nayas, owner of Enlightened Beauty in Fargo, ND.

How did your turnaround story begin?
... Read More

Inside a Successful Salon/Spa Culture Shift

December 18, 2020 | By Neil Ducoff | No Comments

What exactly is a culture shift?

Think of a culture shift as being obese, in poor health, and knowing that you have to lose 100 pounds. Doing so means completely changing your behavior with respect to diet and physical fitness. It means 100% commitment to doing whatever it takes to become a new you.

It’s the same in business. If your culture is contaminated and toxic, it cannot perform anywhere near its full potential. It’s like you’re watching employees drill holes in the bottom of your ship and hoping the bilge pumps keep you afloat. Eventually the bilge pumps get overwhelmed and the ship sinks.

In this week’s blog post, we showcase the winner of the 2020 Team-Based Pay Culture Shift Award, Mary Ann Brooks, owner of Brooks & Co., in Edwardsville, PA.

Mary Ann converted Brooks & Co. to Team-Based Pay in August of 2018 and never looked back.... Read More

Driving Salon/Spa Client Loyalty in the Days of COVID-19

December 13, 2020 | By Neil Ducoff | No Comments

Strategies definition of Client Loyalty: “The customer satisfaction business outcome is all about delivering extraordinary service, quality and value to achieve maximum client retention — and doing so with a no-compromise passion to be nothing less than world-class.”

In good times, retaining clients is essential.

In COVID-19 times, retaining clients is massively critical. It means becoming super innovative and thinking out of the box to counter the negative impact of clients spreading out appointments and addressing COVID fears.

This week, we showcase the winner of our 2020 Team-Based Pay Client Loyalty Award.

 ... Read More

Retaining Salon/Spa Employees is an Earned Outcome

December 6, 2020 | By Neil Ducoff | No Comments

Strategies definition of Staff Retention: “The staff retention business outcome is all about creating a dynamic and empowering culture to attract and retain the best employees — and doing so with no-compromise leadership, open communication, integrity, and respect.”

FACT: Employees come and go. However, the “employees just don’t stay with salons/spas very long anymore,” or, “Why train them if they’re just going leave,” thinking is doing more to encourage turnover than improve it.

  • Excellent employee retention doesn’t just happen.
  • Paying high commission doesn’t improve retention.
  • Allowing employees to do as they please doesn’t improve retention.

Building an integrity-based culture with a team that’s committing to growing the salon/spa is what retains employees.

This year’s winner of the 2020 Team-Based Pay Staff Retention Award is…... Read More

How One Salon Paid Employees During the Shutdown and Stayed Debt-Free

November 29, 2020 | By Neil Ducoff | 2 Comments

Strategies definition of Profitability: “The profitability business outcome is all about achieving predictable cash flow and bottom line profitability — and doing so with the highest level of no-compromise financial accountability at all levels of the company.”

To showcase what a salon that’s truly locked in on profitability looks like, we interviewed this year’s winner of the 2020 Team-Based Pay Award for Profitability, Laura Pinkas, owner of Shine Hair Color & Design Studio in Columbia, SC.

What was Shine’s number one accomplishment in 2020?
... Read More

Thirty Hair — Doing it Right

November 16, 2020 | By Neil Ducoff | 3 Comments

Winner of the 2020 Team-Based Pay Business of the Year Award

Sarah McGee Mariman is the owner of Thirty Hair in Columbia, MD.

A long-time coaching client of Strategies, Incubator graduate and Team-Based Pay company, Sarah has had quite the journey from the fiery pit of hell to an amazing success story.

Sarah attended her first Incubator Seminar in 2008, after what started out as a great vision to build something special, turned into a cultural and financial nightmare.

Sarah, what was your salon/spa like before going to the Team-Based Pay business model?

Sarah: Team-Based Pay to me is more than just a pay system. But it doesn’t come without hard work and leadership.... Read More

2020 Team-Based Pay Awards Winners

November 16, 2020 | By Eric Ducoff | No Comments

In the following interviews, the 2020 Team-Based Pay Award winners each share how the Team-Based Business Model has helped them build healthy, profitable, and inspiring companies.

They also share how being a Team-Based company helped them survive and thrive during the COVID-19 shutdown.

Profitability Award
 – Shine Hair Color & Design Studio – Columbia, SC

Owner: Laura Pinkas... Read More

My Concern for the Reopening of Salons/Spas

May 18, 2020 | By Neil Ducoff | 8 Comments

First, some background…

My passion is for business and the leadership and systems that make a business productive and profitable.

I believe in transparency, shared accountability and the unlimited potential of a team-based culture.

The salon/spa industry has been the focus of my career for over 50 years. My track record, and the 26+ year track record of Strategies, of helping owners build the companies, cultures and profitability they never thought possible, is impeccable.

I’m sharing all the above not to boast, but to get your attention and to understand what I need to share…because I believe this may be the most important blog post I’ve ever written.

FACT: Salons and spas are historically known for their lack of profitability and high employee turnover.

Fast forward to today

Since mid-February, our industry and economy has been shaken to its core by COVID-19. All previous national crises and recessions pale in comparison. Never before have all non-essential businesses been ordered to close for a month or more. Never before have such massive federal loans and relief funds been poured into small businesses and individuals.... Read More

2019 Team-Based Pay Awards Winners

September 30, 2019 | By Eric Ducoff | No Comments

The fifth annual Team-Based Pay Awards were held September 29th, 2019 at the Westin Buckhead Atlanta in Atlanta, GA. The awards ceremony ran concurrently with Strategies’ Team-Based Pay Conference 2019 at the same location, and were sponsored by Kopsa Otte.

Strategies created the Team-Based Pay Awards to celebrate and honor the superior performance and financial successes of salons, spas and medspas that are currently using Strategies Team-Based Pay compensation program.

Entrants were required to answer essay questions for each of the eight award categories, as well as provide profit & loss statements, balance sheets, cash-flow plans and broadbands for each department.

The 2019 Team-Based Pay Award winners:

  • Best Turn-Around Award

    Mary Kate & Company – Wichita, KS
    Owners: Mary Kate Denton & Rebecca Smith
  • Best Culture Shift Award

    Omagi SalonSpa – Louisville, KY
    Owner: Marian Sang
  • Productivity Award

    Natural Remedies Spa – Vienna, WV
    Owners: Bill & Linda Moore
  • Profitability Award

    Shine Hair Color & Design Studio – Columbia, SC
    Owner: Laura Pinkas
  • Staff Retention Award

    Blush Salon Spa – Fargo, ND
    Owner: Lacey Spaulding
  • Customer Loyalty Award

    Viriditas Beautiful Skin Therapies – Providence, RI
    Owner: Laurie Neronha
  • Coaches’ Choice Award
    A New Beginning – Bethel, CT
    Owner: Carol Romer
  • TBP No-Compromise Leadership Business of the Year
    Poza Salon – Charlotte, NC
    Owner: Pooran Okhovat

Three BIG Cheers for Blush Salon Spa

August 4, 2019 | By Neil Ducoff | 1 Comment

Lacey Spaulding is the owner of Blush Salon Spa in Fargo, ND.

  • Lacey is a long-time coaching client of Strategies and winner of the 2016 Team-Based Pay Award for Culture Shift.
  • Lacey has grown Blush into an efficient, profitable business with a truly impressive team-based culture.
  • Blush Salon has been in the very capable care of Strategies Coach, Steve Swanson.

But nothing can prepare a leader and team for the sudden and tragic loss last June of Johnny Grey, who was not just a valued team member, but a team member with an infectious spirit for life and dedication to teaching and delivering the highest standards of professional salon services.

On August 2nd, Lacey posted the following to the Strategies Facebook page.

I seriously can’t even make this up. We hit our July service goal on the EXACT DOLLAR yesterday. We exceeded retail by $339, and hit service right on as our very last client checked out last night! ... Read More

What Salons & Spas Need to Know about Team Bonus Disqualifiers

November 6, 2017 | By Neil Ducoff | No Comments

Team Bonus Disqualifiers for Salons Spas

If you get caught speeding, you get a ticket.

In sports, if you commit a foul, you get penalized.

So, doesn’t it make perfect sense that if an employee breaks enough rules, he or she can be “disqualified” from team bonus?

The answer is YES, NO and it DEPENDS.

Strategies has been teaching the in’s and out’s of Team Bonus for over 24 years because it’s an integral element of our Team-Based Pay (TBP) business model.

NOTE: Team Bonus is not exclusive to TBP. It can add a “teamwork” incentive to any pay program.... Read More

A Celebration of Industry Excellence and Hope

October 23, 2017 | By Neil Ducoff | No Comments

A celebration of industry excellence and hope

On October 16th, Strategies held the 2017 TBP Award Ceremony during our fourth annual Team-Based Pay Conference.

Over 300 conference attendees gathered together for what has become both an inspiring and emotional evening of celebration.

The best way to celebrate these eight outstanding TBP Award winners is by sharing their own words from their 2017 TBP Award Application:

Productivity Award:

Business: Savoye Salon Spa
Location: Suamico, WI
Owner: Michell Bartlien

“Savoye is a really productive salon. In November 2016, we were over productive, typically were running at 125%. We learned why that wasn’t so great. Regular guests were being turned away, whether pre-booking or not, there were not enough hours available. We have groomed new staff and have already seen a difference in our productivity sticking to the target 85%. Productivity is also about the guest experience. It is consistent and we give them value.... Read More

2017 Team-Based Pay Awards Winners

October 16, 2017 | By Eric Ducoff | No Comments

The third annual Team-Based Pay Awards were held October 15, 2017 at the Hyatt Hill Country Resort & Spa in San Antonio, TX. The awards ceremony ran concurrently with Strategies Team-Based Pay Conference at the same location.
Strategies created the Team-Based Pay Awards to celebrate and honor the superior performance and financial successes of salons, spas and medspas that are currently using Strategies Team-Based Pay compensation program.
Entrants were required to answer essay questions for each of the eight award categories, as well as provide profit & loss statements, balance sheets, cash-flow plans and broadbands for each department.

The 2017 Team-Based Pay Award winners:

Best Turn Around Award: Studio 16 Salon & Spa — Yakima, WA. Owner: Andrea Wintzer
Andi Wintzer Team-Based Pay Awards... Read More

Brand Building for Team-Based Pay Salons & Spas

April 24, 2017 | By Neil Ducoff | No Comments

Being busy doesn’t create a brand.

Filling chairs and treatment rooms doesn’t build a brand.

Building client loyalty to “stylists/estheticians/massage tech/etc.” is more anti-brand building than anything.

There are amazing ways to “build” career opportunities for service providers far beyond “building their book.”

Building a brand means building a “company” that delivers something unique and special to its customers that competitors just can’t match.

Here are TWO significant brand-building strategies for salons and spas that fit perfectly into the Team-Based Pay Business Model:

Strategy #1: Sell “TIME” … not “services”

Your salon/spa sells time in exchange for your professional services. The old business model is about filling up individual service providers’ columns on the appointment book with haircuts, color, skin care, etc. A “seize the moment” business model could easily be about selling clients blocks of time to receive multiple services and professional guidance from a team.... Read More

The Danger of Who Gets the Credit

March 20, 2017 | By Neil Ducoff | No Comments

Danger of Who Gets the Credit

I was in a Barney’s New York store looking for new suit.

I narrowed the selection to a suit I really liked and was ready for some sales help.

About ten feet away, two sales people are having an argument about “who should get the credit” for a sale.

The store was pretty empty so it was easy to hear every word.

This went on for ten minutes while I stood there…waiting.

Had I not liked this suit so much, I would have left and no one would get the sale.

Finally, one of them came over to help. I said, “I could hear you both arguing over a sale. Customers shouldn’t hear that kind of stuff.” Embarrassed, she apologized and helped me buy the suit.

The “who gets the credit” argument plays out in salons and spas every day. Yes … it happens even in Team-Based Pay salons/spas.... Read More

2016 Team-Based Pay Awards Winners

September 21, 2016 | By Eric Ducoff | No Comments

2016 Team-Based Pay Awards Winners

The second annual Team-Based Pay Awards were held September 18, 2016 at the Westin Chicago Northwest in Itasca, IL. The awards ceremony ran concurrently with Strategies Team-Based Pay Conference at the same location.
Strategies created the Team-Based Pay Awards to celebrate and honor the superior performance and financial successes of salons, spas and medspas that are currently using Strategies Team-Based Pay compensation program.
Entrants were required to answer essay questions for each of the eight award categories, as well as provide profit & loss statements, balance sheets, cash-flow plans and broadbands for each department.

The 2016 Team-Based Pay Award winners:

Productivity Award: Moshi Moshi – Chapel Hill, NC – Owner Catlin Hettel.
... Read More

Salon & Spa Interviewing and the PAY Conversation

September 12, 2016 | By Neil Ducoff | 1 Comment

A phone call comes in for a position you want to fill. The prospective employee says, “I’m interested in the [service provider] position you have open. What commission rate do you pay?”

I have never understood why, in the salon/spa industry, the pay conversation can begin before an owner has a chance to say, “Tell me a little about your experience.”

Hiring a stylist, colorist, esthetician, massage therapist, nail tech or any other technical position, is all about finding the right fit in terms of skill, personality and culture. It’s an investment of time, energy and resources to create the right opportunity for the right individual.

It’s imperative to ensure that these pieces fit before the pay conversation begins.

The intricacies of hiring an employee is diametrically opposed to renting a booth or suite where the service provider’s ability to pay rent is paramount.... Read More

Owning an Employee-Based Salon or Spa

July 18, 2016 | By Neil Ducoff | No Comments

Owning an Employee-Based Salon or Spa

There are many voices that say, “Commission salon/spas are a thing of the past.”

What I don’t understand is why “commission” … a method of compensation … is used to describe an employee-based business.

The voices predicting the demise of commission salon/spas mostly come from those involved in booth rental and suites (independents that rent and those that need to rent space). Ads for suites all tout the same theme …

“Be your own boss.”

Yes, suites are the new shiny thing and getting lots of attention, but they target the talent at employee-based salons/spas to fill those suites.

Commission salon/spas are easy targets because the hook is: “Why make 40% or 50% when you can keep it all?”... Read More

Team-Based Pay Case Studies

June 30, 2016 | By Eric Ducoff | No Comments

Want to see what Team-Based Pay looks like in action? Here are two case studies showcasing the financial and cultural horsepower of a Team-Based Pay salon/spa.

Case Study #1 – The Urban Salon Team – Burlington, VT 

Case Study #2 – Rituals Salon-Spa – Midlothian, VA

Team-Based Pay Case Study [#1]: The Urban Salon Team

Team-Based Pay Case Study - Urban Salon TeamThe Urban Salon Team
2015 & 2017 Team-Based Pay Awards winner for Client Loyalty
Owner: Stacey Hamblett
Location: Burlington, VT
Square Feet: 1,300
Year Opened: 2000
Began Team-Based Pay: June 2011
Website: urbansalonteam.com... Read More

The Dirty Truth About Salon & Spa Service Payroll Costs

June 6, 2016 | By Neil Ducoff | 4 Comments

Warning: The following may be a tough pill for many salon and spa owners to swallow… but it’s one that needs to be swallowed nonetheless.

Ready? Let’s talk salon and spa service payroll costs:

The Strategies benchmark for service payroll (not commission rate) is 30 to 35 percent of total revenue (Service Sales + Retail Sales = Total Revenue) … as it appears on a Profit and Loss Statement.

Each and every time we post this benchmark on the Strategies Salon/Spa Idea Exchange Facebook discussion group, owners say, “No one will work for that commission rate.”

And of course, stylists and other service providers post high attitude comments like, “I would NEVER give 65 percent of what I bring in to the owner.” Others say, “Based on my skill and experience, I would be insulted to be offered such a low commission rate.”

Disconnect on Service Payroll Percent

No matter how many times we clarify that our benchmark of 30 to 35 percent of total revenue has nothing to do with commission rates … it is clear that many owners and service providers are have difficulty understanding that we are referring to the total payroll cost for all service providers to the business.... Read More

When Salon & Spa Employees Choose to Leave

April 11, 2016 | By Neil Ducoff | 1 Comment

When service providers decide to quit a salon/spa, it is anything but, “Go gently into that good night.”

All too often, the process plays out with clandestine plotting and close teammates swearing secrecy. The easy part is quitting the salon/spa.

The difficult part is figuring out how to get the clients they serviced to follow them to a new location. The presumption is that all clients that requested them “belong to them.” And why not, they did the work.

Owners have a very different perspective. Owners look at their investment in training, coaching and filling the service provider’s appointment books with new clients. Owners look at the collective effort that is required to “build” a successful service provider.

Most importantly, owners regard their customer database, client history, formulas and other data as an asset and company property.

There are many voices in the industry that say, “no one owns the client” and that clients are free to go wherever they choose. Yes, clients are free to go wherever they choose. But, when the departing employee actively solicits those clients … often times through unauthorized use of client data … that’s when things get ugly.... Read More

Why Retail Commission Does Not Work in Salons & Spas

March 21, 2016 | By Neil Ducoff | 2 Comments

For an industry that is so dependent on professional products, we still haven’t broken the secret code to get professional service providers to sell.

Even with the advancement and sophistication of salon and spa retail space, service provider engagement in retail selling is disappointing at best, and frustratingly indifferent at worse.

We’ve all heard the infamous, “I’m not a salesperson,” statement from service providers. Yet, the predominant reward for selling retail at salons and spas is a salesperson commission rate. If the process of selling retail is distasteful … will a retail commission rate make selling retail taste better?

A frequently asked question is, “What’s a good retail commission rate to motivate my employees to sell?” Here are three reasons why this is the wrong question to ask:

  1. And my motivation is what? … : The question assumes that there is a magic retail commission rate that will motivate employees to sell. As previously stated, if the majority of service providers just don’t like to sell retail, there is no retail commission rate that is going to motivate them to sell.
  2. And the profit on retail is… : The standard 50 percent “Profit Margin” on retail is NOT “net profit” on retail. To properly understand the TRUE profit on professional retail products, you must charge retail its share of the overhead expenses for “living” in your business. Retail overhead is based on the percentage of square footage that retail occupies. Overhead expenses for a salon/spa typically run +/- 40 percent of total revenue. If the product cost is 50 percent of selling price, you pay a 10 percent retail commission and overhead is 40 percent … there is NO retail net profit. Pay more than 10 percent and your retail business is running at a loss. Sorry, but that’s how the numbers really work. RELATED: Want a some help understanding how the numbers work in a salon/spa? Check out part one of this three-part post on salon/spa profit.
  3. And the credit goes to … : Salon/spa software can track every service sold … by an individual. But retail is not a service. Very often, retail recommendations are closed at check out. Very often, guest services sells additional product(s). Very often, the client buys products that weren’t recommended. Just because a service provider delivered the service doesn’t mean he or she created the entire retail sale. Who gets the credit for the retail sale is complicated when one or more service providers and guest services staff are involved. The “who gets the credit” quagmire for the retail commission almost always creates more hurt feelings, in-fighting and indifference. Check out this article on “Who Owns the Client.”

When professional product retailing truly emerged in the early 1970s as a profit center, the seemingly logical reward systems were to offer service providers retail commission. That’s how they were paid for service – so it just made sense to do the same for retail. The instantaneous problem was that retail is much more of a team sport than a service. Multiple employees can be involved in creating a retail sale while, for example, one stylist can deliver a cut, color and style.... Read More

What California Bill 1513 Means for Salons and Spas on Commission

March 17, 2016 | By Eric Ducoff | 8 Comments

California Bill 1513 for Commission piece-rate legislation salons and spas

Note: Although CA employment attorneys were consulted when researching this article, we highly recommend that you contact a legal representative to discuss your rights and responsibilities on this topic. Strategies is not a legal councel and the contents of this article should not be considered as such. We will be updating this post as more information is presented to us.

Commission salons and spas in California were just given the ultimate “Bad Hair Day”.

With the passage of California Bill 1513 “piece-rate legislation”, the rules have completely changed on how salon and spa owners can compensate their stylists and massage therapists.... Read More

How Employee-Based Salons Will Endure Rental & Suites

January 25, 2016 | By Neil Ducoff | 2 Comments

There are those in our industry who believe that the popularity of booth rental and suites is going to mark the end of days for employee-based salons. Sorry, but this is not the case. Is there a decline in the number of salons? Yes … a few percentage points … but nothing worthy of saying employee-based salons are done for. Still, this kind of fear-based rhetoric is certainly enough to send needless chills down a salon owner’s spine and have them questioning the viability of their once predominant business model.

Booth rental has been around for decades and has most definitely penetrated almost every market. The emergence of salon suites and suite franchises solidifies the booth rental model’s place in the salon industry. However, with all due respect, much of the mass advertising for the “suite opportunity” is half-baked and misleading. Why? Because the suite business model is about getting stylists to sign multi-year leases.

Markets change, business models come and go … but to survive and thrive, independent salons must adapt. To truly succeed and endure – salons must become innovative and distinctive brands that deliver truly extraordinary technical skills and customer service at a level that’s often discussed, but rarely delivered.... Read More

2015 Team-Based Pay Award Winners

October 6, 2015 | By Eric Ducoff | No Comments

The first annual Team-Based Pay Awards were held September 27, 2015 at the Westin Chicago Northwest in Itasca, IL. The awards ceremony ran concurrently with Strategies Team-Based Pay Conference at the same location.
Strategies created the Team-Based Pay Awards to celebrate and honor the superior performance and financial successes of salons, spas and medspas that are currently using Strategies Team-Based Pay compensation program.
Entrants were required to answer essay questions for each of the eight award categories, as well as provide profit & loss statements, balance sheets, cash-flow plans and broadbands for each department.
Industry icon, Ann Bray (2014 International Hairstylist of the Year / Hunger Games), was the keynote speaker at the award ceremony. Ann told her story of how Team-Based Pay not only saved her family’s salon, but also helped it become profitable and debt free. “I went from working all the time and not taking a paycheck, to not working at all and still taking a paycheck,” said Bray. “And I owe that all to Team-Based Pay.”... Read More

Making Peace with Performance Reviews

August 10, 2015 | By Neil Ducoff | No Comments

Do you do quarterly performance reviews at least once a year? That’s a line from my No-Compromise Leadership book that always gets an unsettled chuckle. Why? Because there’s something about conducting performance reviews that causes them to be avoided, conveniently forgotten or dreaded. For many leaders, the thought of scheduling performance reviews is the equivalent of sentencing themselves to hour after hour after hour in purgatory. If you regard once a year as bad enough, quarterly performance reviews are going to be pure torture. But no matter how you view the process, avoiding performance reviews is a massive leadership compromise.

All leaders want to have a dynamic, efficient and productive business with a culture dedicated to delivering relentless quality. They want engaged employees who believe in the vision and purpose of the business. And more than anything … they just want employees that do their job. But what leaders want, requires that leaders also do the most essential part of their job – to coach and inspire employees. Performance reviews are simply part of the work of leadership to bring out the best in those they lead.... Read More

Anatomy of Payroll Expense

August 3, 2015 | By Neil Ducoff | No Comments

If you have a business, you have payroll expense. Even if you work alone, after all the expenses are paid, you are the payroll expense. Machines and computers may automate, speed and simplify many aspects of work, but a business is still about people. And when a business has people, payroll is and always will be the largest expense category.

Payroll buys a complex array of talent, thinking and behavior. People have ideas, dreams, passion, skills, courage, imagination and other purely human qualities that give a business life and meaning. People are also the most challenging aspect to leading and growing a successful company – especially in a service business where quality and excellence is dependent on how well the service experience is executed.

Here is my No-Compromise Leadership anatomy of payroll expense:... Read More

What is the best commission rate to pay salon or spa staff?

July 24, 2015 | By Neil Ducoff | 18 Comments

This question is routinely posted in discussion forums. And just as routinely, and with the best intentions, the same old responses begin piling up.

Some suggest 45%, some 50%, and some even 60% and higher.

Some suggest sliding commission pay scales. Others advocate commission with product charges. Heck, it’s even assumed that if a salon isn’t booth rental, then it’s a “commission salon.”

FACT #1: The question, “What’s a good commission rate?” is the wrong question. The question itself identifies a lack of understanding of the financial realities of a salon/spa business.

FACT #2: The correct question is … “What percentage of my salon/spa’s total revenues can it afford in service payroll expense?”

The days of 50% commission are long gone. The days of 60/40 commission split rates in salons (40% to the salon) never should have happened because it is financial suicide for the business.

Total service payroll (hands that do the work) for the business must live between 30% to 35% of business’ Total Revenue (Service + Retail Sales) – as it appears on your Profit and Loss Statement. (Again, that’s 30-35% of the company’s Total Revenue, which is very different than 30-35% commission per service provider.) Once you understand what THAT number is … you can design your pay system.... Read More

Choosing Your Business Model: Employee or Independent Contractor

July 20, 2015 | By Neil Ducoff | 2 Comments

A business model is best described as a schematic that defines all of the working features, components and capabilities that will drive the business. If you want your business to deliver consistent quality and growth potential, those elements must be built into its business model. If you want your business to deliver flexibility with minimal management oversight, those elements must be built into that business model. Just like a Ford F-150 truck will never perform like a Ferrari 488 GTB, a business model can only perform the functions it was designed to deliver. A McDonalds will never perform to the standards of a Chef Gordon Ramsey restaurant.

An independent contractor (booth rental or suite) business model will never perform like an employee-based business model. The two business models are diametrically opposed and, by design, conflict with each other. The employee-based model generates revenues through a coordinated process of delivering services and products to the company’s customers. The independent contractor model generates revenues through rental fees collected from independent contractors that service their own customers, add-on services for independent contractors and potential retail sales.... Read More


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