Congratulations! Your business is growing and you’re thinking about adding employees to your salon. Just as important as finding the right people for your clientele, you’ll need to determine how your new employees are going to be paid.

At GlossGenius, we’ve worked with thousands of beauty professionals (including hairstylists, barbers, nail artists, estheticians, makeup artists, and more) who have successfully taken their business to the next level, and now it's your turn! With employees, you have total control over their schedules, offered services, and which clients they get to work with.  Our all-in-one beauty booking app can help harness the potential and profitability that comes with expanding your empire.

Below, we’ll walk you through the most popular payroll options for independent beauty professionals to help you find the perfect fit for your flourishing business!

4 Ways to Pay Your Staff as a Salon Owner

Here are four pay structures salon owners can use:

1. Hourly Wage

The simplest of your options is to pay an hourly rate. Perfect for varying schedules and newer employees who may be working as your assistant or whenever you need an extra set of hands.

• Pros: Paying hourly allows you and the employee to always know how much they are being paid, while being a great way to keep your employee costs low.
• Cons: Keep in mind you’ll have to keep track of how long your employees work and motivate them to upsell your clientele without any additional compensation.

2. Annual

An annual salary is not just for professionals behind a desk. Depending on your business, this could be the best way to slay. Unlike hourly-based pay, your employee will have a set schedule.

• Pros: You won’t need to keep track of your employee’s hours and their pay covers all the side jobs and additional tasks they complete between clients.
• Cons: You may need to find things for them to work on during slow periods in order to keep this model cost-effective for your salon business.

3. Commission Pay

Having commission structures based on bookings is the best way to accommodate employees of all levels and nurture a career growth path. Your employee can work hard to build their skills and client lists and will directly feel the results of their effort on payday. This is excellent for salons with retail products for your employees to upsell.

• Pros: A commission-based payroll option can equal a happy team and a happy profit and encourages stylists to invest even more in their client relationships!
• Cons: This requires more hands-on money management practices and is difficult to budget for. With this approach, having a good relationship with your accountant will go a long way especially when tax time rolls around!

Note: The United States labor laws require that a business takes careful consideration into the prevailing minimum wage against the commission earned during a specific pay period.

4. Team Or Performance-Based Pay

This option cultivates a supportive environment by working together, often providing a more well-rounded business with employees specialized in different areas. This method gives the salon and business owner more control over the company culture and payment structure.

• Pros: Your employees will have a regular paycheck and can be more flexible with their time behind the chair. They have more time available for promoting the business, honing their skills, and servicing clients without needing to rush.
• Cons: Over-performers may feel they’re carrying the weight of the brand on their shoulders, so be sure to keep an eye on each employee’s performance and find ways to keep them all on track to meet the collective goals of the business.

Overall, choosing the right salon compensation structure comes down to many factors within your own business. There is no right or wrong answer. You are investing in your brand and will be successful as long as you take the time to choose the best option for you!

Conclusion

As a salon owner, it is essential to carefully consider how you will pay your employees to ensure your business remains profitable while keeping your staff satisfied. Each of the four payroll business models discussed in this post has its pros and cons, and it is crucial to weigh them against your business's unique needs before making a decision.

Whether you opt for hourly pay, annual salary, commission pay, or team or performance-based pay, the key is to find a compensation model that works for your business and your employees. By taking the time to make the right choice, you can ensure the continued success of your salon staff.