Commissions advice?

[Skoots2019]

Hi all

I'm looking for some advice on commissions offered to stylists on services not retail. It would be great if anyone could give me some examples on what you do for your staff that is both achievable for the stylist and affordable for the salon. ie tiered levels of commissions or just a flat commission rate over and above a multiple of their basic takings.

Hope this makes sense and thanks in advance.

Kind regards

 

[House Beauty]

It depends entirely on the cost price and how much you are selling it for. You need to make enough profit to buy more stock once sold but also actually make money.

Then if there is not enough profit for commission as well you need to raise the price of the product.

 

[TheDuchess]

It depends on the mark up. And whether you are VAT registered or likely to become VAT registered. And what your set up us - Spas sell a lot of retail.

High Street Shops usually mark up 2-300% which is how they can run a half price sale.

My salon retail is usually 30-40% profit. But remember you have to buy testers. And pay carriage. This takes the profit margin down to closer to 20-30%.

I quickly realised that giving staff 10% commission is giving them half the profit.

I abandoned commission because it didn't seem to incentivise staff enough - 10% on £500 sales is £50. If staff aren't comfortable retailing that's not going to motivate them. You have to work quite hard to retail £500 a month. I personally retail around £2500 a month. That makes me a star. If I was offered £3000 more wages a year I'm not sure if I'd feel special enough. Offer me a company car...

I still remember being sent on a team incentive to Euro Disney for a weekend in September 25 years ago.

A pay rise of 30p an hour is about the same as a bonus of £50 a month. Giving people a sales target which maps to their hourly rate of pay seems to work better as an incentive in the lower levels of target. "Sell £150 on average a month for 3 months for an increase in your pay of 10p an hour" etc.

I find that hourly pay is a nice transparent way to pay staff and also helps with calculating holiday pay which has to be based on average earnings. If you have a high commission earning staff member you have to pay holiday pay equal to the commission they would usually make.

I also target by product sales actual numbers rather than value. This rewards junior staff who understand cuticle oil but are afraid of expensive skincare products. They are targeted to sell to one client in 5, but I explain this as "try and sell a product a day." If they sell 25 products in a month = free product of the month. This kind of incentive works well for youngsters who haven't already got bursting bathroom cabinets