Product and Service Charges:
Many of our salons/spas are setting up product deductions or service charges to stop paying commissions on products used in a service and to help cover education, client marketing, and business building promotions. NOT to cover the overhead of running the salon/spa.
You could raise the commission percentages at each level if you set up a product charge and service charge. These charges will take the cost of professional products "off the top" and will create an education fund and savings plan for each operator.
Set up a product charge taking the cost of products off the top before paying commission (this needs to be done with a price increase). This should average about 10%. When an operator reaches service sales of $ 1000.00 per week, the salon/spa will absorb the product charge.
Set up a service charge of $ 1.00 per service. This charge will be split as follows:
25% of the dollar will go to the operators' education fund to be used for advanced education, shows, and travel expenses
25% of the dollar will go to marketing including the Birthday and Referral programs the salon uses
25% of the dollar will go to salon remodeling (the average salon increases sales 20% the year they remodel)
25% of the dollar will go to a profit sharing fund in which the employee will be fully vested after five years
The service charge will be absorbed by the salon every week that the operator reaches
$ 1500.00 per week in service sales. This rewards your top producing operators and makes the service charge a "right of passage" in the salon's culture.
Creating an Education Fund:
Taking the $ 1.00 per customer service charge and using .25 cents of that dollar in an education fund will generate a large personal education fund. An operator doing
$ 800.00 per week with an average ticket of $ 20.00 will create an education fund for themselves totaling $ 520.00 per year.
$ 520.00 per year could be used to attend the Midwest Beauty Show with ALL expenses paid. $ 520.00 could be combined with other operators' education funds to get a monthly in salon education class from top name talents. The potential is unlimited when a fund like this is put into place!
Creating an Employee Savings Plan:
Using the same example operator just a 25 cent per customer service charge will generate a savings plan, using simple interest, of over $ 3250.00 in FIVE years!
Compensation for your administrative and reception staff should be based on a base salary or hourly pay plan with bonus incentives for gift certificate sales, override commissions for increases in retail sales over present levels, and prebooked customers (booking future appointments with customers before they leave the salon).
NOTE: always enter the payroll info and run sample reports to make sure numbers are correct for payroll. MIKAL is responsible for the proper function of the software but not the calculations based on the information entered on the screens. That is your responsibility!