Should you choose commission or booth rental for your salon?
This one is for owners.
October 10, 2026
Salon renovation, branding, marketing, service lists. That’s the fun part. Choosing how you decide to compensate your employees is the part that’s not so fun but one of the most important aspects of being a salon owner and manager.
When deciding on compensation structures, you have three options:
- Hourly rate
- Booth rental
- Commission
The legal implications
Let’s go over the legal implications first.
These rules are based on California law; check your state’s requirements.
Booth rental
Only Licensed Cosmetologists, Licensed Manicurists, Barbers, Estheticians, and Electrologists are permitted to rent booths as independent contractors. They must be able to set their own rates, receive payment directly, control their own schedule, maintain their own business documents, and supply their own tools and products. Salon owners cannot require a booth renter to work specific hours, use the salon’s central booking app, wear a specific uniform, or use salon-provided color lines.
Hourly
Traditional hourly positions pay at state minimum wage or more with no sales commission attached. Timekeeping must be meticulously tracked and rest breaks must be provided and accounted for. Employees must be paid while on-site and if they are sent home early must be paid half of their scheduled shift.
Commission
To classify pay as commission, you must pay a base hourly rate of at least two times the state minimum wage for all hours worked, independent of or in addition to the commissions earned. Commission employees are entitled to overtime pay and must be paid at least twice per month.
The financial risks
After you’ve chosen what you can handle, legally, you want to consider the financial risks. Who carries the burden of a slow week?
Hourlyhas the highest upside. Every dollar that comes in the shop that is above the stylists’ wage belongs to the owner. The shop owner owns the books and the retail sales. The downside is that wages, payroll taxes and other costs are still due.
In a scenario in which the salon pays commission, the owner will keep less during a busy week. So, same as hourly but the shop keeps less of the revenue. The upside is the owner keeps the clients and retail sales.
Booth rentis the most predictable, but the least income. Owners share the costs with their renters. Renters pay an amount per week to work in the salon. Renters pay for their own tools and products. The clients and product sales belong to the renter. The biggest risk is an empty chair earns $0 and an owner misses out on a percentage towards the salon’s rent for however long the chair is empty.
The key takeaway
The key takeaway is what risks your salon can sustain. New salons with low volume clientele may choose to rent a booth out until they can sustain a certain level of recurring customers. Well established salons may choose to pay their employees hourly to produce more predictable books. A commission salon may leverage this incentive to build visibility into their salon. It all comes down to the culture and volume of your space.