Case Study: How a Salon Suite Lease Can Increase Your Earnings
If you’re currently working as a commission-based stylist at a salon, making the transition to a private salon suite lease has the potential to supercharge your pre-tax income (possibly by as much as $35,000 or more per year). Becoming your own boss is an exciting prospect and can be a savvy business move if you have loyal clients who will follow you to a new location. And at Indie, we have a Commission to Salon Suite Owner Roadmap to help you understand what’s involved and how we help.
We know how important it is to review the numbers before making your decision, so we provide a real-life case study here. One of our Indies, Kelly* (name changed for privacy), consulted with our Market Manager, Kandice, for a detailed analysis of her business data. Here, we break down the numbers to demonstrate how becoming an Indie can boost Kelly’s earnings. If you’d like to follow suit with your own data, Kandice is happy to help you. We recommend you have at least three months of data on hand (preferably more).
Step One: Review Your Current Numbers
Once Kelly toured our studios and fell in love, she knew she wanted to become part of our community. She and Kandice sat down together for a Commission to Salon Suite Owner Consultation and reviewed Kelly’s data. Here’s what they discovered:
- Number of clients: Kelly sees an average of 25 clients per week.
- Service ticket per client: Kelly has an average service ticket of $90.
- Product sales volume: Kelly sells approximately $200 worth of products each week.
- Weekly service sales: 25 clients x $90/service ticket = approximately $2,250 per week in earnings.
- Studio cost: The Indie Salons studio Kelly chose is $330/week.
Step Two: Analyzing Kelly’s Situation
Based on the information that Kelly provided, here’s a breakdown of what she currently earns as a commission-based stylist vs. what she estimates to earn as an Indie:
- At her commission-based job, Kelly takes home 50% of her $2,250 weekly service sales. This equates to $1,125 per week.
- With $200 in product sales per week, Kelly only takes home 10% ($20). Not at Indie Salons–she’ll keep 100% of her profits.
- After subtracting rent and product expenses, she’s expected to take home $1,880 weekly compared to $1,145 at her current commission-based job. That’s a pre-tax increase of $37,485 per year!
Step Three: Understanding the Numbers
Curious about how Kandice and Kelly reached this conclusion? Here’s a look at the math:
- As an independent entrepreneur at Indie Salons, Kelly will keep 100% of her income from services ($2,250 per week).
- She’ll also keep 100% of the profits from product sales. The cost of these products is about 50% of the retail sales price, so she’ll take home approximately $100/week from product sales ($200 x .5=$100).
- When Kelly purchases products through our wholesale beauty supply program, she’ll receive 10% back as rent rewards. 10% of $100 in purchases adds up to $10 in rent credits per week.
- Her operation expenses include the cost of her studio at $330 per week, plus $100 in products and $150 in additional expenses. This equals $580 per week to conduct business.
- The bottom line: Even without increasing her clientele, Kelly is expected to earn an additional $735 per week.
There are many benefits to being an independent salon suite business owner, including creating your own experience, setting your own schedule, playing your own music, and creating your dream salon environment (and with Indie, not having to do it alone!). Our Commission to Salon Suite Owner Roadmap will help you with the steps it takes to get there.
One thing to point out about the figures above. As an independent business owner you do have to pay employment taxes (15% versus 7.5% as a commission stylist), however you also have the opportunity to deduct many business expenses such as equipment, your rent, education, products, software, and more. A rule of thumb quoted by many industry business coaches is that if you compare two stylists producing $100,000 behind the chair, the business owner comes out ahead of the commission stylist generally by 30% or more on an after tax basis.
As you probably guessed, Kelly was blown away by the numbers of this real-life case study and joined the Indie Salons family. We love her success story and are always excited to see new Indies write their own story.
If you’d like to chat with Kandice about a salon suite lease in Boulder, Denver, Lone Tree, or Cherry Creek, she’s more than happy to help you understand whether you are ready, including understanding your unique situation, and if you like, going through your data and/or walking you through our Roadmap. As an independent Colorado based business, we’ve helped well over 100 beauty professionals successfully transition from salon to salon suite owner. We can help you feel confident that becoming your own boss is the right step at the right time. Ready to get started and give yourself a much-deserved raise? Give Kandice a call or text at 303-792-8222.