Renting Space vs.Paying Commission
I was just offered an opportunity to rent a massage room in a local salon for $150 a week (or share with another therapist for $75 a week.) The salon will supply the massage table, storage, and towels for the therapist(s) but supplying the table linens is the responsibility of the therapist. The salon will also do some advertisement and help promote my services along with other services offered at the salon but will not supply business cards for me.
The owner says the salon is located between two area colleges and other businesses which is "sure to bring clientèle and a steady flow of walk-ins into the salon" to whom I can also market myself. How does this deal sound overall? Is it fair/ordinary?
I've been also approached by another salon with a 60/40 deal - that is the salon getting 40% of a $60 fee for a 1 hour Swedish massage. Is that percentage split typical?
Thanks for your help!
New Massage Therapist
Dear NMT -
Thanks for your email and questions.
Let's talk about the first situation first - the room rental opportunity. To be honest, I can't really say if it is fair or unfair...it is just a deal. Fairness really would have to be evaluated and determined by the person(s) looking at the space and opportunity. For a new therapist though, it probably wouldn't make any sense as there is no guarantee that the therapist would have any clients or income to pay for the space initially. Not knowing how the salon is set up and what the various logistics of the space are like again makes it really impossible to know if this is a good deal.
Here are some questions that would need to be answered are similar to any other office rental situation:
- How large is the room?
- What is the acoustic/sound quality like?
- What is the atmosphere/vibe/reputation of the salon?
- What other services are being offered on-site? (This is especially important as it related to chemical smells and dryer sounds that come along with most salons.)
- What kind of access is given to the room and salon (hours of operation)?
- Who interviews or decides on the other therapist?
- Is the location desirable and easy for clients to find/get to?
Now let's look at how this deal could make sense. An established therapist is looking for a new office. Currently she is working on a percentage basis paying 40% per client to the salon where she works. However the salon has recently changed owners and her new boss plans to get rid of massage entirely unless the therapist agrees to becoming an employee, working a set schedule and making an hourly rate.
The therapist has worked very hard to market herself and feels this change is not in her best interest. She sees 10 clients a week average at $60 per service for a weekly gross of $600 and pays a commission to the current salon of $240 per week. The move to a flat rate of $150 a week makes total sense to her, especially since she likes the new space better and it is convenient to the bulk of her current clients. Besides, she really likes being self-employed and does not want to be an employee or give up the flexibility she has become accustomed to. Bear in mind that saving money is not the only or even the best reason to take an office. There are many factors that should go into that decision. Always do your homework.
Now for a few thoughts on the second opportunity, the 60/40 commission split. That rate is actually more typical of how things were when I began doing massage more than 15 years ago. It is also probably one of the best deals you'll find working in someone else's business and/or until you are ready to rent your own place someday. Again though, money is not everything and you must consider all the factors of the work environment, not just the $$$.
Back to the commission structure. What is more typical in today's massage and spa workplace is a split the other way with 40% being about the max commission level you could expect. In many cases, pay is hourly, a flat fee per service or perhaps a combination of any or all of these. The basic rule of thumb is that the grander the spa, the lower the pay percentage as the overhead is higher as may be the prices. (Spa owners, if you need to talk to someone about figuring out the best way to pay your staff, email me at Felicia@spalutions.com and I will put you in touch with some compensation experts!)
In my opinion, what matters most is finding a place where you are happy, do your best work, and feel excited to bring your clients and prospects. As a new therapist, you may also find comfort in working in a place with other therapists so that you feel supported and have growth opportunities beyond what you learned in school. This can be a small price to pay compared to making a larger commission per session but feeling alone.
And in today's economy, just having a place to practice an art that you love and earn a steady living is worth a lot. I really encourage people to be grateful for all the blessings that come with their present situation and not always be looking out for the bigger, better deal. That type of practice can come back to hurt and haunt you - and will slow your overall success for sure.
Hope that helps!
Do you have questions about how to market or improve your spa, massage or wellness business? Send them to Felicia@spalutions.com and you may see it (along with the answers) in an upcoming blog.
Categories: Business Q and A
Tags: office space compensation massage therapy
I simply cannot fathom someone taking 60% of a therapist's pay. And spa and clinic owners wonder why they have such a massive turnover and can't build any staff loyalty.
The five therapists who have been here with me the longest get to keep 70% of what they make. The ones who have come after get to keep 60%. I have no turnover. I just keep adding staff members as the business grows.
In August of this year, I was able to expand into my third suite of offices. The success of my business is due to my dedicated staff. I have hired the best people I could get, and pay them enough that they want to stay. My place is not the Grove Park Inn, but it's not dumpy, either...it's just a nice, middle of the road place in a professional building.
I provide laundry service, don't have to do very much advertising because word of mouth accounts for over 90% of our business, and the therapists just have to supply their own lotions and potions.
My clients appreciate the fact that familiar faces are always here. My staff appreciates being appreciated. It has served me very well to handle things this way, and I am very happy knowing that I am enabling over a dozen people to make a good living and still making a living myself. In spite of the economy, we have actually beat last year.
I feel very blessed to have the people I have, and I encourage other owners to look at things in this perspective--you can't do everything yourself, and it is your staff members who will make or break you. If they're appreciated and paid what they're worth, they won't just be looking for the next best thing to come along, and you won't have the constant turmoil of hiring and training new ones, only to have them leave when they find a better deal.
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Thanks for your comments, Laura. They are always welcome here
I think the variety of business models and pay structures in the massage and spa industries vary so much because of the overhead it takes to run certain types of businesses. For example, spas of the plush, over-the-top style that have become more and more common place tend to have high dollar rents, large support staffs, and big advertising costs that cut into the overall profit margin. They also tend to provide more for the employees/practitioners than some of the smaller mom-and-pop shops do in terms of supplies, equipment, uniforms, marketing support, various infrastructure and client flow all while maintaining an expensive ambiance.
The franchises I've been too seem to have dialed it down a notch in terms of the overhead but their service prices are cut as well so they can't offer the same pay structure that a standard massage or skin care practice can. But again, they are providing a system, infrastructure and steady flow of clients that the service providers basically just have to show up and see. Not a bad deal for someone who has just graduated from school or who has no desire to work all the unpaid hours required to build a practice.
In my private massage office, I've had a number of independent contractors work with me for the last couple of years. Because my overhead is so low and because I have absolutely no desire to be involved in helping build their businesses, I charge a flat fee per each use of the room. If they bring their own sheets, it is $20 per session regardless of the duration of the appointment. If they want me to provide and clean their linens, it is $25 per session. Basic equipment and oil/lotion is furnished (no advertising or business cards though) and they can charge their clients whatever they like. If I send them a client I cannot see, then I take 50% of the fee since I referred them the business. But for the most part they are completely on their own in managing their schedule, clients and success. This works for my current situation but if I were to open or manage another spa or group practice, my pay rates would be different.
The bottom line in my opinion is that every situation is unique. The massage therapist or esthetician who is a motivated, self-starter with a knack for marketing themselves and/or growing their business (as well as that of the spa/practice) does deserve a higher level of pay and can probably find it. Likewise, someone who plans on doing the bare minimum or just showing up, seeing clients and then doing no follow-up, no re-booking, no setting of a treatment plan, deserves a much lower level of pay. Those factors combined with the needs of the business to survive and thrive are what should determine both what fees the client pays and what level of pay each staff member receives.
The sad truth is almost every spa and group massage practice owner I meet in my consulting business has not found the balance between what the business can afford to pay and what the service providers think they should make. There is almost always a high level of tension around this area because the owners never took the time to see what the business' needs were from each service or room on a daily, weekly or monthly basis. Instead they just asked around to see how much their competitors were paying - with little to no knowledge of those business' expenses - and matched or exceeded that level of compensation. And they are often struggling to stay afloat or even pay themselves as a result.
Even more sad is that many service providers have no concept of the costs of doing business and assume they are being ripped off by their boss or simply don't care what happens to the business as long as they get paid what they want. As a spa owner, I experienced this first hand many times. For example, one staff member - my highest paid employee at the time - came to me for a raise. That raise would have increased her pay to a level where we would lose money on every service she provided, so I told her I could not do it and why. Do you think she was sympathetic? No...she told me she didn't care that I would be losing money if I paid her more. Soon after our meeting she quit which was actually a blessing for us both. As for the raise...I suspect that it would not have been enough money over the long term to keep her happy and soon she would have been back to ask for another increase in pay.
To wrap up, I'll just interject that pay is not the only thing that keeps you from having high turnover. There's a lot to be said for just treating people well, valuing them and making them feel like they are part of the team. As a spa owner, I always worked hard to find ways to connect my staff with each other, the clients and the community and to make our spa the best place to work, period. I did lots of little things to let each employee know I cared and that their contribution was important to the success of the business. I also paid them as much as I could afford to pay. I also made room in our budget for the business to succeed and for me to be rewarded somewhat for the sacrifices and risks I made in opening the business and providing a place for us all to make a living. That is not ripping people off - that is why people open businesses.
To anyone who is a spa or massage business owner, I encourage you to find a way to ensure that everyone in the business can succeed financially...including you. As for those service providers who want to earn more than what your business can afford to provide, there are other options out there for them. Let them go and find the one(s) that will make them happy!
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Great information. thanks for this information i really like it. can you give me more details about property mortgage?
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