Booth Rental vs. Commission for Dog Groomers

Under commission, the salon keeps a share of every groom and covers the building, the supplies, the booking system and the employer half of payroll taxes. Under booth rental, you pay the salon a fixed rent for a station, keep the full service price, and cover nearly everything else yourself. Neither is the better deal in general. Which one pays more for you comes down to how much revenue you reliably bring in and how bad your slow weeks get.

What changes when you rent a booth

As a booth renter you are usually treated as self-employed rather than as an employee. In practice that tends to mean:

• You set your own prices and your own schedule, and you usually book your own clients.
• You buy your own shampoo, blades and supplies, and often your own tools.
• Card processing fees come out of your revenue.
• No one withholds tax from your pay. You owe self-employment tax, which covers both halves of Social Security and Medicare, and you generally make estimated tax payments during the year.
• Rent is due whether or not the week is busy.

The arrangement varies by salon and by state, so read the rental agreement closely, and if your status (employee or independent) is unclear, that is a question for a tax professional before you sign.

A worked comparison

Take a week with $1,500 of grooming revenue. Assume $250 a week in booth rent, $60 a week in supplies, and card fees of about 3 percent. These are illustrative figures. Use your own.

Commission at 50 percent: your gross pay is $750. As an employee, 7.65 percent comes out for Social Security and Medicare, about $57, leaving roughly $693 before income tax.

Booth rental: $1,500 minus $250 rent, $60 supplies and $45 in card fees leaves $1,145. Self-employment tax is about 14.1 percent of that (15.3 percent applied to 92.35 percent of net earnings), roughly $162, leaving about $983 before income tax.

At that volume the booth renter is about $290 a week ahead. That gap is why booth rental appeals to established groomers with a full book.

Where the two cross

Using the same assumptions, the two arrangements come out even at about $717 of weekly revenue, roughly 11 grooms at $65. Above that, booth rental pulls ahead quickly. Below it, commission wins, and it wins by a lot in a bad week, because the rent does not shrink.

Run a $400 week through both. Commission pays $200 gross, about $185 after payroll taxes. The booth renter takes in $400, pays $250 rent, $60 supplies and $12 in fees, and is left with $78, about $67 after self-employment tax. The commission groomer earns nearly three times as much in that week.

The costs that do not show up in a single week

Time off. A week of vacation under commission is a week of no pay. Under booth rental it can be a week of no pay plus a week of rent, depending on the agreement.

Slow seasons. Grooming demand has seasons. Average your revenue across a full year, including January, before you compare.

Benefits and insurance. Employees may get health coverage, paid time off or workers' compensation. Booth renters usually buy their own liability insurance and anything else they need.

Building a book. A booth only pays if the chair is full. Groomers who move to booth rental with a loyal client list do well. Groomers who expect the salon to send them clients often find it does not.

How to decide

Track your real revenue for a few months first, week by week, including the slow ones. If your typical week sits comfortably above the break-even and your slowest weeks still clear rent, booth rental is worth a serious look. If your revenue swings below it regularly, commission is carrying risk for you that you would otherwise carry yourself. The commission only calculator logs each groom and keeps a weekly history you can export, which is exactly the record this decision needs.

Keep reading

• Are Dog Groomer Tips Taxed?
• How Grooming Commission Actually Works
• All pay guides