Short answer
You calculate stylist commission by applying a set percentage to a stylist's total service and retail sales, after they reach a specific target. This calculation is run weekly or monthly, and you'll need to ensure the total pay always meets the UK National Minimum Wage for the hours worked.
The basic percentage model
The simplest way to calculate commission is to pay a flat percentage on total service sales. Paying commission from the first pound sounds simple, but it doesn't cover the basic costs of running a chair. A safer method is to set a weekly or monthly target that covers the stylist's basic salary and their share of the salon overheads before commission begins.
For example, suppose a stylist's weekly target is £1,000. If they take £1,500 in service sales, they've exceeded their target by £500. If you pay a 30% commission rate on sales above target, the stylist earns £150 in commission on top of their basic wage.
You can also set a different percentage for retail sales. Stylists receive a 10% rate on retail sales, which isn't tied to their service target. A stylist selling £100 of shampoo and conditioner earns £10 in retail commission.
The sliding scale model
A sliding scale or commission band model rewards your highest-performing staff by increasing their commission percentage as their sales grow. It's a system that motivates stylists to fill their diaries while protecting your profit margins.
Suppose you set three commission bands for service sales:
If a stylist brings in £1,600 of service sales in a week, they'll earn £100 in the first band, £100 in the second band, and £30 in the third band. That comes to £230 in commission for the week.
Calculating these bands manually for a team of six stylists takes hours and leads to mistakes. Luminate has commission automation built into the app, so you don't have to track service and retail sales against individual commission bands and staff levels by hand.
- Band one. A stylist earns 10% commission on service sales up to £1,000.
- Band two. A stylist earns 20% commission on service sales between £1,001 and £1,500.
- Band three. A stylist earns 30% commission on service sales over £1,500.
National Minimum Wage compliance
Under UK employment law, commission counts towards the National Minimum Wage. If you pay a basic wage plus commission, the total amount your stylist earns in a pay reference period, divided by the total hours they worked, must meet or exceed the National Minimum Wage.
If a stylist has a slow week with few clients, their commission drops, and their combined earnings can fall below the legal minimum threshold. When this happens, you must top up their wages to make sure they're paid the minimum rate for every hour they worked.
The law on pay is strict, and mistakes lead to heavy penalties and public naming by HMRC. It's vital to check your commission structures and contracts with an accountant or employment professional to make sure your pay practices comply with current UK regulations.
What this means for your salon
To calculate commission accurately, you need to track both total hours worked and every sale down to the individual stylist. Relying on paper diary sheets or complex spreadsheets leads to errors that hurt your profits or underpay your team. Luminate handles these calculations automatically so you're always certain your numbers are correct and your payroll is compliant.