One is a flat line and one is a slope
Booth rent pays the salon the same amount whether the chair bills $600 or $2,400 in a week. Commission pays the salon a share of everything, so it rises with the chair. Draw both and they cross once. Below the crossing the rent is worth more to the salon; above it the commission is.
The uncomfortable part is that the person in the chair is looking at the mirror image of the same picture. A stylist who bills well above the crossing keeps far more under rent, because everything over the rent is theirs. A stylist who is still building keeps more under commission, because commission never charges them for a quiet week. So the arrangement that suits the salon best on a busy chair is the one that busy stylist will most want to leave, and the arrangement that protects a new stylist is the one that costs the salon most while they are new. Every real salon is managing that tension rather than solving it.
The fixed cost of a chair does not care which model you pick
Rent, utilities, insurance, the software, the front desk and the cleaning divide across the chairs whether they are worked or not, and that allocation is why an empty chair is not a neutral event. It also sets the break-even in each column. Under commission the gap between one dollar of service revenue and what is left after commission, burden, backbar and card is the only thing paying that fixed cost down, and at 45 percent commission with 18 percent burden it is a smaller fraction of the dollar than most people expect.
Work the fixed number out honestly. Total monthly fixed cost divided by chairs, divided by 4.345 weeks, is a defensible figure. Leaving it out entirely produces three columns that all look profitable and none of which pay the rent.
The lines nobody puts in the comparison
Backbar is the usual omission. Colour, developer, foils, shampoo, capes and laundry are a real percentage of service revenue and they move with the work, so under commission they land on the salon and under most rent arrangements they do not. Card processing is the other one: the effective rate is total processor fees divided by total card volume for a month, which is higher than the advertised percentage once per-transaction fees are included, and it applies to whichever party actually runs the terminal.
Tips are deliberately absent from every column on this page. They are not revenue to the business, they carry their own reporting and payroll handling, and folding them in makes the comparison meaningless.
The part that is not arithmetic
Booth rent and employment are not two prices for the same thing. They are different legal relationships, and which one a working arrangement actually is gets decided by tests that look at control, independence, who sets the hours and prices, who owns the tools and whose clients they are — not by the heading on a contract. Misclassification is expensive and lands on the business rather than on the worker. If you are choosing between these models, the arithmetic on this page is the easy half; the classification question goes to an accountant or an employment lawyer first.
Related pages
For the payroll side of the hourly and commission columns, the employee cost calculator builds up the full cost above a wage from your own rates. If you want the whole shop rather than one chair, labor cost percentage takes a posted schedule against forecast revenue, and break-even sales handles fixed costs and contribution in the general case.
On the demand side, no-shows and deposits works out what an empty slot in the book actually costs, which is the number that turns a busy chair into a quiet one. If you teach as well as cut, workshop pricing covers seat prices and break-even for a class.
Questions people ask
Is booth rent or commission better for a salon?
Neither, in general — it depends entirely on what the chair produces. Booth rent is flat, commission is a slope, and they cross at one revenue level that this page works out from your own rent, commission rate, burden, backbar and fixed allocation. Below the crossing the rent wins for the salon and above it commission does. Run your busiest chair and your quietest one through it and you will usually find they land on opposite sides, which is why many salons end up running both and why that is harder to administer than it looks.
What fixed cost should I allocate to a chair?
Everything that arrives whether the chair is worked or not: rent, utilities, insurance, software subscriptions, the front desk, cleaning, waste collection, water and the loan on the fit-out. Add those for a month, divide by the number of chairs, divide by 4.345 to get a week. It is deliberately a blunt allocation — a chair by the window is not really cheaper than one at the back — but a blunt allocation is enormously better than none, because leaving it out makes every pay model look profitable.
Why is the commission column so much worse than the raw commission rate suggests?
Because commission is not the only cost that moves with service revenue. On top of the commission itself there is payroll burden calculated on it, backbar consumed doing the work, and card processing on the money coming in. At 45 percent commission, 18 percent burden, 6 percent backbar and a 2.9 percent effective card rate, about 62 cents of every service dollar is gone before the fixed cost of the chair gets anything. That remaining fraction is the number worth watching, and it is the one this page shows in the break-even section.
Can I just decide to make my stylists booth renters?
That is not a decision a business gets to make by itself, and this page will not tell you it is available to you. Whether a working relationship is contracting or employment is determined by tests applied to how it actually operates — who controls the schedule, who sets prices, who owns the equipment, whose clients they are, and more. Calling it booth rent in a document does not settle it. The consequences of getting it wrong include back taxes, penalties and unpaid wage claims, and they land on the business. Take the question to an accountant or an employment lawyer before you take it to a spreadsheet.
Where do tips fit into this?
They do not, and that is deliberate. Tips are not revenue to the business, they belong to the person who earned them, and they carry reporting and payroll handling of their own that varies with how they are paid and where you are. Folding them into a comparison of what a chair nets the salon would inflate every column and change none of the conclusions. Keep them out of the arithmetic and handle them with your payroll provider, who is also the right source for the burden percentage this page asks you to supply.