Setting Targets
I work with a lot of salon owners helping them with different areas of their business.
One point that regularly comes up is how to set targets and then create a motivating commission structure.
Some salons set their targets based on a stylist’s weekly pay.
So if a stylist earns £300 per week, their target could be say, 3 X £300 plus VAT
£900 plus 20% = £1080
This doesn’t factor in prices, time taken or hours worked.
A stylist target should be based on THREE Factors:
- Hours they work
- Prices they charge
- Time they take on each service
If Mary works for 40 hours per week, charges £40 per cut and blow-dry and takes 45 minutes for this service; then her target is calculated in the following way…
First we have to get to her average hourly charging rate:
Cut and blow-dry at £40 divided by 3, multiplied by 4 = £53.33 hourly rate
X 40 hours = £2,133.20 which is her Maximum Potential
This is not considered reasonable or achievable, so we would set her target at 75% of that, which is: £1600 per week.
This would be the figure that we base a higher rate of commission on. For example:
Weekly wage of £300 or 30% of net takings, whichever is greater:
When the target of £1600 is hit: less VAT = £1333, commission increases to 35%
£1333 X 35% = Pay is £467 per week
If the target was based on the weekly pay alone: the target would be MUCH TOO LOW, at £1080, which only represents about 50% of a stylists’ potential.
If you would like help setting targets and pay structure for your salon staff, then contact me now on 07860 651084, or email me at: [email protected]
Simon Harris
To download the PDF version of this article click here!