A great salon is built on talented stylists, loyal clients and a business model that works for both. Here is how to set it up.
Every state regulates cosmetology. Stylists generally need a state cosmetology license, earned through training hours at a licensed school and passing exams. Many states also require the salon itself to hold an establishment license, pass an inspection and post licenses visibly. Some states require a licensed manager on site. Barbers, nail technicians and estheticians usually have separate licenses. Check with your state board of cosmetology before signing a lease.
| Model | How it works | Pros | Cons |
|---|---|---|---|
| Commission | Stylists are employees paid a percentage of service sales | Brand consistency, control of service quality and schedules | Higher payroll costs; must meet minimum wage and overtime rules |
| Hourly plus commission | Base hourly pay plus commission on services and retail | Stable income for stylists; easier compliance | More complex payroll |
| Booth rental | Independent stylists rent a chair and run their own business | Predictable rent income; lower payroll | Less control; misclassification risk if you control their work |
| Suite rental | Stylists rent private suites | Rental income; low staffing | Little brand control; real estate business |
The difference between an employee and a booth renter depends on the actual relationship, not the label. If you set stylists’ schedules, prices or services, provide their products or require them to follow your procedures, they may be employees under federal and state tests. Misclassification can bring back wages, taxes and penalties. Some states have specific rules for booth renters.
See how to start a business for planning basics.
| Factor | What to consider |
|---|---|
| Visibility and parking | Easy access matters for appointments |
| Plumbing | Shampoo bowls need water, drainage and hot water capacity |
| Electrical | Dryers and tools need enough circuits |
| Ventilation | Important for chemical services such as color and smoothing treatments |
| Size | Space for stations, shampoo area, dispensary, retail, reception and break room |
| State board rules | Some states have requirements for sinks, restrooms and sanitation |
| Lease | Term, build-out allowance, exclusivity clauses |
See our legal requirements checklist.
| Category | Examples |
|---|---|
| Stations | Styling chairs, mirrors, stations with storage |
| Shampoo area | Shampoo bowls and chairs, water heater |
| Color | Dispensary, mixing tools, timers, processing equipment |
| Tools | Dryers, irons, clippers, shears (often stylists’ own) |
| Sanitation | Disinfectants that meet state board rules, laundry, closed storage for clean tools |
| Front desk | Booking software, POS, retail displays |
| Comfort | Reception seating, beverage station, Wi-Fi |
Price services based on time, product cost and stylist level:
| Factor | Notes |
|---|---|
| Service time | Longer services cost more |
| Product cost | Color and treatments use expensive products |
| Stylist level | Many salons use tiered pricing by experience |
| Market | Compare with local salons at your price point |
| Retail | Product sales can add meaningful margin |
Use the cost of goods sold calculator for product costs and the profit margin calculator to check service margins.
| Category | Examples |
|---|---|
| Lease and deposits | First months’ rent, security deposit |
| Build-out | Plumbing for shampoo bowls, electrical, flooring, lighting, ventilation |
| Furniture and equipment | Chairs, stations, shampoo units, dryers, reception |
| Opening inventory | Professional color and products, retail stock |
| Licensing and permits | Establishment license, inspections, business licenses |
| Insurance | General and professional liability, property, workers’ compensation |
| Technology | Booking and POS software, website |
| Marketing and working capital | Grand opening and several months of operating costs |
Build-out often costs more and takes longer than expected. Get contractor bids before signing a lease, and negotiate a tenant improvement allowance if possible.
eztime helps salon teams with scheduling, a time clock and digital employee files for license tracking. See our salon management guide.
State boards may inspect salons with little or no notice. Daily checklists, such as those you can set up with task management, make passing inspections routine.
| Metric | Why it matters |
|---|---|
| Rebooking rate | Shows client loyalty |
| Client retention | Share of clients who come back |
| Average ticket | Services plus retail per visit |
| Retail per service | Retail sales effectiveness |
| Chair utilization | How full each stylist’s schedule is |
| Labor cost % | Commission and wages as a share of revenue |
Our guide on employee retention strategies helps keep talented stylists, who often take clients with them when they leave.
In most states, stylists need cosmetology licenses and the salon needs an establishment license from the state board of cosmetology. Some states require a licensed manager. Check your state board’s rules.
Commission gives you more control and brand consistency but higher payroll costs. Booth rental gives steady rent income but less control and misclassification risk if you treat renters like employees.
If you control their schedules, prices, services or methods, they may legally be employees. Booth renters must truly operate as independent businesses.
It depends on location, size, build-out and equipment. Plumbing for shampoo bowls and electrical work can be major costs. Build a detailed budget for your space.
By delivering consistent results, pre-booking the next appointment, sending reminders, keeping detailed client notes and building strong relationships between clients and stylists.
Yes, employees paid on commission must still receive at least minimum wage for all hours worked each workweek, and non-exempt employees are entitled to overtime. State rules may add requirements.
It depends on your space and model. Many salons open with a few stylists and add more as the client base grows. Make sure each chair can be filled with enough clients to cover its cost.
Set overtime thresholds and weekly hour limits in EZTime and managers get an alert while there is still time to change the schedule. See current plans and what each one includes on the pricing page.