Top 4 Challenges Commission Salons Face—And How to Fix Them.

Nina Tulio

In today’s ever-evolving salon industry, commission salons face unique challenges that demand strategic, fresh approaches to stay competitive. If you’re struggling with low profit margins, hiring, or keeping stylists amidst the industry shifts, you’re not alone. Here’s a breakdown of the top challenges and how you can turn them into opportunities to elevate your business.

1. Low Profit Margins

PRICING- Low profit margins are all too common, especially when operating costs keep rising while service prices remain stagnant. The average commission salon owner in the USA makes about an 8-8.5% net profit. Many salon owners hesitate to adjust prices, fearing they’ll scare off clients, but here’s the reality: a thoughtful, strategic pricing structure can attract the right clients and boost profitability without overworking your team.

How to Fix It:
Start with a thorough cost analysis of your services. Consider all your expenses—from products to utilities to rent, and salon payroll—and create a pricing model that not only aligns with your brand but also reflects your true costs of doing business. I teach to package pricing but we A La Carte on the back end fully understand the cost of product per service. ( you can check out my FREE pricing calculators to check out your profit and product spend.)

Small, steady increases over time are usually well-received, especially if you communicate the value behind them. Remember, it’s not just about covering costs—it’s about building a sustainable business that supports you and your team and showcases the immense amount of value delivered through client experience.

LACK OF BUDGETING AND BOOKKEEPING- Another major reason commission salon owners struggle to make consistent profits is a lack of effective budgeting and bookkeeping. Without a clear handle on finances, it’s easy for expenses to spiral and profits to shrink. Many owners are so focused on day-to-day operations that budgeting and financial tracking fall by the wayside. ( I get this because I lived like this for the first 3-4 years of owning my salon.)  This lack of financial clarity can lead to overspending on back bar supplies, underpricing services, or missing areas where costs could be reduced.

Solution: Start with a monthly budget that outlines all essential expenses, from rent and utilities to product costs and payroll. Regularly review your financial statements, and consider working with a bookkeeper and CPA ( THAT UNDERSTANDS OUR BIZ) who can help organize your finances, track income accurately, and identify areas to boost profit. Financial awareness is key to running a successful, sustainable salon!

RESOURCE- I help owners work toward a 20% profit using my 2 part signature budgeting and pricing system. It lays out all of the spend categories with target % and calculates where you are currently at with spend and net profit. Once we have that data this sheet converts to a price per minute sheet helping you see where you’re under charging and helping you get back on track.
You can find this in my SYNERGY COURSES.

2. Finding Target Stylists

“According to Deloitte’s Human Capital Trends report, 82% of leaders believe culture is a competitive advantage. A strong, positive culture helps attract top talent and differentiates a business from others in the industry.”

You may be thinking that suite rentals have disrupted traditional commission models, enticing stylists with the promise of independence and flexibility. It’s tough out there, I get it. But let’s focus on what YOU have to offer as a commission owner: the sense of community, support, security, and career growth that a well-run commission salon provides. The goal is to fill your salon with stylists who want to be part of a growing team. Your job as a leader is to provide them with a SAFE space that offers them a clear path of growth, opportunity, and a sense of belonging. Stylists want to be a part of something bigger than themselves.

How to Fix It:
Position your salon as a place for career growth. Offer an attractive compensation package with benefits like, continued education allowance, paid time off, flexible scheduling, mentorship, and team-building activities. Foster a collaborative environment that makes stylists excited to come to work. Highlight these perks in your job listings, on social media, and your website. When stylists see your salon as a place where they can grow professionally and personally, the allure of suites just take a back seat.

TIP: Want to take it further with benefits as long as your profit allows. Offer 401K match, profit sharing, and a bonus program based on performance.

3. Keeping Stylists – Build a Culture That Stylists Want to be a Part of.

“Strong cultures lead to a decrease in turnover rates. Research shows that companies with high employee satisfaction have a 25-50% lower turnover rate. When employees feel connected and recognized, they’re more likely to stay.”
-Harvard Business

Even if you manage to hire great stylists, retaining them can be challenging. With the rise of suites, stylists often feel tempted to “try it out on their own.” But here’s where commission salons have a chance to shine: by creating a supportive, growth-oriented culture where stylists feel valued, recognized, and challenged to reach their full potential.

Here is what people crave:

1. Trust and Psychological safety

Psychological safety happens when people feel they can openly speak up without fear. It’s about trusting they can share their thoughts—even if they differ from their owner or leader—without facing backlash. This means team members feel secure contributing fresh ideas, raising concerns, or being transparent when mistakes come up, knowing they’re supported for their honesty and contributions.

  2. Growth Opportunities

Stylists are looking for a clear growth path with consistency, transparency, and efficiency. They don’t want to spend 12 months in an assistant program—they want a program that gets them on the floor faster while offering structure and tailored support. By accelerating training and creating an individualized approach, we can help them reach the floor more effectively. And once they’re there, a clear growth plan should outline commission percentages and price increases, so there’s no guessing. Let’s remove the guesswork and set up a straightforward path for their success. Access to this in SYNERGY LITE

3. A sense of belonging

People want to feel like they belong and that they truly matter. When employees feel part of a team and know they’re contributing, engagement naturally goes up. Team-building activities/meetings that allow people to connect on a personal level are powerful for fostering that sense of belonging. Stylists also want to feel recognized and valued in your salon—it’s more than just a “thank you.” Recognition is about truly seeing their hard work, creativity, and dedication. Celebrating wins, big or small, shows them they’re appreciated and builds a culture of mutual respect. When stylists feel valued, they’re more engaged, motivated, and loyal to your business.

4. Flexibility

Stylists today crave flexibility—not only in their schedules but also in your leadership style. They want to feel trusted and empowered to create a work-life balance that suits them while knowing they have supportive leadership behind them. Flexibility shows them that their needs and well-being matter, which, in turn, fosters loyalty and long-term growth.
* I am not saying they come and go as they please. But if they are hitting their weekly goals and provide a consistent client experience that aligns with your brand. Be flexible in your approach with their schedule.

How to Fix It:
Focus on building a culture that empowers and inspires your team. Implement my 8-step leadership framework that includes regular feedback/coaching sessions, career growth plans, recognition, and a strong emphasis on work-life balance. Make it clear that each stylist’s growth is a priority. Consistent communication and mentorship show stylists that they’re not just another number—they’re part of something bigger. When your team knows you’re invested in their success, they’ll be far more likely to stick around.

4. ATTRACTING TARGET CLIENTS

78% of consumers use digital tools, including online reviews,  to help them find a salon. - Phorest Salon Software

Finding new target clients as a salon owner is key to building a loyal, thriving client base and salon business.  Here are three powerful ways to do it:

1. Google My Business: Optimize your Google My Business profile with photos, client reviews, and updated contact details. This boosts your visibility in local searches and helps attract clients searching for salons nearby.

2. Referrals: Encourage your loyal clients to refer friends and family. A referral program offering incentives or perks for each new client they bring in can amplify word-of-mouth marketing and expand your client network.

3. Business-to-Business Partnerships: Connect with local businesses—like med spas, boutiques, and fitness studios—to cross-promote each other. This kind of partnership helps you reach new audiences who already value self-care and wellness, making them ideal potential clients for your salon.
   
   BONUS- Social media- IG, TIKTOK
   Join Local FB Community and Networking Groups: Many communities have groups specifically for local business recommendations or salon services. Join these groups, participate in discussions, and offer value (education and tips) to establish your presence.

Using these strategies consistently helps broaden your reach, strengthen local connections, and bring in clients who are aligned with your salon’s vibe and services.

The Bottom Line

Staying competitive as a commission salon in today’s landscape isn’t easy, but by rethinking your approach to marketing, pricing strategy, recruitment process, and team culture, you can build a business that attracts and retains top talent while increasing your profit margins. Let’s take your commission salon to the next level—one strategic step at a time.

So much love to you!

Looking to learn more from Nina? Check out Make That Money course for suite owners/renters. And in my Synergy course for commission owners.

Psst! MORE Free resources are a click away!

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