Compensation Models Commission Vs Booth Rent

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name: compensation-models-commission-vs-booth-rent
description: "Model provider pay deliberately: commission tiers vs hourly-plus-commission vs booth rent vs hybrid. Compare risk, upside, control, and cost against the provider's book — and flag the worker-classification (employee vs 1099) consequence for a licensed professional. Economics only, not legal advice."
---

# Compensation Models — Commission vs Booth Rent

The comp model defines the whole relationship between shop and provider: who carries the risk, who keeps the upside, who controls the chair, and — critically — whether the provider is an **employee or an independent contractor**. This skill models the economics and flags the classification call.

## The models

| Model | Shop keeps | Provider gets | Risk sits with | Classification signal |
|---|---|---|---|---|
| Commission (tiered) | A share of every service | A % that can rise with volume | Mostly the shop | Employee-leaning |
| Hourly + commission | Wage floor + service share | Guaranteed base + upside | Shared | Employee |
| Booth / chair rent | Fixed rent | All service revenue, minus rent + own costs | The renter | Contractor-leaning |
| Hybrid | Rent or wage + a share | A blend | Shared | Depends on control |

## The loop

1. **Model on the actual book.** Run the provider's real service revenue, product cost, and hours through each model — the "better" model depends on how full and how high-priced the book is. Traverse the comp-model tree in [`../../knowledge/salon-spa-decision-trees.md`](../../knowledge/salon-spa-decision-trees.md). Treat commission-split and booth-rent benchmarks as `[verify-at-use]`.
2. **Weigh risk vs upside vs control.** Booth rent trades the shop's upside for predictable rent and trades the provider's safety net for full upside and full risk. Commission keeps the shop in the growth but on the hook for the slow week.
3. **Flag classification — do not decide it.** Employee vs booth-renter/1099 is a legal determination with wage, tax, and lease consequences. Model the money; route the classification call to a licensed professional.
4. **Tie to retention.** Whatever the model, a prebooking habit is what fills the chair — see [`../booking-and-no-show-control/SKILL.md`](../booking-and-no-show-control/SKILL.md).

## Metrics

| Metric | Reads | Note |
|---|---|---|
| Provider take-home by model | modeled net across models | Decision input; runs on the real book |
| Shop contribution by model | shop margin after comp/rent | The owner's side of the trade |
| Effective labor cost % | comp cost / service revenue | Commission-model health |
| Break-even chair fill (booth rent) | hours to cover rent + costs | Renter's risk line |

## Anti-patterns

- Picking a model on a rule of thumb instead of the provider's book.
- Calling a chair "booth rent" while controlling the schedule and product — the classification risk.
- Ignoring product/back-bar cost in the model.
- A commission tier that never rewards the growth you want.

## See also

- [`../chair-and-room-utilization/SKILL.md`](../chair-and-room-utilization/SKILL.md) — utilization sets whether the chair can carry rent.
- Best practice: [`../../best-practices/choose-the-comp-model-deliberately.md`](../../best-practices/choose-the-comp-model-deliberately.md).
- Command: [`/model-compensation`](../../commands/model-compensation.md).