Medical Spa and Spa Compensation Programs
By: Bryan Durocher
Posted: December 18, 2008
page 7 of 8
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Compensation structure changes
Having the wrong compensation package is one of the leading reasons why spas are not profitable. Hands down, one of the scariest moves for any business owner to make would be to change their compensation package. Some common barriers owners face are lack of understanding about how to pay or the more important fear of a walk out.
It is important to walk through these uncharted waters safely and securely at a pace that is comfortable for you and does not throw you into overwhelm. Many times you will see that compensation is an issue and yet they may not be prepared to do anything with it right away. The important thing to do is educate your team members on the appropriate profitable structures and come up with a game plan for when and where the change can be implemented. You may find that they want to focus on other areas first to build your confidence and move toward this change in time. Another option is you may not change the compensation right away with your current staff and will implement a new structure for new hires. Eventually a structure will have to be implemented across the board to reach profitability. It is a numbers game for the business if it is going to make any money.
If a business owner is paying more than 50% commission or is offering some type of benefits in conjunction with a commission structure greater than 50% they are losing money. This means every client who lays on thier esthetician's table is costing them money instead of making them some. It does not matter how much money a tech brings in. Costs go up exponentially. Typical payroll burden is about 10% above the commission paid out. This includes costs of matching FICA, Medicare, and workman’s comp insurance.