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The U.S salon industry is steadily growing. In 2016, there were approximately 270,000 salons and barbershops. Their services and retail sales reached a whopping $62 billion. If you own a business in this niche, you might wonder how much to charge for booth rental. This depends largely on the type of salon and its reputation, location and clientele. A top-rated salon in a prime location will likely charge more for booth rental than a small beauty studio that's just starting out.

How Does Booth Rental Work?

As a salon owner, you have several options for employing staff. Depending on your budget and goals, you may hire employees, charge a commission or use the booth model. The latter involves charging a weekly or monthly fee to the beauticians, hair stylists and other professionals operating in your salon. In this case, you won't be responsible for paying wages and benefits.

Many of those who work in the beauty industry are independent contractors. They're responsible for paying their taxes, continuing their education and selling skin, hair or beauty products to make a profit. Salon owners provide them with the equipment and space needed to do their job. How much you'll charge for booth rental depends on a number of factors.

Research the Local Market

The first step to calculating rent for a salon booth is to research the local market. Check your competitors to see what they charge. Browse forums, online chat boards, Facebook groups and local websites too. Many stylists use these platforms to discuss and compare booth rental fees, share their experiences and exchange tips.

In 2017, the average booth rental fee was around $400 per month. However, some beauty salons were charging as little as $250 or as high as $1,200 per month. It all comes down to your location, equipment and target customers.

Say you own a small beauty salon located in a residential area. In this case, you may not have as much exposure and as many clients as a salon located downtown on a street with high traffic. Your rent may be lower too. Therefore, it makes sense to charge less for booth rental compared to what you'd charge if your salon was located in a higher-end area.

On the other hand, if your salon is super popular and has a steady flow of clients, you may charge more for booth rental. The stylists who work at your facility may earn quite a lot, and they'll be willing to pay more for rent to get the exposure they need.

Consider Your Expenses

Before setting your rates, calculate your expenses and determine what you should charge to make a profit. Factor in the building rent, insurance, equipment maintenance, utilities and so on. Don’t forget about the cost of accounting, phone services, website maintenance and advertising.

Once you’ve figured out how much to charge to remain profitable, divide that amount by the total number of booths in your salon. Assess your expenses once a year or so, and update your rates accordingly. Decide whether you're going to charge the same rate to all stylists or set different rates.

Make a Booth Rental Contract

Make sure you have a solid booth rental contract in place. Consider offering different options, such as three-, five- or 12-month rentals. A good way to attract talent is to provide discounted rates to hair stylists and other pros who rent a booth for a year or more. If your salon sells beauty products, you may set up a commission structure to encourage stylists to recommend them rather than sell their own products.

Your rental contract should clearly state that those who use the facility are responsible for paying their taxes, renewing their licenses and complying with the law. Be sure to include what happens in case of missed payments, conflicts and failure to comply with the salon's policies. State the rights and responsibilities of each party, from acquiring and serving customers to the legal aspects.