The truth about booth rental vs commission: what they don’t tell you about profitability, freedom, and burnout.
The debate over rental vs. commission salons has been heating up for years. Some argue that booth rentals and suites are “destroying the industry,” while others believe they offer freedom and opportunity.
The truth? Both models can work—but only when you understand the hidden costs, leadership challenges, and long-term responsibilities involved.
In this post, adapted from the Hello Hair Pro Podcast, we’ll unpack the myths, explore the hidden costs of renting, and show you how to decide which model is right for you.
The Problem With The “Rental Is Destroying the Industry” Argument
When you hear someone say that rentals are ruining the salon industry, it usually comes from a place of fear or frustration.
The reality is:
Commission salons failed to innovate. Many ran outdated playbooks (if any), demanded outdated commitments (like handing out business cards at the mall), forced dated contracts (non-compete agreements), and ignored what modern hair professionals wanted.
So...
Rental offered an alternative. Stylists and barbers who wanted freedom flocked to rental, proving that the market wanted options.
Neither model is inherently good or bad.
Both require leadership, structure, and clear expectations.
Rental vs. Commission: What It Really Means
At its core, choosing between rental and commission comes down to one question:
Do you want to be left alone, or do you want guidance?
- Rental = independence, full responsibility, business ownership.
- Commission = support, structure, mentorship, shared systems.
Both can work—but too many stylists jump into rental without truly understanding what it means to run a business.
We often talk about different skill sets.
Doing hair and running a business are two wildly different skill sets.
Being good at hair isn't a guarantee you'll be good at business.
You need to learn the skill of running a business if you're interested in the rental model.
The Hidden Costs of Rental (What Nobody Tells You)
One of the most dangerous marketing pitches in the rental world is: “You keep all your money.”
That’s not true.
Renters face dozens of hidden costs, including:
- Rent + deposits: (often with key fees, security deposits, and contracts).
- Taxes: and prep expenses
- Build-out expenses: mirrors, lighting, shelving, paint, personal touches, signage, sanitation supplies, towel warmers, etc.
- Licensing & insurance: professional liability, general liability, property coverage, business interruption insurance.
- Inventory: back bar, color, developers, retail, gloves, and towels.
- Software & systems: booking, payment processing (with CC fees), client communication, email marketing.
- Professional services: accountant, lawyer, music licensing, trash removal, and utilities.
- Education & community: classes, branding, marketing, and continued growth.
These costs add up quickly.
And if you’re not pricing correctly, they can easily outweigh the “freedom” you thought you were buying.
Note: You'll find some of these items included in the rental model, but we'd argue that's because the people running the business are trying anything to gain renters and stay competitive, and they won't be around long-term.
Why Targeting New Grads for Rental Is Predatory
Many rental salon owners target cosmetology graduates immediately after they graduate from school.
This is dangerous.
- New grads don’t yet have the technical skills to prosper.
- They don’t have the business knowledge to manage taxes, pricing, and marketing.
- They often feel overwhelmed, which can lead to burnout or failure.
A better approach?
Commission models that mentor, support, and build skills, or attending a business school.
Once a stylist has demand and business knowledge, they can choose rental with confidence.
NOTE: At Hello Hair, we strongly believe that everyone should make their own choices. We're not publishing this to persuade, but rather to spark conversation and hopefully guide younger hair pros that are being targeted toward a better decision for their future and longevity in the field.
What Commission Salons Can Learn
Commission salons aren’t off the hook here.
The rental model exploded in part because commission owners:
- Refused to evolve their policies.
- Controlled schedules and weekends.
- Ignored the changing needs of new professionals.
The opportunity for commission salons today is to fix those mistakes by offering:
- Clear career paths
- Fair pay structures
- Modern benefits (flexible schedules, mentorship, community)
- A focus on hospitality and culture, not control
Will You Thrive In The Rental Model?
Before jumping into booth rental or a suite, ask yourself:
- Do I have 3–4 months of expenses saved (rent, operating costs, etc.)?
- Am I 90–100% booked with a loyal clientele?
- Do I know my product costs per service and back bar percentages?
- Do I have a pricing plan that includes profit and future increases?
- Have I priced out insurance, software, taxes, and retirement savings?
- Am I prepared to handle the administrative work (or pay to outsource it)?
- Do I have an education/community plan to avoid stagnation?
If you can’t answer “yes” to all of these, we'd encourage you to reconsider.
The Coming Shift Back to Commission
Industry leaders predict that over the next few years, we’ll see a swing back toward commission salons—but only the ones that innovate.
- Poorly run commission salons will close.
- Rental salons that offer too many freebies without generating a profit will also fail.
- All salons that lack vision will fail.
- The strong will remain: commission salons that offer culture, mentorship, and clear growth paths—and rental operators who treat it like a real business.
Competition is healthy.
It pushes all of us to evolve.
Why We Love Our Model
At Hello Hair, we’ve proven that demand—not years in the industry—determines price.
Many hair pros confuse this and believe that if they have a certain number of years behind the chair, they'll automatically find success on their own.
This is false.
For example:
- Jen's newest apprentice, Madison, hit 1,500 hours and was already fully ready to service clients.
- Her prices will likely increase before she’s even licensed. She'll have a higher haircut price point than many renters.
- Why? Because she has demand, repeat clients, and proven results.
Compare that to a past employee of Hello's who had five years of experience but no established clientele. She wanted a raise, but as Todd explained:
“50% of zero is still zero.”
Pricing increases aren't about seniority.
They're about demand, effort, and the value you provide.
Final Thoughts
The rental vs. commission debate isn’t about which is better—it’s about understanding what each truly requires.
- Rental offers independence but comes with major financial and administrative responsibilities.
- Commission offers support, structure, and growth—but only if owners run it well.
Instead of pointing fingers, we should be asking:
How can we make both models stronger?
We believe everyone can flourish!
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