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Booth Rent: Operating Cost or Money-maker? (a little long)
#1
I will be going back into a nails-only salon soon as a booth renter (independent contractor). My question for owners and booth renters:
Is booth rent supposed to cover operating costs or also serve as a way for the owner to increase their profits?
Not being sarcastic or rude, just need to know how to negotiate. Most of the booth rents in my area are $50 or $75/week, with a few weeks (usually 2) thrown in free up front. I think this is probably a fair price in my area, since everyone charges the same thing.
But the $75/week places generally are no different than the $50/wk places. As a business woman, I think it's fair to look at the differences between the salons to establish the price difference. Paying more should have some perks, right? Like separate parking, great walk-in traffic, safety, getting a key, having a receptionist....know what I mean?
I think I may have inadvertantly offended an owner by engaging in "negotiation", bringing up these things. At the end, I got the "I set my price, if you don't like it go somewhere else" kind response. But when I see chipping paint, outdated pedi chairs that take an hour to clean and disinfect properly, old towels covered in polish...I want to know where that extra $25 is going cuz it sure as heck isn't going into the salon! This owner basically stated that she has to make money too, not just break even. She is also an active nail tech at the salon -- I thought that's where the profits come from, not the booth rent. (I know, some of you are probably saying 'how naive is this chick?') Please tell me if I am!!!
I don't think I'm better than anyone, but I've been a managerial professional in another industry for 15 years and have developed some business knowledge that I'm very pleased to take with me into the nail industry. Some places I will not even consider, but I feel like we (me and owner) should at least be able to negotiate.
Please be honest and tell me what the accepted practices (spoken or unspoken) are. I've only had my license for 3 years but I want to find someplace I can settle in at and not hop chairs for a year before I find a good home.
Thanks ladies!!!!
Jeanne - New You Nail Gallery
Detroit, MI

"The MIND, once stretched by the IMAGINATION, never regains its original form"
 Reply
#2
I wouldn't rent a booth from someone that doesn't put a little money back into her shop especially if the paint is peeling and the towels are crappy. Do you have to supply your own products ect. You are definetly right that you should be able to negotiate. Alote of the booth rent's around here are $700 a month or more. I am lucky I rent the back room of a Hair Salon for $300 a month, I have my own business name on the window ect and all my stuff is my own but it includes utilities, toilet paper, paper towels, stuff like that. Booth rent is definetly better then commision that is for sure though, my mom is a hair dresser making commission and definetly believe she is getting the crappy end of the stick if you know what I mean. Good luck and I wish you the best Big Grin
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#3
I am a renter and my rent pays for the space to work in. I have my own table, chairs, storage, lamp, pedicure tub and provide all my own towels, paper towels, tea, juice, supplies, and much more. Nothing is provided to me as a renter. Most salons have stations for the renter, but I wanted my own.
Renters, well, we are our own little business within someone else's salon. So we are responsible for running our business all on our own.
We should have our own phone for appointments, ( a receptionist should not be making your appointments unless YOU are paying them and then the rent should be much higher to cover costs of their salary.)
run our own hours,
bring our own clients or advertise on our own to get new ones.
Have our own liability insurance,
our own towels,
Pay our own taxes,
have our own cards and brochures,
supplies,
products,
tools,
office supplies.
Everything to run a nail business.
The salon only has to provide us the space to do that in. We also need to set our own hours. You do need a key, because you need to have access to your business and belongings.
The salon should be keeping up with the maintenance and aesthetics. But the do not have to provide a parking lot, or fancy furnishings. The rent is likely based on square footage divided up. And not bases on how many clients will walk in, as your own business, thats up to you. If there are nail tech employees they should be taking the walk ins anyway. Salon owners do get the short end of the stick because with a renter they get what is a fair price for the space, and with employees they get a very tiny % when all is said and done. Its not easy from what I understand.
My point is, as a renter, you need to manage your entire business as its not the burden of the owner, just like the salon owner. Rent is due to a landlord, not a boss. I hope that makes sense. Its a lot to take in and salons run differently. But I control every bit of my nail business, from my web site, and retail, to my hours, prices and what I serve them to drink. The building landlord does not supply the salon owner with any perks other than keeping the building and lot safe, clean, and maintained. The rest is up to the business owner.

It would make no sense to run a salon and charge renters just enough to pay the bills, they need a profit. I don't believe I read anywhere that she is changing prices or adding anything on to the current rent. Just that you want to know what makes one salon charge more rent than another and what you should expect your rent to pay for. It will pay for your space and then help the owner keep the doors open and pay her own expenses and have a little in her pocket as all works look for. A pay check.
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#4
Well said Sobeit Big Grin But as for refreshments (coffee etc.) me and the owner of the salon split that cost down the middle. It beats having more then one coffee pot Big Grin

Off topic, Sobeit I love your avatar, how did you find that? I need a new one and can't figure out what I want and I forgot how to upload it :lol:

Melissa
__________________________________________________________
http://www.facebook.com/back2youesthetics
http://www.back2youesthetics.com
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#5
Thanks ladies for the feedback. I understand the relationship between the renter and owner. I agree with sobeit: booth rent covers the space, the utilities, and whatever they "choose" to throw in. We supply everything else. I'm on the same page with you there.
My question is more about what booth rent covers. Booth rent calculation can take into account all sorts of things (sq ft, utility rates, building lease, permits, etc. Should it also include an "upcharge" so they can make money off of their renters?? If an owner chooses to do that, then fine, so be it (no pun intended) but at least tell me or show me what the upcharge does for ME. If it does nothing for me (only puts more money in your pocket), then I feel it's up for negotiation or I'll move on. I will never know the owners lease rates, see utility bills, etc., I know the price/sq ft in my area runs from $5-$11, and I know what the $11 places have (mostly designated parking area). So the only way for me to gauge the difference in a $50/wk and $75/wk salon is what I see.
Jeanne - New You Nail Gallery
Detroit, MI

"The MIND, once stretched by the IMAGINATION, never regains its original form"
 Reply
#6
Here's my take on it.....imo, you rent the room for set price. Kinda like renting an apt. or house. There's NO more fees after that point, ( or there shouldn't be, imo). You find out what comes with it....in my case, electric, water, and the ability to wash my towels on premise. I've got a key to the main salon along with a key to my room. Each room is about 10x10 and I'm allowed to do with it as I please. The room is set up for a hair stylist which means I've got a sink which comes in handy for pedi work.
I just spent about $1000 renovating it, new paint and ceramic tile floor, along with other misc. stuff. The owner did not help me financially with any of it. If the owner was to charge me anymore, for anything, I'd seriously think of moving.

Parking outside is a given, any responsible salon owner has a place set aside for employees. If they're smart that is....it's a real pia to work in places that have inadequate parking. Been there and HATED it.

As for the upcharge question, so the owner can make money off of the renter.....I would think at least half of the rental fee is profit. IMO, any normal business needs to make a profit and I would think the rental price per week/month should do that. No other charges should be done. If an owner tried to charge for other things, I'd pull out my contract and ask where that is.
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#7
It would be up to the business owner if they are trying to make a profit or just cover expenses. I was a booth renter and now own my salon - if I were to rent space to other techs I would definitely be looking to make a profit of some sort.

As a business owner, you have a lot of time & money invested in securing a location and outfitting the salon. You then have ongoing time & money spent replenishing supplies (whether that's towels, toilet paper, beverages, whatever. We should absolutely be compensated for that effort.

If other salons are not charging enough to generate a profit, then by all means, take the cheaper location if it will work for you, but I would then be wary of taking any business advice from someone who is not running their business in such a way as to actually make a profit! To me, that is no different than a nail tech who won't charge clients what they need to in order to actually make a profit.
Candice
Nail Tech/Owner
http://www.PanacheNailStudio.com
 Reply
#8
In answer to the orignal question a salon owner can set a price for a booth renter to include anything they want to recoup in costs. But the price should be set and that is it. No other charges should be included outside of that price. So it is up to the owner to decide how much they want to charge. And it should be indicated on the contract what is included in the rent and what isn't.

IMO if I went to a shop and it was in the condition you described I would expect cheaper rent. If the atmosphere is cheap, then I wouldn't want to pay high dollar rent. Would you pay a high rent for an apt or a house that is isn't kept up?

I don't think you were being unreasonable in negotiating the rent. Never hurts to ask. All they say is what she said. IMO if she got that defensive over that, can't imagine what she will be like down the road on other issues.

Go with your instincts. If they are telling you the place isn't being kept up and money being put back into the salon, what is it going to look like in 10 years?
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#9
Your question, really, has no answer. It doesn't matter if it is based on what the owner is being charged per square foot or if the rent takes into account other costs or desired profit margins. If the owner paid cash for the building and pays $0 sq ft (not including property taxes), should you be able to benefit from that? Of course not.

What do costs over the square footage do for you? Well, it is there for you, and then again, it's not. It helps to maintain the business, sure, but also gives the owner a little incentive to have you there. We all want our money to work for us, but the money has to work for everyone. I don't care what my landlord pays for his commercial mortgage on the suite I rent. Do I pay his mortgage, does he get "extra"? It doesn't matter. I am paying a rate to be there. If I don't like the location, the parking, or the condition of the building it is none of my business what my landlord is doing with the rent, I have the choice to go somewhere else when my lease is up.

My advice: Concentrate on what other salons in the vicinity with similar amenities are charging. Negotiate with that. If the salon doesn't appear clean or isn't going to be a good fit, don't worry about where you assume the money is or isn't going, just move on. You will find a place that fits, but you may have to be patient.
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#10
All great advice. Footie, I think I'm there with you now. I think I was just a little upset because I found a salon that is close to my house and it has a parking lot for customers rather than street parking (a big perk in my area), but it needs some serious sprucing up. The booth rent is $75 instead of the going $50/wk rate. I think I was just bummed because I wanted it to work out.
Anyhoo, lesson learned for me. Thanks all!
Jeanne - New You Nail Gallery
Detroit, MI

"The MIND, once stretched by the IMAGINATION, never regains its original form"
 Reply

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