Why underpaying your team is hurting your bottom line

My wage bill is out of control.  I hear this from salon owners all the time.

But here’s the real problem…

Most salon owners see wages as an expense to be minimised, instead of what they actually are - your biggest opportunity for profit.

I used to make this mistake too...

Like many, I tried to keep payroll costs as low as possible:

❌ Paying only the bare minimum in commission
❌ Squeezing margins to protect profits
❌ Avoiding incentives or bonuses

I thought I was being smart with my money.

But what I actually created was a staff turnover nightmare.

New hires would come in, get trained, and then leave for a salon that paid better. The constant recruitment, training, and loss of loyal clients was eating away at my business.

The Hidden Cost of High Turnover

Replacing a therapist isn't just about finding someone new; it’s a financial drain:

💸 Lost revenue while the position sits vacant
💸 Recruitment costs (ads, interviews, admin time)
💸 Training time before they are fully productive
💸 Clients leaving to follow their favourite therapist
💸 Inconsistent service quality, leading to fewer repeat bookings

The average cost to replace a therapist? £12,000.

Multiply that by a high turnover rate, and suddenly, cutting corners on wages doesn’t seem so smart.

So, I Took a Different Approach...

Instead of focusing on cutting costs, I focused on increasing staff loyalty and performance. Here’s what I did:

✅ Increased commission rates to reward performance
✅ Added performance-based bonuses for client retention & sales
✅ Created career progression opportunities to keep my team engaged
✅ Invested in regular education & training to improve skill sets

Yes, this meant my wage bill went up by 11%.

But the results? Game-changing.

📈 Retention improved by 85%
📈 Average client spend increased by 23%
📈 Rebooking rates jumped to 77%

The Bottom Line? Higher Payroll = Higher Profits

The result of these changes? My net profit actually grew by 30%.

Your team isn’t a cost; they’re your biggest investment.

If you want to know exactly how to implement this in your salon, join my Thriving Beauty Business Club.  For more information This email address is being protected from spambots. You need JavaScript enabled to view it.