Commission salon or chair rental? A numbers-first decision guide

Abby's take

What this means for the industry — and for independents

Industry impact. The move from salon employment to chair rental transfers both upside and responsibility to the individual hairdresser. More control over prices and schedule can improve earning potential, while products, workspace, administration, quiet periods, tax planning and unpaid time become business decisions rather than employer costs.

For freelancers. A freelancer who compares gross service sales with take-home wages will almost always overstate the benefit of leaving. The decision becomes clearer when the same time period includes employee entitlements on one side and realistic utilisation, all operating costs and owner provisions on the other.

What I'd do next

• Average at least eight recent payslips and record ordinary pay, regular commission, penalties, allowances and employee super separately.
• Build a freelance forecast from completed repeat demand and bookable hours, then remove GST where applicable before treating sales as business revenue.
• List fixed and per-client costs separately so you can calculate contribution per appointment and the weekly sales needed before paying yourself.
• Add cash provisions for tax, super, sick time, holidays, cancellations and equipment replacement instead of calling every bank deposit personal income.
• Stress-test the decision at 70 per cent of expected bookings and delay the move if the reduced scenario immediately creates cash pressure.

Watch-out. Employment entitlements, award classifications, tax, GST, super and business deductions depend on individual circumstances. Use current Fair Work and ATO information and obtain accounting, financial or legal advice before acting on the comparison.

Do not compare a payslip with business turnover

An employee's payslip is money after the employer has paid many operating costs. A freelancer's weekly sales are money before products, workspace, software, merchant fees, insurance, accounting, marketing and other business expenses. Comparing the two directly makes independence look more profitable than it may be.

Start with the same period, ideally four ordinary weeks rather than a Christmas rush or a quiet holiday month. Compare what you receive as an employee with what the freelance business could retain after delivering the same services and paying the costs required to operate.

Value the salon job properly before leaving it

Use actual payslips, not memory. Record ordinary wages, any regular commission or bonus, penalty rates, allowances and employer super. Also note paid annual leave, personal leave and any training, products, tools or other costs the salon genuinely covers.

The Hair and Beauty Industry Award may apply to salon employees and sets classifications and minimum conditions. Fair Work directs workers and employers to its Pay and Conditions Tool for current pay, penalty and allowance calculations. If you are an employee, a commission arrangement does not automatically remove the minimum entitlements that apply to the employment.

Create two figures: cash received and package value. Cash received helps with weekly budgeting. Package value helps prevent you from treating employer-funded super and paid time off as if they were worth nothing.

Build freelance revenue from capacity and demand

Forecast service revenue using the hours you can actually sell. Start with the number of bookable appointments by service mix, then apply a realistic utilisation rate based on repeat demand, rebooking and enquiries. Do not fill every theoretical gap simply because the calendar has space.

Use revenue after discounts, refunds and GST where applicable. The ATO says a business generally must register for GST when GST turnover reaches $75,000 or more. GST collected is not income you can spend as owner pay, so forecasts near or above the threshold need to model prices and cash flow correctly.

Build three cases: conservative, expected and strong. The conservative case should include cancellations and a slower first stage. If the decision only works in the strong case, it is not yet a resilient decision.

Model your freelance earning potential · Check the quality of your client demand

Separate fixed costs from each client's cost

Fixed costs are due whether the day is full or empty. They can include chair rent or membership, insurance, software, phone, bookkeeping, website and regular marketing. Variable costs rise when you perform a service: colour, treatments, disposables, card processing and other appointment-specific supplies.

Calculate contribution per appointment by taking average net service revenue and subtracting the variable cost of delivering it. Then divide weekly fixed business costs by average contribution to see how many appointments cover the operating base before owner pay.

That first break-even number is not the target. Add the amount you need to pay yourself, plus planned provisions for leave, super and equipment replacement. This shows the sales level required for the move to support a life, not merely keep the business account above zero.

Review your service-pricing framework · See the TBB workspace pricing pathway

Budget for the benefits that stop arriving automatically

A sole trader does not receive employer-funded paid leave from their own business. Time off still has a cost because bookings stop while personal expenses continue. Build a weekly leave reserve based on the number of non-working weeks you want, and add a separate buffer for illness or unexpected closure.

The ATO explains that sole traders include business income in their individual tax return and may enter PAYG instalments for regular prepayments of expected tax. The ATO also notes that a sole trader does not have to pay super guarantee for themselves, which makes a deliberate personal super plan important rather than optional in the forecast.

Keep tax and super provisions separate from operating profit. They answer a cash question: how much of the money in the account is genuinely available to spend? Moving those amounts regularly reduces the chance that a busy quarter creates a painful tax bill later.

Compare control, risk and time as well as money

Chair rental may give you more control over prices, hours, clients, products and brand. That control has value, but it also creates work. Count unpaid administration for ordering, messages, bookkeeping, content, cleaning tasks, policy management and fixing booking issues.

Employment can provide income stability, team structure and fewer operating decisions. Chair rental can provide autonomy and greater upside. Neither is universally better. The right choice depends on demand, cash buffer, commercial skill, personal risk tolerance and whether the extra responsibility supports the way you want to work.

Write down the non-financial reasons for moving, then test whether the proposed workspace actually delivers them. Leaving for flexibility does not help if access hours are restrictive. Leaving for brand control does not help if the agreement controls your pricing or client communication.

Check the agreement before relying on promised flexibility

Use a 70 per cent stress test before deciding

Take the expected freelance bookings and reduce them to 70 per cent while leaving fixed costs unchanged. Then add one unexpected equipment or personal expense. The point is not to predict disaster; it is to see whether an ordinary wobble forces immediate borrowing, discounting or a rushed return to employment.

If the conservative case is tight, change the plan rather than forcing the date. You might begin with fewer rented days, build a larger cash buffer, improve rebooking, review prices or reduce unnecessary software and stock commitments. A staged move can preserve momentum while keeping the downside manageable.

Make the final comparison after personal tax on both sides, ideally with an accountant who can apply your circumstances. The decision is strong when expected freelance cash and control justify the extra risk, while the conservative case remains survivable.

Consider a staged daily or weekly workspace pattern · Check the wider business-readiness gaps

Official sources checked on 15 September 2026

Fair Work Ombudsman, Hair and Beauty Award MA000005 summary and current pay tools: https://www.fairwork.gov.au/employment-conditions/awards/awards-summary/ma000005-summary

Australian Taxation Office, Registering for GST: https://www.ato.gov.au/businesses-and-organisations/gst-excise-and-indirect-taxes/gst/registering-for-gst

Australian Taxation Office, Business structures — key tax obligations: https://www.ato.gov.au/businesses-and-organisations/starting-registering-or-closing-a-business/starting-your-own-business/business-structures-key-tax-obligations

Australian Taxation Office, PAYG instalments: https://www.ato.gov.au/businesses-and-organisations/income-deductions-and-concessions/payg-instalments

Common questions