Fix the comparison boundary before calculating
Records and assumptions to align
- Use one service-revenue definition and one period for both cases. (not complete)
- Map the commission base, tiers, refunds, product sales and payment timing. (not complete)
- Map chair rent, included space/equipment/products/software and any additional fixed/variable charges. (not complete)
- Identify which party bears consumables, marketing, booking, rework and idle-time costs. (not complete)
- Keep legal control and worker classification outside the arithmetic. (not complete)
| Field | Required unit | Preferred evidence |
|---|---|---|
| net service revenue | CU/period | booking and payment record or explicit scenario |
| commission | CU/period | current agreement and statement |
| chair rent | CU/period | current agreement/quote |
Build a reproducible scenario
commission-case contribution = net service revenue - commission - provider-borne variable costs; rental-case contribution = net service revenue - chair rent - provider-borne variable costs - other fixed charges
- net service revenue
- Completed-service revenue under the same refund/discount/tax boundary (CU/period) — booking and payment record or explicit scenario
- commission
- User-entered commission under the current base and tier (CU/period) — current agreement and statement
- chair rent
- Fixed chair/booth payment inside the declared inclusions (CU/period) — current agreement/quote
Do not compare a commission-inclusive service model with rent while omitting costs transferred to the renter. The labels do not determine legal status.
Fictional monthly commercial comparison
The example uses a 45% commission and 2,200 CU rent only as invented inputs.
| Case | Declared inputs | Substitution | Result |
|---|---|---|---|
| Commission at 6,000 revenue | 6,000 revenue; 45% commission; 600 provider-borne costs | 6,000 - 2,700 - 600 | 2,700 CU |
| Rental at 6,000 revenue | 6,000 revenue; 2,200 rent; 1,100 provider-borne costs | 6,000 - 2,200 - 1,100 | 2,700 CU |
| Rental at 4,000 revenue | 4,000 revenue; 2,200 rent; 850 provider-borne costs | 4,000 - 2,200 - 850 | 950 CU |
Stress-test the uncertain inputs
| Variable | Lower case | Higher case | What it tests |
|---|---|---|---|
| Completed-service revenue | Quiet-period case | Capacity-limited case | Tests fixed versus variable exposure |
| Included costs | More included in rent/commission | More borne separately | Tests like-for-like scope |
| Refund/rework burden | Observed low case | Downside case | Tests who bears service recovery |
Stop and review when
- Terms omit who controls work or bears key costs/risks. (not complete)
- The cases use different revenue or refund definitions. (not complete)
- The commercial result is being used as a worker-classification answer. (not complete)
Turn the scenario into a controlled decision
- Reconcile the baseline to current records and name the evidence owner.
- Run the base case, then change one uncertain input at a time.
- Record the chosen response, approval limit, review date and stop trigger.
- Compare actual results with the original boundary before reusing the assumption.
Avoid these mistakes
- Comparing rent with gross commission while omitting transferred costs. (not complete)
- Assuming high revenue without chair-hour or demand capacity. (not complete)
- Treating contract labels as legal classification. (not complete)
Questions to resolve before approval
- Does the crossing revenue show which model to choose?
- It shows one economic boundary only. Service model, cash, control, responsibilities and local law remain separate.
- Can the salon use this to classify a worker?
- No. Classification depends on the real facts and local rules, not the payment formula.
Methodology and source boundary
- Sales Commission Plan Profitability methodology — Margin101: Product-owned commission-base and contribution boundary.
- Occupancy Break-even methodology — Margin101: Product-owned fixed occupancy and volume crossing boundary.
- Outsource vs Hire methodology — Margin101: Product-owned fixed/variable commercial comparison; no classification conclusion.