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Posted by Sava Andric, Sep 30 2007 12:14PM

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How much percentage to pay for a room

I am considering renting a room 3 days a week at a Hairdressers salon offering Massage,Reflexology and Indian Head Massage. On my first visit to meet the owner it was agreed that I can pay him a percentage for the first few 3-6 months until I get some regular clients.
I went for the send time to see him the other day and when I bought up the discussion about room rental he is asking for 50/50% of my earnings.Prior to that he was offering the room for £350.00 per month.

I think 50% is alot as I did speak to someone in July who said that 20-25% was the normal rate.

Please can someone advice me what is the going percentage rate and would it be better to divide the £350.00 and pay him for 12 days in the month?

The owner has decided to also do some research on prices.

At the moment the salon do not offer theses services so we would be helping each other.

Waiting for someones reply
Thanks
Sava
Gillian Kenyon
Oct 4 2007 5:17PM
Hi Sava

I can confirm that alas too many people are being taken down the rent a venue route by unscrupulous landlords - and that is what they are. Landlords !. They do not help to generate business for you - they just see you as a way of reducing their own premises costs and overheads, business rates etc etc. Most of these want a set amount for the room, no matter how much work you have or how much you earn during that time. It is soon easy to make a financial loss - particularly in the early days when you are trying out new 'introductory offers' to new clients such as 2 treatments for the price of 1 to get repeat clients in.

That being said, there are also some excellent landlords who set reasonable rates and help you generate your business as this also helps them - these are the ones who take a percentage of what you earn.

However, our experience is that you are quite correct in thinking that 50% is well over and above the norm.

If the venue has a client base that it is going to market your services into, then up to 25% maximum is fair. By this I really do mean that the landlord must help you by being pro-active, sending out their own letters/introductions for you and your services to their clients, having a reception service that takes calls and appointments for you, has a cleaning service for your rooms, lets you use their premises on an exclusive basis for therapies, provides the room heated and inclusive of rates etc.

Somewhere between 10 and 20% is viable if you need to do your own marketing - and remember - you also want to be allowed to use the room without any rent for those FREE sessions that you may need to give to key clients who you wish to impress to get them top refer you to other people.

To put all this into financial perspective - your landlord is also a business and can't afford to subsidise your business start up.

One easy comparison is to ask yourself, how much does it cost to rent a room to live in where you are. That is 24 hours per day, 7 days per week. Divide it back down by 168 and multiply up again for the hours you would be using it to do therapies. This is more like what you may be expecting, plus an appropriate hourly proportion of business rates for the room.

Of course, business premises aren't the same price to rent as living premises but it does give you a feel for how much to expect to have to pay.

And then - use these hourly costs to work out what you would have to charge - minimum, to cover your premises costs. No matter what start-up offers you have, you should never fall below that price per hour.

After all, you need to earn much more than this just to have enough income to cover the costs of your materials, investment in couch and other equipment, uniforms, marketing, services of an accountant.

And then, you mustn't forget why you are doing this, you need to live too and so to also allow for being able to pay yourself yourself a living wage on top of this too.

Hope this helps.

If you have any further queries, please feel free to drop me a line at TheHClub@Hotmail.com. We are a club of independetn member practitioners with many skills and hundreds of years of experience to share with other practitioners.

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