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Here’s a wild thought: What if your best employees are secretly scrolling job boards on their lunch breaks? 🤔
Employee retention is one of the biggest challenges for med spa owners.
A report from the US Department of Labor corroborates this, with sectors like healthcare, social assistance, and leisure and hospitality (including med spas, spa businesses, and wellness clinics) showing one of the highest turnover rates.
In the medical spa industry, where the industry is crowded and top talent is always in high demand, getting compensation wrong can be costly.
However, striking a balance is not easy — high salaries can eat into profits, while low ones risk losing skilled professionals to the competition.
If you’re losing sleep over how to keep your star performers happy without breaking the bank, read on. We’ll be breaking down the most effective compensation strategies that attract and retain top talent.
Understanding compensation structures in the med spa industry
Compensation structures in medical aesthetics can vary widely, there’s no one-size-fits-all approach.
But, choosing the right compensation model can help you create a rewarding work environment that drives performance while keeping your medical spa competitive and financially healthy.
Below, we explore the three most common pay structures for the med spa.
Base pay
Base pay is typically a fixed amount employees earn before bonuses, commissions, or other incentives.
It’s paid either hourly or as a salary and forms the foundation of an employee’s compensation.
Understanding who to pay hourly and who to pay a fixed salary helps you structure competitive and fair pay for different roles.
- Hourly wage: Ideal for front desk staff, estheticians, and other non-clinical roles, as their hours may vary based on booked appointments and overall demand. Hourly rates often depend on experience and location.
- Annual salary: Suitable for management positions, such as spa directors or clinical managers, and for licensed medical professionals like nurse practitioners and physician assistants, whose roles require leadership and specialized expertise.
Commission-based pay
Commission-based pay ties in salary or bonuses with an employee’s performance, giving them a solid incentive to increase their productivity and sales.
In a med spa context, this means the employee receives a percentage of product retail sales or treatments they perform.
Research shows that commission-based compensation works.
In fact, 57% of employees say earning commissions or bonuses pushes them to do a better job, and 52% feel it helps them stay focused on hitting their goals.
However, before considering this compensation type, it’s important to be aware of regulations.
💡Regulations around commissions
Many states consider medical spas as medical practices and have certain statuses and laws that make commissions non-compliant.
One example is the fee-splitting statute that prohibits physicians from dividing commissions with non-physicians like estheticians, or anti-kickback laws, where offering a commission for patient referrals to another provider for a different treatment could be seen as a kickback.
Hybrid pay structure
The hybrid pay structure combines a fixed base pay with commission incentives giving employees the best of the two previous options — reliable income and motivation to go above and beyond.
As a med spa owner, this approach lets you offer financial stability while rewarding high performance, striking the perfect balance between security and incentive-driven growth.
For your med spa, this can mean a steady hourly rate or salary, plus commissions on product sales or treatments.
How do you decide how much to pay team members?
Deciding how much to pay your med spa team involves weighing up several key factors.
- Start by researching industry benchmarks and local job boards to ensure your pay rates are competitive.
- Consider the specific responsibilities of each role — clinical staff, for example, may warrant higher pay.
- Experience levels also matter, as professionals with a few years of experience in their pocket will bring value, and will be able to hit the ground running.
- Local cost of living plays a big role, too. Compensation expectations in urban areas are typically higher than in smaller towns.
- Additionally, factor in certifications, specialized skills, and the demand for certain treatments in your area, which can justify higher pay rates.
Lastly, make sure to align compensation with your business’s revenue goals and employee retention strategies — competitive pay can help lower turnover and improve team morale.
What compensation structures are most effective for med spa staff?
Now that you know the different compensation structures and what to consider when setting pay, let’s look at what compensation plans are suitable for different med spa staff members.
Front desk/receptionists
Hourly wage + upselling incentives: An hourly wage paired with upselling incentives strikes the perfect balance between steady income and motivation to boost sales for front desk staff or receptionists.
The hourly rate provides them with financial stability, while the bonus for upselling products, memberships, and additional treatments encourages them to actively engage with clients and contribute to revenue growth.
This works well because your front desk staff is perfectly positioned to upsell or cross-sell your med spa’s services and products. So why not give them an extra boost with upselling incentives?
Estheticians
Base pay + commission: The best pay plan for estheticians is a base pay combined with commission on treatments and products. This structure motivates them to provide excellent client care and build loyal clients.
The base pay allows them to deliver high-quality treatments without having to worry about their livelihood, while the commissions on services performed and retail sales motivate them to go the extra mile.
How much commission should you pay? There isn’t a straightforward answer.
Some sources suggest that the commissions should be 30-50% on services and 5-15% on product sales.
Others suggest you can offer higher commissions as long as the service payroll stays within 30-35% of total revenue.
Medical Directors
Stipend or profit sharing: Offering a stipend or profit-sharing mode to your medical director is a great way to give them competitive compensation without tying their pay to daily operations.
A fixed stipend should reflect their expertise and oversight responsibilities in a steady income.
Or, you could go with a profit-sharing model that ties their earnings to your med spa’s success. This is a greater motivation for them to grow the business, as the more you make, the more they make.
You have several profit-sharing options to choose from, depending on your med spa’s revenue.
Spa directors or managers
Salary + performance bonuses: A fixed monthly salary plus a performance bonus is the perfect combination to make med spa directors and managers feel secure and motivated in their roles.
Tying bonuses to revenue growth and client satisfaction KPIs helps you reward their leadership efforts and keep them in the right result-driven mindset.
Compensation strategies for attracting and retaining top talent in a med spa
Above, we covered how you can structure your med spa employees’ compensations. But compensation is always a work in progress.
What was competitive and attractive a few years ago may not be today. Work/life balance has soared in importance globally in recent years. You should always review your compensation strategies to ensure you’re not being left behind.
Here are some effective strategies to help with retention.
1. Offering competitive base salaries
At the end of the day, everyone works for a paycheck. Perks and growth opportunities are nice, but if your med spa employees don’t feel fairly compensated for their hard work, they won’t stick around.
For example, the average base salary for a receptionist is $52K, while the national average for an aesthetician pay is $45K.
It might be tempting to lowball employees and cut costs by hiring less experienced staff at lower wages. But this can backfire, leading to high turnover and risking the quality of your services. In other words, you get what you pay for.
Offering competitive base salaries at or above market rates will help you attract high-quality candidates who can help your med spa thrive.
2. Using performance-based bonuses
Performance-based bonuses are a great way to motivate your team members without the pitfalls of flat-percentage commissions, which can create unhealthy competition and resentment among staff.
Tying bonuses to performance metrics, like target revenue, retail sales, package or service upsells, client retention rate, or positive customer feedback, you reward individual achievements while keeping the focus on shared business goals.
🫰Commissions in Pabau
Does creating a commission program sound complicated? it doesn’t have to be! Pabau’s commissions feature allows you to set multiple commission types for multiple revenue streams, like products, memberships, gift cards, etc.
The best part? Pabau automatically calculates how much commission you should pay your team members. No more commission headaches!💰
3. Establishing tiered compensation plans
Tiered compensation plans allow your team to earn more as they hit performance milestones, for example, if they hit sales targets or sell a certain number of premium packages.
It’s a great way to keep them motivated and focused on growing with your med spa instead of jumping ship for better pay somewhere else.
Tiered compensation encourages your staff to keep leveling up and aligns their long-term growth with your med spa’s strategic goals, such as increased revenue, upselling premium services, or better client satisfaction.
4. Regular pay increases for top performers
Even your top performers can lose motivation if their paychecks don’t reflect their hard work.
Regular pay raises for the best staff members show your team that hard work really pays off — literally.
By rewarding consistent high performance, you’re giving your star employees a reason to stay loyal rather than looking for a better paycheck elsewhere. Plus, it shows the rest of your team that their efforts can lead to a pay bump, too.
Aim to review pay rates at least once a year, but don’t be afraid to reward exceptional performance more frequently if it’s deserved. A typical raise ranges from 3% to 5%, but for top performers who consistently exceed goals, consider bumping it up to 7% or more.
5. Set product sales incentives
Want to pump up your product sales and reward your team at the same time? Try offering product sales commissions.
Sales incentives — like 10% on retail sales for your estheticians — encourage them to recommend products that genuinely benefit clients. When clients see that your team members are excited about the products, they feel the vibe and are more likely to buy.
It’s a win-win: they get a nice bonus, and your med spa boosts its revenue.
Just make sure to keep the incentives realistic and tied to genuine product knowledge so it feels natural and not pushy.
6. Offering a comprehensive benefits package
Competitive pay is great, but if you really want to keep your team happy, a solid benefits package is where it’s at.
Think beyond the paycheck — offering flexible schedules, professional development opportunities, and health insurance can make a world of difference. Not only do these perks help you attract top talent, but they also show your team you genuinely care about their well-being and growth.
Plus, when employees feel supported, they’re more likely to stick around and give their best.
Simplify your med spa’s operations with Pabau
In theory, creating the right compensation plan sounds simple: offer the right mix of pay, perks, and incentives, and you’ll attract the best talent, and keep them.
In practice, it’s not quite so easy.
If you’re not strategic, the best people get snapped up.
However, no one needs the added mental load of manually managing compensations and commissions or making sure everyone gets paid on time.
This is one of the areas where Pabau can help. As an all-in-one practice management software, it can help you with booking and scheduling, patient record management, marketing your business, and lots more.
It also has a suite of staff management tools:
- Built-in commission feature to motivate and engage your staff
- Automated compensation calculations and tracking
- Schedule and rota management
- User permissions settings
- Pay your freelance staff quickly and easily
With Pabau, you’ll have the tools you need to keep your team happy, engaged, and delivering excellent service. Ready to see how it works? Book a demo today!
