Why do most tattoo artists pay their shops a percentage of revenue instead of a flat fee?
In talking to tattoo artists in the US, we have heard that most pay their shops a percentage of their revenue and that the rate is typically between 40% and 50%. So, for example, if an artist does a $500 tattoo, she might give her shop $250 and keep just $250 for herself. This seems like a lot! Why is this such a popular model then? Why is it not common for artists to pay their shop a fixed “rent” instead?
The answer is sales. Imagine a salesman whose job it is to find you customers, tell them how great you are, and book them to be tattooed by you. That salesman deserves a reward for this and, the better he does, the more he should be rewarded. By sharing a percentage of your revenue with him, you have perfectly aligned your goals and his. This is why percentage-based commission is such a popular model for rewarding salespeople.
Of course, in other scenarios, commission has no place. You’d never pay your landlord a percentage of your earnings just as you’d never expect to pay for your ink with a percentage of the revenue made using that ink! For all these things that do not get you customers, a flat fee is the only fair way to pay.
So, is it fair for you to pay your shop a big, percentage-based commission? It depends on how much selling they are doing. Imagine that your shop does nothing to help you get customers: no shop website, no shop instagram, and no walk-ins. Imagine that customers have never heard of your shop at all. How many bookings would you have? How much would you bring in on your own via social media, word-of-mouth, etc?
If the answer is “zero,” then you owe your shop owner a big hug! However, if you’d lose less than 50% of your customers, then perhaps 50% commission is not justified in your case. For those artists who have strong acquisition channels of their own, rental models can mean more take home cash.
For this reason, some artists are able to negotiate a rental model with their shop. Tattoo conventions are another example of a popular rental model. And this is exactly why we created Cove Studios. Cove Studios rents tattoo stations to artists for a flat fee, and those artists keep all the money they make. The first location is in Los Angeles and more are coming worldwide.