Payroll: How to Deduct Service/Class, and Product Costs from Payroll Commissions

Deducting Business Cost from Payroll Commissions is a feature within Vagaro that allows you to better manage your payroll for commission-based employees and booth renters. Once the feature has been configured, it will tell the system to deduct cost to business prior to applying the commission percentages. The percentage is calculated on the net of the service. This determines what the service provider will receive in pay. For instance, if the service cost of a cut, color, and blow-dry is $50.00 and the Cost to Business is $10.00, the Service Provider will earn a commission of $40.00.  

The system will do the following:

Price Charged for Service - Business Cost(s) = Net Earnings

Net Earnings X Commission % = Employee's Pay

Follow these Steps to Setup Payroll to Deduct Business Costs:

To go to the service/class menu settings page go to this link https://www.vagaro.com/ShopOwner/ManageNewServices.aspx otherwise follow the instructions below.

1. Hover over Settings, then click on Service/Class Menu.

Click on the Edit icon for each service you want to add a Business Cost.

3. Enter the dollar amount that you want to deduct in the Cost to Business box. Please note: This is not a % amount. Go to the next step once you enter the Cost to Business for all the items you want to adjust.

4. Click on Reports at the top of the screen and then click on Payroll configuration, which is on the left-hand side of the screen.

5. Toggle the switches to deduct the Service/Class and Product Costs from Payroll Commissions. You also can subtract the sales discounts from the service price when calculating commission.  

6. Once you have set up all your options, click on Save. If you are ready to run payroll click on Save and Run Payroll.