Why We Set Annual Service Sales Targets (and Why It’s Fairer for Everyone)!

Think Bigger: The Problem With Micro Targeting

When it comes to setting service sales targets, many salon owners and managers instinctively reach for quick maths: take the minimum pay, multiply it by three (or whatever your chosen multiplier is), and then multiply that by the hours worked in a week. It feels logical, immediate, and easy to calculate. But here’s the problem: it’s not accurate.

At Loop HR, we encourage a very different approach – one that looks at the bigger picture and calculates targets based on annual salary, not micro pay periods. Why? Because that’s what actually reflects the real cost of employing someone. It's a more accurate, transparent, and fair way to forecast performance for both the business and the employee.

Let’s start with the basics. When you only look at the current pay period, you’re missing out on the full cost picture. You're not just paying someone for the hours they work this week – you’re also paying for:

5.6 weeks of paid holiday,
Additional bonuses or service commissions,
National insurance, pensions, and other obligations.

If you ignore those costs when setting your targets, you’re not forecasting properly. You’re underestimating what your business needs to bring in to cover a range of employment costs.

The Power of Annual Planning

When you calculate targets across the whole year, you suddenly gain clarity. You can see exactly what each employee is expected to generate and the cost to the business, not just for the year, but overall. From there, it’s easy to align individual rewards that align with real costs and business goals.

And once you’ve set that annual target, you can break it down in any way you need – weekly, daily and hourly. This flexibility allows you to manage targets in a way that suits how your team works, without losing sight of the bigger picture.

Why This Approach Is Fairer

From the employee’s point of view, it’s important that targets reflect the hours they work, but targets must also relate to the employee service price. Setting targets that relate to price level removes a lot of the frustration and confusion that often surrounds pay and performance conversations.

With such transparency it also opens the door to smarter pay structures. With an annual view, you can shape pay around behaviours you want to encourage – great service, loyalty, skill development, retail sales – whatever matters to your business.

Two simple methods to help you set realistic, fair and data-driven targets

Loop HR uses two simple methods to help you set realistic, fair and data-driven targets.

Optimum Hourly Rate - This is based on what an employee could earn if every appointment were sold at the highest rate. Of course, we know that’s not realistic 100% of the time, so we build in a Minimum Target Threshold – the point at which bonuses or commissions begin. This threshold is easy for employees to understand. It’s their baseline, not their goal. It sets clear expectations while giving room for motivation and growth.
Annual Sales Target (based on salary) - This is the classic “magic number” method – take the annual salary and multiply it by 3 (or your chosen figure) to find the annual service sales target. Loop HR then automatically breaks this down into weekly, daily, or hourly targets, using data it already holds: hours worked, pay structure, holidays, and more. By using annual salary as the foundation, the targets are rooted in the real cost of employment. You’re not guessing. You’re planning.

Precision Built In

If you try to reverse-engineer a Loop HR target using weekly pay periods or individual shifts, it won’t match - and that’s intentional. Our system uses factual data to build targets that account for everything: contracted hours, holiday allowance, salary, bonuses, and even schedule variations.

It’s this level of precision that sets Loop HR apart. You don’t need to run manual calculations or guess whether someone’s hitting their target - the system knows, because it’s based on a complete picture of each person’s employment.

That said, if you want reassurance, you can manually calculate any target – or any part of the data – using the details from the employee’s profile. Transparency is essential for trust, and Loop HR is built with that in mind.

In Summary: Accuracy, Fairness, and Clarity

By setting sales targets against an annual salary and/or service prices, you get:

Greater financial accuracy – you understand true costs at all levels of sales income.
Fairer expectations – employees know what’s expected and why.
Clearer forecasting – you can plan ahead with confidence.
Smarter rewards – you can link pay to performance in a way that actually works.

Targets should never feel like moving goalposts. With Loop HR, you set them once, you set them right and everyone’s on the same page.

Ready to Transform Your Salon Business?

If you're ready to take the next step in managing your salon, spa, or barbershop with more structure, clarity, and confidence — we're here to help.

At Loop HR, we support thousands of hair and beauty professionals with everything from simple salon management strategies to complex data and performance systems - all streamlined, salon-specific, and built to grow with your team.

Click here to schedule your Discovery Call and let us show you what’s possible.