Commission-sales rates vary according to types of sales. The rates are usually based on gross sales revenue, with different commissions for certain sales levels, including fixed-commission rates. It is good to know about the various sales commission structures in order to evaluate whether or not to accept a sales position. Commission rates for performance can be a lucrative and motivating negotiating tactic before and during sales job employment situations. For example, when total gross sales surpass certain sales goals, a sales person’s commission percentages could increase as a merit bonus.
Variable-commission structures are similar to straight commission. However, in variable commission, the rate increases or goes down depending upon the sales’ circumstances, which are dictated by the economic cycle of a business. For example, certain products sell on a seasonal basis, such as holiday decorations and summer sporting goods. While it may be possible to garner a higher commission on new accounts, larger sales based on total volume over a certain amount of revenue may require an adjustment at a lower commission rate. Real estate professionals and insurance agents are just some of the kinds of employment situations that typically receive variable-commission compensation.
Draw Against Commission
A draw against commission is also like
Base Plus Commission
The base-plus-commission structure is generally the same as “salary plus commission.” In this case, the company pays a certain salary, called the base, which is the salesperson’s to keep. Above that amount, the company provides a commission according to a mutually agreed upon formula. Many sales groups use this commission combination. A very wide variety of sales representatives receive base-plus-commission compensation, generally including those who serve the public in retail store settings such as book, equipment, telecommunications and mobile-device sales.
Advance Against Commission
Much like the draw-commission structure, the advance-against-commission system is usually an occasional rather than a continual event. Also, it generally does not exceed the
Residual commission is one that keeps on paying regardless of whether a salesperson stays with a company. For example, when it comes to insurance sales, a sales associate is entitled, for a period of time, to commissions on clients’ payments on policies that the salesperson sold to them prior to leaving. When your sales work involves a lot of new-account generation, you would be wise to negotiate a residual commission on those new accounts. The justification here is that the reward for selling the account belongs to you; after you leave and the account is maintained, a portion of the income would be yours for a while. Residual commissions are also paid to those in affiliate sales and similar programs.