Commissions and Salaries in Sales

Written by businessideas.info

There are two ways to get paid in sales. One is through commission payments, in which a salesperson is given a percentage of every product they sell. The other alternative is a salary, which is not affected by how many products are sold (although whether or not a raise is given may depend on performance).

It is not uncommon to find both methods used at the same time. In exchange for a slightly lower salary, salespeople can opt to also get commissions. Therefore, performance directly affects their earnings, and if they hit a slow streak, money is still coming in from the salary.

Many people advocate for only commissioned or only salaried selling. Hardcore salespeople usually support commission sales, since that is based on performance and what sales is all about. Commissions are also good for the company, because they only pay when somebody sells something, so they can never take a loss. For companies that market an easy to sell product, however, the salary route might be better taken, as it will save money in the long run.

Realistically, most businesses would do better having only commissions, but the needs of the salesperson must also be taken in to account. Most people prefer to also have a salary so there is some kind of guarantee, and commission-only structures are usually only found in multi-level marketing type businesses. Having a salary and commission mix is a great way to make your employees feel secure and give them incentives to sell more products. Also, salaries and commission rates can be adjusted at any time, so no plan is set in stone.