A commission only job or opportunity as we prefer to call it, is a mutually beneficial partnership between a company Principal and a self-employed sales agent, manufacturers rep or sales agency where the agent and company have a contracted working relationship but on very different terms to that of an employee.
Working in a commission only job, you are competing with yourself on a daily basis. This will allow you to hone in and develop your skills, and increasing your ability to contribute to the company you are providing a service for. A commission only job, because you are an independent contractor, is a useful stepping stone to entrepreneurship. When you start a business, just like in a commission only job, you don’t have a boss who helps to motivate you every day. Instead, you must be the one to motivate yourself to get up and make a plan of attack to get the sales and earn your paycheck.
Why is working on commission better than a salary?
Employers benefit from paying a commission to their employees because it means that they only pay the employee if there is a sale. This eliminates the burden of paying employees for work that does not result in sales. It also eliminates the need for the employer to pay payroll taxes since the person on commission is an independent contract and not an employee.
Professionals working on 100% commission jobs usually earn more than those doing jobs that are paid a base salary. In case of an increase in sales, then the commission agent sells more and therefore gets a higher income on a monthly basis – that can a lot more in comparison with a person that has a wage.
What are the disadvantages of a commission only job?
- Payment is only made when a sale is confirmed. …
- It takes time to build up to livable wages. …
- There are agency costs which happen even when sales don’t get made. …
- People must have a certain set of skills in order to be successful.
What are the advantages of a commission only job?
- Encourages employees to work harder.
- Highly talented professionals in sales and marketing get more out of commission-based pay since their income relies on how hard they work.
- Helps manage payroll expenses.
- Your set your own schedule.
- You control your income and thus you create your own economy.
- You might have unlimited earnings potential.
- You know exactly how well you’re doing.
- You’ll probably work more independently.
What is a good commission rate?
The industry average for sales commission typically falls between 20% and 30% of gross margins. At the low end, sales professionals may earn 5% of a sale, while straight commission structures allow a 100% commission.
So should I take commission only job or one with a salary?
That is a decision only you can make. Even though there are many positions that offer a base salary, the value of working for commission only is that you are in control of what you earn. You are in control of creating your own economy! Someone who is highly motivated to earn six figures a year, will earn generous commissions, while their less ambitious counterparts will be stuck in that 9-5 job working minimum wage or just above minimum wage.
Time To Meet With Nick
Nick Roy has been involved in marketing and website design since 1999. He has been a business owner since 2008 where he grew his first agency to 7 figures in five years before a bad acquisition brought that to a halt. That combination of success and failure provides Nick with a unique perspective to share with clients on what it takes to succeed as a small business owner. While he currently holds an MBA from Hawaii Pacific University, he is primarily self-taught when it comes to website design and online marketing. He is also an instructor of social media marketing for Wynmore Academy. Click here to set up a time to talk with Nick about your business goals.