Not all jobs come with a fixed salary. Those in careers including sales positions, real estate or financial advisors often earn commission, which the U.S. Dept. of Labor defines as a "sum of money paid to an employee upon completion of a task, usually selling a certain amount of goods or services." Here's what you need to know about commission-based careers.
Salary vs. Commission
Commission pay jobs tend to be structured in the following way: employees receive a fixed base pay plus a commission, if applicable. For example, if a salesperson earns 10% commission percentage on a sale, and they close a $100,000 deal, they will receive $10,000 plus their fixed base pay. If they don't close a sale or meet agreed-upon targets, they won't earn anything on top of the base pay, which is typically a nominal amount of money.
Those who earn a fixed salary, think the marketing employees who produce campaigns that support the sales team, earn the same amount of money each pay period.
Benefits of a Commission-Based Job
If you can embrace uncertainty and pivot quickly depending on the needs of customers and prospects, you'll be poised to achieve a steady, and likely sizeable, paycheck of commission pay. Think about it this way—if you thrive on working with people and have a knack for selling, it's likely you'll be able to hit or exceed sales targets agreed upon by your manager, and that will be reflected in your pay.
However, much of available commission work, while still under a corporate structure, require employees to be self-starters and highly motivated. If you don't respond to sales inquiries or reach out to potential buyers, there will be no one in your queue, and you won't make the sale.
What to Ask Before Agreeing to Job With Commission Pay
Not all commission is created equal. Before taking a job where your earnings are based on commission, do your research to be clear about when and how you are paid, and any special factors that will impact your earnings.
- Will you earn a base salary plus commission, or will you only be paid commission?
- What is the commission percentage? Is it a fixed amount for every transaction or does the percentage vary depending on the product, sale price and other factors?
- When will you be paid for each sale or outcome? Will it be immediately after the client signs the paperwork and agrees to the sale, or after they make their first payment?
- Is there a maximum amount you can earn each year or quarter? Be sure to ask if the company has a ceiling on the max commission you can earn.
Top Jobs That Offer Commission Pay
While there are plenty of sales or consulting jobs available, here are the ones that pay the most or are the most reliable.
- Business to business sales, including software. Tech companies such as SAP, Salesforce and Microsoft have been ranked high in earnings opportunity. Keep in mind that large business deals can be very slow, and may take 6-12 months to close--meaning you won't close many deals, but those sales you do make, tend to be very lucrative.
- Medical device sales. While you don't need to be a doctor, the top performers have a clear understanding of science and can easily speak to medical professionals and surgeons to understand their needs and the needs of patients.
- Digital media sales. The digital landscape changes quickly, and top performers need to juggle large client lists, lots of conflicting demands, consumer preferences and have a grasp of the foundational technology.
- Real estate agent. In addition to showing houses on the market, you'll need to be an expert at relationships and be great at fostering negotiations. Typical commission is 2.5 to 3% of the total sales price of the house.