Sales Rep 101 – Chapter 27

Commission or Salary

Ah yes, the dreaded 100% commission. In sales there are many different ways companies can set you up to get paid. If you are inside sales sometimes you may get paid hourly or a small salary and then receive smaller commissions on sales. Years ago when I sold YellowPages my company paid me a salary plus commissions. It was not a draw. I got paid my salary no matter what. I will go into what a draw is in another section. But the salary was smaller so I could get paid more commission. And then my favorite, the 100% commission. So, there are a few things to consider when you accept a new sales position. If you are relatively new, then a salary plus commission may not be a bad option. It gives you a little peace of mind that you will be getting paid something no matter what. In fact, if you are brand new some companies might be willing to pay you a salary for the first year and allow you to better and then switch you to another plan. But if you have been in sales for a while and feel like this is the career path for you then I would consider switching to 100% as soon as you feel comfortable. And why do I say that? Because you can make more money. When companies pay you commission only, usually your commission percentage is higher which allows you to make more money over time. Yes, it can be stressful. And yes you can have some pretty thin months. However, you can also have some fantastic sales months. But you need to be smart and save some of that money for the not so good months. Let me give you an example. I knew a sales rep that made over $200K per year. That sounds like great money doesn’t it. But he bought some property and was spending as fast as it was coming in all on this property that he bought. And inevitably in sales you run into some slow months. And he would complain to our manager that he was not making enough money! I know right! The fact is if you are making $200K no manager is going to feel sorry for you if you are not smart enough to manage your money properly. Never assume that if you are making $10,000 per month on a regular basis that it will always be there. Make sure to make a plan to save. If you do that, then 100% is the way to go.