How People Really Get Paid in Sales
A commission is not just “extra money.”
It’s a system that decides:
Here are the main types — with real examples.
1. Flat Percentage Commission
Definition:
A fixed % on every sale.
Example:
You sell a €10,000 contract.
Commission = 10%.
You earn €1,000.
If you sell €50,000 total → you earn €5,000.
Best for:
Stable pricing, predictable margins.
Risk:
No extra reward for overperformance.
2. Flat Fee Commission
Definition:
A fixed amount per sale, regardless of price.
Example:
€200 per contract.
Sell 5 contracts → €1,000.
Even if one client spends €3,000 and another €300.
Effect:
Encourages speed and volume, not upselling.
3. Tiered (Graduated) Commission
Definition:
Commission increases after certain sales thresholds.
Example:
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5% up to €10,000
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8% from €10,001–€20,000
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12% above €20,000
If you sell €25,000:
Total = €1,900
Effect:
Creates “push harder” behavior at end of month.
4. Revenue-Based Commission
Paid on total sales revenue.
Example:
You sell €100,000 worth of products.
Commission = 6%.
You earn €6,000.
Even if company profit margin is small.
Good for:
Simple systems.
Risk:
Salespeople may give big discounts.
5. Profit-Based Commission
Paid on profit, not revenue.
Example:
You sell €50,000 product.
Company profit margin = 30% → €15,000 profit.
Commission = 10% of profit.
You earn €1,500.
Effect:
Encourages selling at higher margins.
6. Base Salary + Commission (Hybrid)
You receive fixed income + commission.
Example:
€1,500 monthly salary + 5% commission.
Sell €20,000 → €1,000 commission.
Total income = €2,500.
Most common model.
Provides security + incentive.
7. Draw Against Commission
Company gives advance payment (draw).
Example:
Monthly draw = €2,000.
You earn €1,500 commission that month.
You now “owe” €500 difference (if recoverable draw).
If next month you earn €4,000 →
Company deducts €500 first.
High pressure system.
8. Residual (Recurring) Commission
You get paid as long as client keeps paying.
Common in:
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SaaS
-
Insurance
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Subscription services
Example:
5% recurring monthly.
Client pays €1,000 per month.
You earn €50 monthly.
If client stays 24 months →
€1,200 total from one client.
Powerful long-term model.
9. Gross vs Net Commission
Gross commission: calculated before returns or cancellations.
Net commission: calculated after refunds, chargebacks, or unpaid invoices.
Important detail many people ignore.
10. Bonus Commission
Instead of % per sale, you get bonus for hitting target.
Example:
Sell €100,000 in a quarter → €5,000 bonus.
Once target is reached, motivation may drop unless overachievement bonus exists.
Key Question Before Accepting Any Commission Job
Ask:
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Is it revenue or profit based?
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Are thresholds monthly or quarterly?
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Is commission paid when sale is signed or when client pays?
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What happens if client cancels?
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Is there clawback?
Small clauses = big impact.
Commissions are incentive architecture.
If you understand the structure,
you understand the real earning potential.
