Commission ties pay directly to production
Unlike a fixed wage, commission pay scales with what a staff member actually generates — this can align incentives well but requires careful structuring to work for both the business and the employee.
Use the calculator to see the real split
The Commission Calculator shows exactly how a given commission percentage splits revenue between the employee and the business for any service — model a few different rates before choosing one.
Flat vs. tiered commission
A flat commission rate is simpler to explain and administer; a tiered structure (a higher rate above a certain revenue threshold) can incentivize higher production, but adds complexity. Choose based on what your team will find genuinely motivating and easy to understand.
Whatever structure you choose, make sure staff can easily calculate their own expected pay — a commission structure so complex that employees can't verify their own paycheck breeds distrust, regardless of whether the math is technically fair.
Factor in product cost and overhead
A commission based on gross service revenue, without accounting for product cost and overhead the business still has to cover, can leave the business with too thin a margin. Model your numbers carefully, factoring in your actual costs, not just the commission split itself.
Changes to an existing commission structure should be communicated clearly and with reasonable notice. Abruptly reducing commission rates for current staff can significantly damage trust and retention, even if the change is well-intentioned.
Frequently asked questions
What's a typical commission rate? This varies significantly by market, service type, and what's included (whether the business provides all product/supplies, for example) — model your own numbers rather than anchoring to a generic percentage.
Can different services have different commission rates? Yes — some businesses vary commission by service type, especially if product costs differ significantly between services.