Commission vs hourly pay

The examples below use one person over a month: 160 hours worked and $5,000 of sales.

The four common structures

Hourly only

Predictable for everyone and simple to run. It suits roles where the person can't change how much is sold — a front desk on a quiet shift, a new hire still training. The cost is that selling more changes nothing for them, so it rarely happens on purpose.

Straight commission

Pay tracks results exactly, and your labour cost falls with sales. It suits experienced people with their own clientele. It is hard on anyone building a book, and a slow month lands entirely on them.

Hourly plus commission

A lower base plus a smaller commission. It is the most common compromise for good reason: people can pay their rent in a slow month, and selling still moves their pay. The commission part needs to be big enough to notice — a few dollars a week motivates no one.

The higher of the two

Pay whichever is larger, hourly or commission. Newer staff are protected by the hourly floor; once their sales carry them past it, commission takes over. It is fair but it hides progress: someone at $1,800 of commission against a $1,920 floor gets no reward for their next $300 of sales. Showing them the gap helps.

Check minimum wage first

For most employees, total pay for each workweek has to come to at least the minimum wage for the hours worked, whatever the plan says. Under a straight-commission plan, a slow week can fall short and the business must make up the difference. Federal and state rules differ, and some states add their own requirements for commission agreements — check with your state's labour department or an employment lawyer before switching someone to commission.

Whatever you pick

Commission only changes behaviour if people can see it building during the month. A figure that arrives with payroll describes the month; one on their phone on the 20th can still change it.

CommissionBoard shows each person their commission as it builds, calculated from your POS. To compare plans for one person first, use the commission calculator, or read how to calculate commission.