Commission pay explained

Commission plans vary a lot. Here is how the common ones work, and what to ask before you sign.

Common pay structures

• Salary only: fixed pay, little upside.
• Base plus commission: a smaller guaranteed base plus a percentage of sales. BLS reports most employers of sales reps use a combination of salary and commissions or salary plus bonuses.
• Commission only: pay comes entirely from sales. Highest risk, often highest ceiling.
• Draw against commission: an advance paid back out of future commission.
• Profit share: you earn a percentage of the job's profit (price minus costs), not of the total price.

Revenue commission vs. profit share: an example

Illustrative math only: on a $10,000 sale with $5,000 in costs, a 10% revenue commission pays $1,000. A 50% profit share pays 50% × $5,000 = $2,500. Profit share rewards selling at a healthy price, and transparency on costs matters, so ask to see them.

What sales reps earn

The median annual wage for wholesale and manufacturing sales reps was $76,460 in May 2025, versus $50,980 for all occupations. For non-technical products the middle was $72,080, with the top 10% above $137,550.

Source: U.S. Bureau of Labor Statistics, Occupational Outlook Handbook, Wholesale and Manufacturing Sales Representatives (May 2025 wage data).

1099 vs. W-2

Many commission-only roles are 1099 independent-contractor roles. That means no tax withholding, so set aside money for taxes. The IRS explains self-employment tax at irs.gov. For the full picture, read 1099 vs. W-2 jobs explained.

Questions to ask

• Is commission on revenue or profit? Can I see the cost breakdown?
• When is it paid: at signing, install, or customer payment?
• Are there caps, clawbacks or chargebacks?
• Who supplies leads?

See a real example

This DFW role pays a 50–60% profit share with full cost transparency: