Some sales jobs can be defined by sales style, location, the type of clients, industry, or how you get paid. A unique part of working in sales is the high percentage of commission-only sales roles. This type of compensation agreement is less common in other industries. There is the potential for commission-based roles to be highly lucrative. But, as a sales recruiter who’s worked in the sales industry with everyone from startups to blue chippers, I know there are also some risks to consider.
In August, I wrote about how to recruit commission-only salespeople. Here, I’ll look at things from the candidate’s perspective. I’ll define sales commission-only jobs and then talk about whether or not you should take a commission-only sales job including 6 benefits of commission-only and 7 potential negatives. This information will help those who are considering working in commission-based jobs.
A commission-only sales job pays based on performance. A salesperson is compensated exclusively based on the sales they generate. In this arrangement, the employee does not receive a fixed salary or hourly wage but instead earns a commission—usually a percentage of the revenue from each sale they make. The more they sell, the more they earn.
There are many different types of commission structures. They vary based on the industry, role, experience, and other considerations.
People are often attracted to jobs that offer then autonomy and significant earning potential. This is a reason by commission-only sales jobs are attractive to motivated sales professionals. Here’s what makes these jobs attractive:
For those confident in their sales abilities and seeking high rewards for performance, commission-only jobs offer significant appeal. However, there are some potential drawbacks that you need to understand before working on commission.
There are some inherent risks to working in a commission-only sales environment. It’s not for everyone and many struggle. So, it’s essential for people to be fully aware of the disadvances of commission jobs in sales before accepting a job offer.
This is perhaps the biggest drawback of working in this type of environment. Without a fixed salary, income can be highly unpredictable. In slow months, salespeople may earn little to no money, which can create financial stress. This is particularly challenging in industries where sales cycles are long or seasonal.
Sales professionals on commission-only pay often face intense pressure to close deals constantly. You will face pressure from management and you will also feel pressure from yourself to perform. This pressure can lead to stress, burnout, or frustration, especially in competitive industries or markets.
Commission roles are more entrepreneurial. Companies often treat commission salespeople like contractors rather than employees. So, many commission-only roles do not offer standard employment benefits such as health insurance, paid time off, or retirement contributions. This means salespeople must often handle these expenses on their own, which can reduce overall earnings.
To maximize earnings, many commission-based sales professionals feel compelled to work long hours or take on additional responsibilities. This can lead to difficulty maintaining a healthy work-life balance, particularly if they feel they need to constantly hustle to make ends meet. Many professionals work evenings and weekends.
Expect competition from everywhere. You are incompetent with other companies and even other sales reps from your own company. In a high-pressure, commission-only environment, some individuals may resort to unethical sales practices to meet quotas and earn commissions.
If you don’t sell, you don’t make money. Since earnings are entirely commission-based, there is little financial security in a downturn or during slow periods. If sales dry up, so does income, creating a high-risk situation for salespeople.
These challenges can make commission-based roles unsuitable for some individuals, especially those who prefer a stable and predictable income or struggle with high-pressure environments.
Commission-only sales jobs offer significant earning potential and freedom, making them attractive to ambitious and self-driven sales professionals. However, the lack of income stability, and benefits, and the high-pressure environment can make these roles risky and unsuitable for those who prefer a more predictable and secure career path. Before accepting a commission-only sales job, it’s essential to thoroughly understand both the rewards and the potential challenges to ensure it align with your personal and professional goals. Careful consideration of your risk tolerance and ability to thrive under pressure is key to success in such roles.
We all want to get paid well for our efforts. Here are some more articles about sales job salaries that can help you make informed compensation decisions:
Are You Getting Paid Fairly As A Salesperson? 5 Compensation Types & 6 Things To Watch Out For
Looking for a Pay Raise? Why You May Need to Switch Sales Jobs to Get It
Know Your Value: How Sales Recruiters Can Help You Ask For The Right Salary
4 Ways to Maximize Your Salary Negotiation for Sales Jobs
Jace is a sales recruiter with almost a decade of experience building high-performing sales teams in North America, across Europe, Asia, and Australia. He also has plenty of tips to help your sales team increase revenue!