Forum Discussion
Commission Based Pay?
Hey guys! Wondering if anyone here has experience with paying employees commission instead of hourly. How is that working for you guys? How do you have it set up to where you’re making the profit you need and the employee is happy and motivated to work hard? At what percentage do you pay? Thanks!
12 Replies
Some cleaning companies do pay a percentage of the jobs. They have great success with it. It is a tier program with 3 stages of percentages depending on how long the employee worked and how good they are. It seems to work out well.
A consistent salary has been working very well for us! A set price for each scheduled work is pretty good motivation to get the job done quick and when we get absolutely washed out with the weather, they still get paid for that day knowing that the work will have to be squeezed back into the schedule later. Of course bonuses and raises at appropriate times keeps the morale up too.
We are a swimming pool service company and tried the commission but the accounting side can got very confusing. What we have settled on is a base salary but on a sliding scale and love a 4 day work week. The sliding scale depends on how many pools they service per week. The 4 day work week has been the most loved by our employees and is a big motivator to get the work done in a timely manner. Hope this helps!
I do 20% depends on the situation. If it’s a big or small job. If its window washing the margins work for my guys!
Our technicians are on commission/performance pay. This has worked very well as it has incentivized the right behavior – get s&#t done. We manage with quality control checks. Now our staff feels like they "own" the job and get a piece of the pie. I recommend keeping your total labor percentage below 25% of the job if you can do so. HOURLY = GET PAID TO WORK SLOW.
how would you do landscaping?
We are trying to figure this out with our pool company. It has been helpful to use our P&L from last year and run different scenarios involving both base salary and commission and adjusting the salary vs commission percentages. It all depends on what the net income is for the year and what seems to be 'normal' for your company.
In Jobber how do you setup commission/flat rate pay for jobs? I only see the hourly rate option.
Unfortunately Jobber does not yet have this figured out. There is not yet a way to set up commission pay structures for job costing or payroll in the software. Hopefully they will work this out soon as it doesn't seem like an overly complicated feature to develop. The foundation is already there with hourly and the job costing feature.
We switched over to commission-based pay back in 2022 and it's been incredible for our business! Commission-based pay incentivizes employees who work efficiently and quickly. I highly recommend!
I have my employees on a salary and if they are able to sell extra services (I.E. cleanings, filters etc. ) then a flat rate commision is added. It's worked very well so far to make the employees actually want to push these extra services when they are needed.
Check the new IRS changes to self employment. Last year they was making changes that made it to where if a 1099 contractor was making a certain percentage of thier money from one business, the irs is trying to force them to switch to w2 pay. I haven't seen how this turned out, if it's already in force or about to be. I know of several roofing companies that have already made the change. It has been the norm to use commission based pay to thier project managers/sales team. If this is in effect, that may make it difficult for you to switch to a commission pay structure.
Honestly, the issue with commission pay structures is that a lot of the workers have a difficult time making a consistent income to start, and I've seen a lot of people lose income they worked for because they either get fired or quit. Then the company keeps the jobs they sold and the commissions they would have had to pay. A worker takes a lot of time building a pipeline, then loses it all. Because the company designs the contract a certain way. This has created mistrust for these types of pay, and makes it more difficult to find workers, especially knowledgeable and experienced ones. No one wants to work for free. The best way to do it in my mind is to set up a dual pay option, pay a minimum salary so they have consistent income, this is a w2 wage, and then create incentive by adding the commission pay on top of it. You take care of your employees better, they are happier, and a happy worker that's not in fear of the bills coming in is ALWAYS a better more productive salesman.
Just my opinion.
