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What Are the Pros and Cons of Being Paid on Commission?

A list of pros and cons before being filled in.
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  • Written By: Anna T.
  • Edited By: Melissa Wiley
  • Last Modified Date: 19 March 2014
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Some of the pros of being paid on commission include schedule flexibility and the potential to make a lot of money depending on individual performance. The main cons of being paid on commission are no guarantee of pay and possible difficulty getting approved for various types of loans because exact income amounts are normally not a certainty. People who are considering taking jobs that offer commission-based pay should carefully consider all the pros and cons before getting started. It might be a good idea for a person doing this type of work to have another job or source of income to fall back on in case it takes a while to make any money while being paid on commission.

Even though the idea of being paid on commission might be scary to people who are considering this type of work, there are a lot of reasons to consider it. Most commission-based jobs offer schedule flexibility that may be perfect for people whose lifestyles require that they work varying hours, such as people with small kids at home or other responsibilities that take up a good bit of their time. Most commission-based jobs are sales oriented, which means that the amount earned often depends on how much effort is put in. People with talents for sales or good knowledge of a product or service might find that they can make much more money paid on commission than they could ever expect to earn when paid hourly.

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One of the main drawbacks to being paid on commission is a lack of security. Even though it's possible that a lot of money could be earned in a short period of time, there's also a chance that a person might go several weeks before earning anything. Sometimes the income potential is directly linked to the demand for a specific product or service, which can vary greatly and is never a sure thing. The fact that income isn't a guarantee means that people who are paid on commission may not be able to qualify for mortgages, auto loans, or other lines of credit because they cannot guarantee their income.

A person who is considering taking a job offering commission-based pay should probably have a back-up plan in place for taking care of bills and other financial obligations just in case money isn't earned or takes a while to start coming in. It might even be necessary for someone receiving commission to take on a second job to cover basic necessities until the commission-based income is more stable. Another option is to look for a commission-based job that offers a base salary or hourly wage in addition to commission pay. Jobs like this might be hard to find, but they tend to be more frequently offered to people who already have lots of skills and experience in particular fields.

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Discuss this Article

Terrificli
Post 1

It is also essential for people working on commission to set aside some money when times are good so they can cover their living expenses when their income drops below a comfortable level. More than one commissioned salesman has gotten in trouble by spending too much cash during the boom times and not setting aside anything for the bust times.

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