What does It Mean to be Paid on Commission?

Being paid on commission means that a person is paid a percentage of the sales that he or she makes. When people are paid totally on commission, they are not receiving a salary or an hourly rate, but rather are paid only according to the sales dollars they bring in. This has both advantages and disadvantages.

When people are paid on a commission basis, they have an incentive to try harder to make sales since this is the only way that they can earn money. However, some people say that some workers paid on commission may take advantage of the situation so that they can earn more. For example, some mechanics are paid this way, and some customers may feel they have been charged for the mechanic to fix things that may have not needed repairing. Although many mechanics are trustworthy, many people feel that a being paid on a commission basis invites dishonesty in order to earn more pay.

Some real estate agents are paid on commission and usually earn good pay when a house is sold. Real estate agents paid on a salary basis may earn more or less than those who only earn a commission. The commission rates vary widely as they must be negotiated with the seller when the home is listed.

Financial advisers are also often paid on commission. Those who work on commission do not bill clients for consulting time. Instead, they make a commission on any financial products their clients purchase, such as insurance, annuities, stocks or mutual funds. Amounts differ, but variable annuities usually provide a fairly highly paid commission for financial advisers. Some negotiate their rates while others have a set commission percentage they accept.

Affiliate marketing programs are often a commission opportunity for webmasters. Affiliate marketing programs involve a webmaster running an advertiser's banner advertisement on a website to receive a referral fee each time a site visitor clicks on the ad. The visitor may be clicking on the ad to buy the product or service or to opt-in for more information such as receiving a newsletter.