Many sales jobs base at least part of their pay structure on an employee making commission. Some salespeople work on straight commission, and there are others, particularly in the retail world, who simply work for an agreed upon salary. An intermediary step between the two is a pay system called draw versus commission.

Draw versus commission generally works in the following way. The employee is paid a flat fee or bottom line salary for his/her work. In retail positions this salary is usually close to minimum wage. In order to boost the salary, employees are given sales goals to meet within a specific time period. If they meet or exceed these sales goals, they are either paid in straight commission, which is more than their draw salary or base salary, or are given a percentage of their sales on top of their draw salaries. When an employee fails to meet sales goals, he or she is merely paid their draw amount.

This payment is a slightly different tactic than one where people are given base pay plus commission. Though these salespeople may still have sales goals, not meeting a goal doesn’t affect pay. Instead they receive their flat salary plus a percentage on anything they do sell. With draw versus commission, usually the only way to make a higher salary is to meet or exceed your sales goal so that you’ll get paid more than your draw rate.

An interesting twist in draw versus commission is that some companies draw an employee’s salary against future commission. When employees do exceed their sales goal, they’re paid a commission, but their salary in the past has been drawn on this commission. So salary may not be much higher from week to week.

What’s really occurring here is that the employee is working on a straight commission, but is guaranteed relatively the same salary from paycheck to paycheck. When sales don’t earn that employee enough money to get paid the standard paycheck, companies deduct these earnings from future weeks where the commission amounts on sales earn the employee more than the standard paycheck. In order to make more money in this system, the salesperson has to consistently sell above the draw level to make sure future paychecks won’t have commission deducted from them.

There can be advantages to draw versus commission methods of payment, though the more unusual one just mentioned should be considered a straight commission job. With the more standard method, draw versus commission guarantees employees will make a certain amount and rewards the superior salesperson for being able to exceed sales goals. Unfortunately, in the retail environment, where this payment method may be tried, employees don’t usually have control over how much traffic enters their stores. You can only sell things if people actually come into your store, and you’re not in control of advertising, store profile, or the economy.

In sales jobs where salespeople generate their own leads, draw versus commission may be an effective payment method for a salesperson. It may motivate people to work harder to sell to make a higher paycheck. There are still issues outside the salesperson’s control like a negative economy that might have a person making only draw. At least in these lean times, there is that draw amount to fall back upon, which can be better than making straight commission if sales suddenly take a downturn, where no sales means no income.