by Michael Colyott

Created on: November 09, 2008   Last Updated: December 08, 2008

Sales people who are selling don't want a salary. Those who aren't selling need a salary to get by. So which is best, salary or commission? It all comes down to the business and your skills. There are basically three methods of paying a sales person: hourly, salary and commission or some combination. The deciding factors on how a sales person is paid are responsibilities, ease of sale, sales cycle, and the amount of the sale.

Retail sales people mostly work in a store and are paid hourly. They're paid hourly because the customer comes to the store knowing they need something making the sale easy, quick and final. A high degree of sales skills are not as important as product knowledge and customer services skills. Sales people may be at a counter or on the floor but no matter where they are their primary purpose is to point the customer towards the product that will resolve whatever their need or want is. Retail sales people may have additional responsibilities that are none sales related and are compensated with their hourly wage. Also, the amount the customer pays for the product or service isn't typically very high.

The position of a salary sales person almost always requires a higher degree of sales skills than a retail store sales person and may have a longer sales cycle. The client may come to the sales person or the sale may be made via the phone. Additional responsibilities may include supervision or training and could take away from their selling time but they are compensated with their salary. The term draw may apply to a temporary salary given during a training or start phase of a sales job. However, sooner or later the draw most likely will stop and the sales person will be on commission.

Commission sales people have a high degree of sales skills or they starve. The ticket on the item or service they are selling is higher and the sales person will develop a customer base for repeat sales. Not many sales people will accept additional responsibilities unless they are sales related because they aren't making money if it is a non-selling responsibility. A lot of people believe that commission sales people earn more annually than salary or hourly sales people. If they don't, there is a good chance they will become salary or hourly sales people.

In the case of long sales cycles and higher ticket items, the sales person may have a base salary as well as a commission. It all depends on the company and the sales person's sales history. So which is best salary or commission? It all depends on your skill level and what you are selling. If you are good, you might want to be on commission. If you're not good, get a salary. But know this, if you are on commission only, you have control of how much money you make and if you are not good, it won't matter, you're going to be fired anyway.

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