I am a smaller business. I am considering hiring someone to work for me on a commission basis. I know whenever I first started in the industry I work for commission. I am not sure the best way to approach this. Should I pay a small hourly wage, and commission on top of there? Or should I make the pay a higher percentage of commission? Also, what I 1099 them? Or would it be hired as an employee?
What would be the best way to hire a commission employee?
Answers
Salary vs commission mix is often a factor of the market (includes employee expectation) and go to market strategy (...the more you invest in marketing (leads), the less you might want to pay in commissions or if the product or service needs a lot of "selling" you might want to pay more in commissions, etc.). Employee vs consultant (1099) is a separate matter with the distinction based on IRS guidelines vs compensation structure.
A Veteran in sales will gravitate to the low/no salary high commission split if offered. Depending on your needs though, you could be best served profit wise by offering a salary plus commission that is either tiered or flat. I know that's a general answer and every industry with its accompanying margins is different.
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