Salary vs Commission: Which Do You Prefer?

Salary vs Commission: Which Do You Prefer?Everyone’s job situation is different. Some people are paid hourly, others a flat rate for the year, and others on commission. There are advantages and disadvantages to each payment system, and it definitely takes some getting used to when changing from one system to another.

Here are the pros and cons for the 3 most popular compensation structures:

Hourly

Pros: It’s very easy to see that the more you work, the more you earn. If you are a hard worker, you have the potential to earn even more money for working overtime, which is often at a rate of 1.5 times the normal rate.

Cons: There is very little stability. Also, if you are sick or need a vacation day, you may feel guilty and go to work when you shouldn’t.

Salary

Pros: There is more stability here and it’s easy to know exactly how much you’ll make every pay period. You are likely entitled to benefits, which can help you take off work without having to worry about making less money.

Cons: There is not much ability to increase earnings since performance reviews are often once a year. Also, you may have to work more than 40 hours a week without being compensated for it.

Commission

Pros: The better you are at your job, the more you will get paid. There is no limit to how much you can earn.

Cons: You can never be sure how much money you will make in a given month, which makes planning difficult. Sometimes, factors outside of your control will determine if you have a good or bad month.

Throughout high school, I worked summer jobs, all of which paid me hourly. The more I worked, the more I got paid. So when I wanted to leave my job picking fruits and vegetables on a local farm at noon, it meant that I wouldn’t be making money during the afternoon.

After college, my first job was a set salary for the year. There was definitely a sense of security which I appreciated.

Now, my compensation consists of a base salary in addition to commission based on a percentage of sales. There’s no limit to how much I can make, which I like. I am able to motivate myself because I know that the harder I work, the better I will do, and the more I will earn.

What payment structure do you have? Do you like it? Which is your favorite?

Updated August 23, 2015 and originally published March 26, 2012.

11 Responses to Salary vs Commission: Which Do You Prefer?

  1. I prefer a base salary plus commission. This gives me a good balance of stability plus incentive to work harder. I know that if I do my job properly I will earn more from commission than what someone would pay me with a salary. When I’m just on salary alone I just don’t feel as motivated to go above and beyond to make the company a lot of money. If my work results in good profit for my employer, I want to get a piece of that action.

  2. Michelle says:

    I would choose base salary plus commission also. I don’t have that now (salary plus bonus right now).

  3. krantcents says:

    My summer job after high school was a commission job. Iliked it because my income was directly related to my efforts. As an adult I probably would want both, salary plus a commission.

  4. Jenna, Adaptu Community Manager says:

    Salary and I love it. Although commission would be nice. I just don’t think it would work for my job.

  5. Donny Gamble says:

    I prefer a salary plus commission because that gives me incentive to perform at my highest level.

  6. Karunesh @ chase-a-dream.com says:

    I rely on salary but I would love to move on to commission. Commissions have no surety and are more suited for an entrepreneur kind of person. So if I am solely living on commission means I acquired some critical an entrepreneur skills.

  7. Evan says:

    Despite being in a business FILLED with commission based individuals where some make a lot more than me and some make a lot less…I am a salary guy. There is something about the stability that allows me to sleep at night.

    • Evan says:

      @Evan, Then again, Does anyone who is an expense (salary) vs an income (bringing in sales) really have stability?

  8. Shyra says:

    I prefer salary plus the commission but the nature of my job doesn’t involve commission.

  9. Leisa Dreps says:

    Both can be constant, but in different ways. Their advantages vary and would depend upon the person. However, both ways of earning also rely on how motivated and dedicated a person is with his work. Income won’t be constant or stable if you just let it stay that way. Being stagnant is a no-no.

  10. Lorillia | Your Money Mentor says:

    Give me commission because then I determine how much i can earn with no limits. What i dont like about salary although u get guarantee pay, your work so much harder. Give me commission.

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