Motivate Staff & Net More Sales: Flat Rate vs. Tiered Commissions

In this article, you’ll learn:

• What commission-based pay is
• The difference between flat-rate and tiered commissions
• Real-world examples of flat rate vs. commission for services and products
• How commission provides more control over services, sales, and payroll
• About using commissions to motivate staff and bring in more sales
• How Vagaro makes is easy to customize flat-rate or tiered commissions
• Additional resources to help you

What Is Commission-Based Pay?

What’s the Difference Between Flat-Rate and Tiered Commission?

Industry Examples: Paying Flat-Rate vs. Tiered Commissions

Combining Hourly Pay, Flat-Rate, and Tiered Commission

Commission pushes your staff to focus on sales, while still having a “security net” in the form of base wages. A base wage lets staff know they’ve got a paycheck they can rely on, even if they have a bad week. But if they’re having a good week, they’ll see the rewards for their work on their paycheck. By combining different pay structures, you have more control over payroll costs— while letting your employees know you’re invested in them. Commission motivates your staff to sell more products, book more classes and services—and bring more revenue into your business.

Commission Gives Owners More Control Over Services, Sales, & Payroll

Here are two ways commission (flat rate or tiered) gives you more control over payroll:

• Employees are more motivated to make sales when their paycheck depends on it.

• Commission ensures your payroll costs are directly related to the money your staff brings in.

Because tiered commission rewards performance with a bigger paycheck, it also causes employees to:

• Constantly improve their performance

• Focus on rebooking and customer satisfaction

• Hit higher sales targets

• Beat previous sales goals

Being able to adjust commission rates by employee, experience level, sales goals, performance, or by specific retail product gives you more control over the flow of money through your business. Commission helps you make sure that you’re only paying out higher commissions to the workers who go above and beyond to make your business exceptional.

** Motivate Staff & Bring in More Sales with Commissions

• Reward employees for their hard work

• Motivate them to attract new clients

• Encourage upselling services, classes, or products

• Put the focus on re-booking clients and customer satisfaction

Commission puts you in the driver’s seat of your payroll costs and inspires your staff to do their best every day. Whether you decide a flat rate or a tiered commission model, always make sure to communicate the terms of your commission structure in writing with staff as part of their employment paperwork. That way, everyone is clear on what they need to do to earn a bigger paycheck, and there aren’t any surprises on payday.

Vagaro Gives You More Control on Your Business Commissions

** Additional Resources

• US Department of Labor – Commission
• National Law Review – A “New Look” for Salon Employee Commission Arrangements in California
• NOLO – Getting Paid by Commission in California
• Modern Salon – Two Views: Working the Tiers
• The Beauty Experience – Pricing Salon Services: The Four Tier Strategy
• Cosmetology-License.com –Commission vs. Booth Rent: The Pros and Cons of Each

Header Image: Giorgio Trovato via Vagaro

Icons & Infographics: Mia Montemayor via Vagaro