How Do Salesmen Get Paid?

by Gregory Hamel
Sales representatives would typically prefer a gross sales commission approach.

Sales representatives would typically prefer a gross sales commission approach.

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Many businesses that sell physical goods hire salesmen to convince business clients and individual consumers to buy products. The more product a salesmen is able to sell, the more he is worth to his employer. Salesmen often receive at least a part of their pay in the form of performance-based compensation such as commissions and bonuses.

Sales Commissions

A commission is a form of pay based on the amount of sales a worker makes. Some salesmen are paid on a 100 percent commission basis, meaning they must make sales in order to earn money. Commissions are typically a fixed percentage of the sale price of goods sold. For instance, a car salesmen might receive a 5 percent commission from his employer for each car that he sells. If the salesmen makes $100,000 worth of sales during a certain month, he earns $5,000 in commissions.

Fixed Pay and Benefits

Many salesmen receive fixed pay in the form of a salary or wages in addition to commissions. Salesmen may also receive fringe benefits such as health-care coverage, dental insurance and life insurance from their employers. The salaries that sales people receive are often relatively low compared to other workers because salesmen can receive both salaries and commissions. Some salesmen, however, are paid on a 100 percent salary basis.

Performance-Based Incentives

Some employers choose to offer additional performance-based incentives to salesmen, such as bonuses and tiered commission structures. Bonuses are special awards of money that employers give to workers who perform especially well. For instance, a company might give the top-performing sales person a bonus at the end of the year as a way to motivate sales staff. A tiered commission structure is a payment system that offers higher commissions to sales people as they sell more product.


The way employers choose to compensate those who sell their products can affect how sales people behave and how customers view companies. Salesmen who work on commission may try harder to make sales than purely salaried workers, but they may also be more pushy with their sales tactics. This can cause customers to feel pressured or hurried into buying products, which can lead to dissatisfaction, especially if products do not live up to the expectations created by salesmen.

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