Sales commissions are a form of variable compensation where earnings are based on performance. The most common structures are:
- Flat Rate: A single fixed percentage on all sales (e.g., 5% of everything).
- Tiered (Split) Rate: Different rates apply to different levels of sales volume. This incentivize higher performance (e.g., 5% up to $10k, then 10% on everything above).
- Base + Commission: A guaranteed fixed salary plus a commission on sales.