Commission structures are not all the same
Before you start selling any product, you need to understand exactly how you get paid. Commission structures vary widely between businesses and industries. Knowing how to calculate your actual earnings prevents surprises and helps you choose the right products to sell.
One off commissions
The simplest structure: you earn a fixed amount or percentage for each sale, paid once.
Example. You sell a business insurance policy worth $2,000 per year. Your commission is 15%. You earn $300 for that sale.
Calculation. Sale value x commission percentage = your commission.
One off commissions are straightforward but require constant selling. Your income resets to zero each month.
Recurring commissions
You earn a percentage of every payment the customer makes for as long as they stay. This is common with subscription products and SaaS.
Example. You sell a software subscription at $200 per month. Your recurring commission is 20%. You earn $40 per month for as long as the customer stays subscribed.
After 12 months with one new customer per week, you would have approximately 50 active customers generating $2,000 per month in recurring commission, assuming reasonable retention.
Tiered commissions
Some businesses offer higher commission rates as you sell more volume. You earn 10% on your first 10 sales per month, 15% on sales 11 to 20, and 20% on everything above 20.
This structure rewards high performers and incentivises consistency. Calculate each tier separately and add them together for your total.
Upfront plus trailing
Common in insurance and finance, this combines a larger initial commission with a smaller ongoing payment.
Example. You earn 50% of the first year's premium upfront, plus 10% trailing commission on each renewal. On a $1,200 annual policy, you earn $600 immediately and $120 per year for every subsequent renewal.
What to subtract
Your gross commission is not your take home pay. You need to subtract tax (set aside 25% to 30%), GST if registered, business expenses, and superannuation contributions.
A good rule of thumb is that your net take home is approximately 60% to 70% of your gross commission after tax and expenses.
Use tools to track it
Keeping track of multiple commission structures across multiple products gets complicated quickly. Platforms like Zepys calculate your commissions automatically so you always know exactly what you have earned and what is coming.