Straight Commission
You earn a percentage of every sale with no base salary. This is the most common structure for independent agents. The upside is unlimited earning potential. The downside is no income when sales are slow. It rewards top performers and penalises inconsistency.
Tiered Commission
Your commission rate increases as you hit volume thresholds. For example, 10% on the first $50,000 in sales, 12% on the next $50,000, and 15% above $100,000. This structure incentivises you to push beyond your baseline and rewards growth. It is particularly motivating once you approach a threshold.
Residual or Recurring Commission
You earn ongoing commissions as long as the client remains active. Common in insurance, SaaS, and subscription based products. The first sale might earn a lower commission, but the recurring payments build a growing income stream over time. This is how agents build wealth.
Draw Against Commission
The company provides a regular draw (advance) that is deducted from future commissions. If your commissions exceed the draw, you keep the excess. If they do not, you may owe the difference back. This provides income stability but can create debt if sales are consistently below the draw amount.
Multiplier or Accelerator Commission
Your rate multiplies when you exceed targets. If your base rate is 10% and you hit 150% of target, a 1.5x multiplier pushes your effective rate to 15% on everything above target. This is common in technology sales and can result in exceptional earnings during strong periods.
Revenue Share
Instead of a percentage of each sale, you earn a percentage of the total revenue generated from your territory or client base. This is broader than transaction based commission and can include upsells, renewals, and expansions that happen without your direct involvement.
Evaluating a Commission Structure
When evaluating any commission offer, consider the base rate, the average deal size, the sales cycle length, whether commissions are recurring, and the payment timing. A 20% commission sounds great until you realise the average deal is $500 and the sales cycle is three months. Use platforms like Zepys to compare opportunities with full transparency on commission terms before committing.