Salary Or Commission - Which Is Better?

Years ago, I had a conversation with a friend who was thinking of getting a job in sales. He asked me which I thought was better, Salary or Commission. This was my answer.

" Here's what a salary is: an agreement between you & your employer that they will pay you a certain sum per hour. Let's say $10 an hour. Your work will make your employer much more than $10 an hour, or you'll lose your job. So the agreement is; Your employer will pay you the FIRST $10 an hour that you earn for him." and he keeps the rest." " Friend- What do you mean 'The rest'?"

Me- " If you get paid $10 an hour, but you generate" less" than $10 an hour in profits to your employer, how long do you keep your job?"

Friend- " Not long, I guess"

Me- " Right, in fact most employers make a" multiple" of your salary off your results. They" have" to, if they want the business to grow"

Friend " That almost seems unfair"

Me-" Actually, it's completely fair. If you agree to work for a specific amount & they give it to you, how can it be 'unfair'?"

Friend- " So what's so great about commission?"

Me- " This, You know the employer that pays you $10 an hour?" He's" on commission. Every CEO of a company, every self-employed person, every farmer, every landlord, almost" every" wealthy person in the" world" works on the profits of their work, we call it a commission"

Friend-" You make commission sound better"

Me-" It" is" better. You ever hear of someone getting promoted to 'Partner' in a business?"

Friend-" Sure"

Me-" The person" was" making a salary. When they become a partner, they now get a share of the company's profits; A 'Commission'. Commission is a Promotion. Commission is" more"

That ended the conversation. It would make a better story if I knew what happened to my friend. I really don't know. We lost touch after that. But years later my Brother-in-Law asked me where I was employed. I said " I'm not employed" He said " You don't have a job?" Me-" No, I have eight employees. They have jobs. I have a" Company" That felt pretty good.

Claude Whitacre is the author of the book The Unfair Advantage Small Business Advertising Manual. Claude speaks on small business advertising and retail marketing.

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