A NEW INCOME

A New Income Q&A

Q: Marketing/Sales Position, commission is 10% of income?

There's a marketing/sales position, the pay is "commission based, will be 10% of the income." It's for a self-owned party theme planner for kids. I'm new to the party industry world, what is that kind of pay??? I'm so used to set pay (hourly or exempt), and never had a commission based part-time position. What's the calculation? What's an appropriate way to ask how much does one earn of that "10%"?

A: In a commissioned position, your salary is made up of 2 components: a base and a commission. You will be given a quota: let's say it is $100,000. Let's assume that your salary is $50,000 per year, and with 10% of it commission, that's $5,000. Your base is $45,000. If you bring in your quota, i.e., sell $100K of business, you will make the $5,000. If you only manage to sell $75,000, you will earn only 75% of the amount, or $3,750. You can now see that, for every $1,000 you sell, you will earn $50. Some companies will give you a bonus if you exceed the quota - so if you bring in MORE than $100K, they may give you a higher commission rate, for example $55 per $1,000 sold. Please note that commission payments are regulated by law to have 30% Federal taxes withheld, no matter what your rate is. You claim the excess withholding at the time you file your income taxes. Most sales positions have a 70-30 mix - 70% base and 30% commission. You are more fortunate in that your base is high at 90%. At least your expected monthly income is more predictable.

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