Commission Structure Checklist

Understand commission model (flat %, tiered, base+commission)

Flat rate is predictable; tiered rewards higher performance; base+commission provides income stability

Know draw against commission terms

A draw advances you money against future commissions — understand if it's recoverable or non-recoverable

Clarity on when commissions are earned (sale vs collection)

Some plans pay on contract signing; others only when the customer pays — this affects your cash flow significantly

Can calculate earnings for typical and best months

Model your income at 50%, 75%, and 100% of quota to understand the full range of possible earnings

Understand commission caps or limits

Some plans cap commissions after a threshold — know if your earnings have a ceiling

Know how returns/chargebacks affect pay

Customer refunds or cancellations can claw back commissions already paid — understand the policy

Compared total comp to salary-only alternatives

Calculate the risk-adjusted value: a stable salary may be worth more than a volatile commission plan

Understand sales territory/lead assignment

How are leads and territories assigned? A great commission rate means nothing without a fair territory

Reviewed non-compete and non-solicitation clauses

These clauses can limit your ability to switch employers or take clients — understand what you're signing