Let’s say you sell computers for XYZ Worldwide. Each computer has a cost, often referred to as the “floor.” This means that you cannot sell the computer for less than the floor or you will be losing the money. You sell ABC a computer that has a floor of $1,000 for $1,400. The profit in the deal would be the difference between the selling price of $1,400 and the floor of $1,000, or $400. Expect to earn between 10% and 50% of profit for your commission. Revenue-based commission plans can be very profitable if you sell high-ticket items. It stands to reason that a revenue-based commission plan for a sales professional who sells custom-designed jets would be more attractive than the same plan for someone who sells sneakers. Like commissions paid on gross profit, revenue commissions are often used in combination with other compensation forms. If you are considering a position with a company that pays only placement fees, you should be aware that the industries that pay exclusively for placement fees are very competitive. These companies also usually have a high turn-over rate with their sales employees. This sort of model is structured so that the more you sell, the more you earn per sale. To help clarify, let’s look at an example. TTS Corporation uses a Performance-Based commission plan that pays out an increasing percentage of revenue and gross profit commissions. Their structure is as follows: Revenues Sold Revenue Percentage Profit Percentage $0-$10,000 1% 8% $10,001-$20,000 3% 10% $20,001+ 7% 13%
