May Pro to Pro

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Have a question and looking for feedback from industry peers? This month KBDN listens in on dialogue between industry professionals as excerpted from the KitchenBathPros.com online Designer Discussion Forum.

COMMISSIONS

QUESTION

I know this has been discussed before at this forum, but I was recently offered a design position that pays 100% commission. The rate is 1/3 of the gross profit, which sounds great, but I’m still on the fence about whether or not to accept it. I need to support my family, and what happens if there is a sudden drought?
I also need to ask, for those out there who work on 100% commission, do you have any kind of health insurance or 401(K)? What type of benefits does your company offer to its employees?

Right now I get 401(K), travel expenses, health insurance, life insurance, an hourly pay, bonuses (sometimes), free education and heavy discounts. But I know I can make more income with commission, and with a family of four, income is the most important thing for me right now.

Any advice that anyone can offer in this regard would be very much appreciated.
—JetMist

RESPONSE 1

Here’s my personal opinion, based on some experience I've had with both methods of compensation. I would never again accept a commission strictly based on gross profits. You have no idea how that number is going to be calculated, and I don't think that you really want to get into an argument with the owners about that issue.

Most designers are not managing the entire transaction unless they own the shop, and most jobs include installation as part of the product. If you don’t have complete control over the gross profit on a job, why would you accept a commission based on gross profit?

Make sure you are paid on what you can control. I remember from many years ago that I had a professor who made a comment in one of my classes. I’ve never forgotten what he said: “Never play anyone else’s game.” The times in my life that I’ve regretted doing something have almost always been attributed to forgetting that sage advice.
—grayslady

RESPONSE 2

Where do you work now? Some of us may be interested in your job!

But seriously, does your company offer various benefits, including educational reimbursement, insurance, bonuses, etc.? If that is the case, you definitely want to consider that as part of the equation.

I have been on both sides of the issue. At one firm I was at 25% of the gross profit, and that was selling cabinets only. That was fine with me because I was in control of setting the job costs and sell price.

Another firm I worked for that sold construction wanted me to take a hit in the commission if the contractor screwed things up. I never could get a straight answer on this stuff, nor was I ever able to see the job costs. I didn’t care for the smoke and mirrors approach that seemed to be going on.
—KB Design1

RESPONSE 3

With this job opportunity, I would insist on being in control of all profits. But health insurance is extremely important, especially with a family to support. If they offer that, then it’s a “no brainer” decision. I guess that I have a lot to think about with this issue.
—JetMist

RESPONSE 4

This gross profit thing can be a hidden problem.

One company I worked for in the past paid commission on gross profits. If there were any mistakes, then that pay, of course, came out of the gross profits. There were actually many times that the designers ended up owing money back on the jobs! Of course with this company, installations were part of the deal. If anything went wrong with the installation – and you can’t believe some of the insane things that happened – this went against the profit of the job, and directly affected the designer’s commission.

This is indeed a very tough decision to make. It could be a good opportunity, or it could easily work out to be not as good of an opportunity as it sounds. I’m sure you probably wish that you had a crystal ball!
—KarH