Commission structures
How home service companies pay their salespeople.
By trade
Pick your trade to see each plan worked through.
The six models
How each pay model works, with the math.
- 01
Percent of sale
A fixed percentage of the sold price. Reference points: ServiceTitan's HVAC target of 9%, and 6-12% of the sale for home improvement in Pro Remodeler's 2018 range.
- Fits
- Set price books, product sales and first plans.
- Watch for
- It pays the same rate on a discounted job unless you add a floor or a sliding scale.
One sold jobExample - Sold price
- $12,000
- Commission at 8%
- $960
Simple to explain and simple to check.
Round hypothetical numbers to show the mechanics. Not a benchmark.
- 02
Percent of gross profit
A percentage of the job's gross profit: price minus equipment, materials and labor. EGIA's example comfort advisor plan pays 15% / 12% / 15% of GP by trimester, plus 20% of GP above budget.
- Fits
- Companies with clean job costing and margins that vary job to job.
- Watch for
- Reps must be able to see job costs, or they won't trust the check.
A discount on a GP planExample - Sold price
- $12,000
- Job cost
- $7,000
- Gross profit
- $5,000
- Commission at 20% of GP
- $1,000
- Same job $1,000 cheaper: gross profit
- $4,000
- Commission at 20% of GP
- $800
The discount cost the rep $200, so they think twice before offering it.
Round hypothetical numbers to show the mechanics. Not a benchmark.
- 03
Draw against commission
An advance paid every period and repaid out of what the rep earns. Recoverable: a shortfall carries forward. Non-recoverable: it's forgiven. See draw against commission.
- Fits
- New hires during the ramp.
- Watch for
- A balance that keeps growing is a debt the rep will walk away from. Set an end date.
Two months on a recoverable drawExample - Monthly draw
- $3,000
- Month 1 commission
- $2,000
- Carried forward
- $1,000
- Month 2 commission
- $5,000
- Paid in month 2, after repaying
- $4,000
The draw smooths the ramp. The rep still earns only what they sell.
Round hypothetical numbers to show the mechanics. Not a benchmark.
- 04
10/50/50 split
Roofing's profit split: 10% of the job comes off the top for overhead, then the profit after job costs is split 50/50 with the rep. See the 10/50/50 split.
- Fits
- Insurance roofing, where it averages 10-20% of the job.
- Watch for
- Adam Bensman advises owners against giving away half the profit, and the Hook Agency author says it suits storm work more than retail.
One roof on 10/50/50Example - Job
- $20,000
- Overhead, 10% off the top
- $2,000
- Materials and labor
- $12,000
- Profit
- $6,000
- Rep's half
- $3,000
- Share of the job
- 15%
Round hypothetical numbers to show the mechanics. Not a benchmark.
- 05
Percent of contract or collected
A fixed rate on the contract value, or on what the homeowner and insurer actually paid. Roofing references: 7-12% of contract, or 30-50% of profit (AccuLynx) and 7-12% of collected (Adam Bensman).
- Fits
- Roofing and exterior work.
- Watch for
- Paying on contract before the money arrives leaves you carrying any short pay.
Contract vs collectedExample - Contract
- $18,000
- Commission at 10% of contract
- $1,800
- Collected after a $1,000 credit
- $17,000
- Commission at 10% of collected
- $1,700
Round hypothetical numbers to show the mechanics. Not a benchmark.
- 06
Base plus commission
A guaranteed salary plus a lower rate. Remodelers Advantage calls base plus commission the most common and usually the best choice for a first hire.
- Fits
- First hires, long sales cycles, and sellers with non-selling duties.
- Watch for
- Too high a base and the urgency goes; too low and it's commission-only with extra paperwork.
A year on base plus commissionExample - Base salary
- $40,000
- Sold in the year
- $1,000,000
- Commission at 4%
- $40,000
- Total pay
- $80,000
Round hypothetical numbers to show the mechanics. Not a benchmark.
Side by side
What each model rewards, and who carries the risk.
| Model | Pays on | Best fit | Owner's main risk | Rep's main risk |
|---|---|---|---|---|
| Percent of sale | Sold price | Product sales with a set price book | Discounts paid at full rate | Little, if leads are steady |
| Percent of GP | Gross profit | Clean job costing, varied margins | Arguments over job cost | Can't check the math |
| Draw against commission | Commission, advanced | New hires on the ramp | Balances that never get repaid | A growing debt |
| 10/50/50 split | Profit after overhead | Insurance roofing | Giving away half the profit | Overhead defined against them |
| Percent of contract or collected | Contract value or cash received | Roofing and exteriors | Short pays, if paid on contract | Short pays, if paid on collected |
| Base plus commission | Salary plus sales | First hires, long sales cycles | Paying for low output | A lower rate in big months |
Pitfalls
Six ways a pay plan backfires.
Commission-only for a first hire
Remodelers Advantage calls it a poor fit for a first hire: it tends to attract independent reps who may not follow your process and who push underpriced deals to get paid. Save it for proven closers who find their own leads.
Full commission on discounted work
If the rate doesn't move with the price, a rep can give away your margin to close. Remodelers Advantage's fix is a sliding scale that pays full rate only at full price; EGIA's sample comfort advisor plan shares discounts 50-50 between advisor and company.
Paying before the money is real
Commission paid at signing comes back out on cancels, denied claims and finance rejections, and clawbacks sour reps fast. Remodelers Advantage's advice is to tie payouts to payment milestones, so the rep is paid roughly as you get paid.
A plan nobody can check
If a rep can't work out their own check from the job file, they'll assume it's wrong. Write the plan down with one worked job, and define sold, net, collected and GP in the document.
Changing the plan mid-year
Change a plan at a natural break, with notice and a side-by-side comparison on last quarter's jobs. A surprise cut is how you lose your best closer.
Paying late or short
In our experience, late or short commission checks lose good reps faster than anything else. Set a pay date, put it in the plan, and keep it every time. Reps rarely leave a company where they're earning well and getting paid on time.
How to choose
Start from how your business makes money.
| If this is you | Consider | Why |
|---|---|---|
| You trust your job costing | Percent of GP | Pays for profit and makes discounts the rep's problem too. |
| You don't, or reps can't see it | Percent of sale with a price floor | Simple and checkable, with the floor doing the margin work. |
| The company generates the leads | A lower rate, or base plus commission | You carry the lead cost, so the rate can be lower. |
| The rep finds their own leads | A higher rate, or straight commission | They carry the cost of finding the work. |
| The ramp runs months, not weeks | Base or a draw with an end date | Keeps a good hire through the stretch before the first sales. |
| Cash comes in stages | Pay on collected funds or milestones | The rep is paid as you are, and nothing gets clawed back. |
FAQ
Commission questions, answered.
What is the most common commission structure in home services?
It depends on the trade. Percent of sale is the simplest: ServiceTitan's HVAC target is 9% of sales. In roofing, JobNimbus found 10% of gross the most common plan.
Is percent of GP better than percent of sale?
Percent of GP protects margin, because a discount costs the rep too. Percent of sale is easier to explain and to check. GP plans only work when reps can see job costs they trust.
What's the difference between a recoverable and a non-recoverable draw?
Both advance the rep a set amount each period. On a recoverable draw, any shortfall against commission carries forward and comes out of later earnings. On a non-recoverable draw, the shortfall is forgiven.
Should a first salesperson be paid commission only?
Remodelers Advantage says no: it calls commission-only a poor fit for a first hire and recommends base plus commission. Save commission-only for proven closers who bring their own leads. Our usual advice is a base or a draw for the first two to three months, then a move to commission.
What pay plan attracts the best salespeople?
The best reps want three things: a plan they can calculate themselves, commission paid on time, and enough good leads to earn. A competitive rate, a draw or base for the first months and SPIFFs on the products you want sold all help. Caps, complicated clawbacks and plans that change after the start date push them away.
Why do new sales reps quit in the first few months?
The usual reasons are fewer leads than promised, commission paid late or short, no training on the products or price book, and rules that change. Most of it is fixable in hiring: show the real lead numbers, pay on time every time, and put the first two weeks into training.
Worked examples use round hypothetical numbers. Last updated Oct 20, 2026.
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