How it works
Draws are common while a new in-home rep ramps up and commission hasn’t caught up yet. The company pays a set amount each week or month. When commission comes in, the draw is subtracted and the rep keeps the rest.
There are two kinds. With a recoverable draw, any shortfall carries forward and is repaid out of future commission. With a non-recoverable draw, the shortfall is forgiven, which makes it work more like a base salary for that period. What a company can recover, and how, depends on state wage law, so have an employment lawyer look at the plan before you offer it.
Why it matters when you hire
For a first sales hire, we usually recommend a base or a draw for the first 60 to 90 days, then a move to commission. A new rep with no cushion tends to discount to get deals through, and a draw buys you someone who follows your pricing while they learn.
Candidates ask about the draw early, because it’s how they pay the mortgage during ramp. Be clear in the offer: the amount, how long it lasts, whether it’s recoverable, and what happens to a balance if they leave.
Some companies use a training wage instead. EGIA’s example HVAC plan pays one through the first 90 days, then switches to 15% / 12% / 15% of GP. Model either version in the commission calculator.