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What Is Commission?

Commission is a great alternative to getting paid by salary or a set hourly wage. Commission is when you get paid a percentage or set amount based on what you sell. With commission jobs you usually have to meet a sales quota which can either be a certain value or a certain number of items that need to be sold in a given time period. Some commission jobs will offer bonuses and incentives for exceeding sales goals. Commission is typically found with any type of sales jobs where you need to sell something. Below are a few jobs where you get paid by commission.

Real Estate

Real estate agents earn a commission when they buy or sell a house. This is usually only a few percent but this can add up to thousands of dollars depending on the value of the house. Sell a million dollar house and you'll be on your way to success. If you pick a resort/vacation area or a high income area then you'll make more. If you pick a low-income/run down part of a city with crime and old houses then you'll make less on commission. With this in mind, consider the location before becoming a real estate agent.

The best thing about a real estate agent is that they only need a 60 hour class to get a real estate license. No college needed! You can make good money too. The main disadvantage is that there are long hours and you might not get a paycheck for weeks at a time. If you don't sell a house then you don't get paid so you could show someone 100 houses and still not earn a penny.

Car Sales

Car salesmen get a commission for every car sold. A typical car gets around 25% of profits for every car sold. This is typically $200-500. A car with a lot of profit can earn up to $1,000 in commission.

New cars usually pay less because the invoice price is usually almost as much as the MSRP price, meaning the dealership won't earn much profit. In these situations, you'll usually get a "mini" deal which is usually $50-150. It's not much but it's better than not selling a car.

The big advantage here is that you only need a high school diploma and a car salesman license (depending on the state you live in). Similar to real estate jobs, there are disadvantages too. Earnings will vary making it hard to budget. You could earn $1,500-$2,000 one week, spend it all, then only earn $500 the next week. This is why you have to manage you money if you choose a car sales job. The hours are bad too. You could work all day and not earn a penny if you don't sell a car.

The average car salesman earns around $50,000+ per year. Top car salesmen earn about $100,000+ per year, but this is rarer.

Furniture Sales

Similar to car sales, furniture salesmen do a very similar job, except they are selling furniture. Furniture salesmen sometimes earn a salary/hourly wage+commission but they sometimes only get straight commission. The average furniture salesman gets around 5-10% commission from the total furniture purchase. This means if you sell a $1,000 furniture set, you'll earn $50-100 in commission.

The great advantage to being a furniture salesman over a car salesman is that people are more likely to buy a piece of furniture. Since furniture costs much less than a car, people will buy a piece of furniture on their first trip without going home to think about it, meaning more commission for you. The disadvantage is that the furniture has to match their walls, floor, and house theme so people will be more picky about what they want which means it'll be harder to get sales. In addition, furniture will last years so you won't get many repeat customers and referrals. Out of all the sales jobs, a furniture salesman will probably have the most steady paycheck which is great for someone who needs to budget.

Overall, an average furniture salesman could get around $40,000-50,000 worse case scenario. At a good store with less salesmen you could likely earn $60,000-70,000. Top salesmen earn around $80,000.

Insurance Sales

One very lucrative commission job is becoming an insurance agent. Insurance agents make money when they sell someone an insurance plan. There are many types of insurance agents. Car insurance, homeowner's insurance, renter's insurance, and health insurance are some of these. Life insurance is becoming a very popular job due to the large number of baby boomers who are currently retiring which is making life insurance agents in high demand.

Insurance agents sometimes have to do cold calling. This is similar to being a telemarketer where you have to call people and ask if they want to buy insurance. This is the main disadvantage to the job. However, there are many advantages including good benefits and good pay. Insurance agents only need an insurance license and some on the job training. A hardworking insurance agent can earn $75,000 per year making it a great commission/sales job. Some make less (around $50,000) and a few make a lot more ($100,000+) but in general, insurance agents make a good amount of money.

Travel Agents

Ever since the internet was invented travel agents have become less popular. You can now book a vacation with the click of a button. However, it can be a fun job. A travel agent's job is to sell vacation packages to people. To do this you'll need to find out where the person wants to vacation. Then you'll need to find the best flight, hotel/resort, rental car, train, bus, etc. In addition, you'll need to find some information for clients such as things to do in the vacation area and what restaurants, grocery stores, and shops are close to the resort.

Unfortunately, travel agents don't make much. The average annual income for a real estate agent is only around $30,000-$50,000 depending on how many vacation packages you are able to sell. Many people do it because it can be fun. Seeing where people will go and helping them out with their vacation can be fun for some people.

Is A Commission Job For You?

The choice is yours. If you want a non-labor intensive job, are a people person, and have the sales charm then you might want to try one of the jobs above. If you hate dealing with people, can't convince people to buy things, and don't manage your money well then you might want to look elsewhere.

Remember to budget and save your money. One week you might do better than the next. Commission is only scary if you are too lazy to sell anything and can't save your money. If you work hard then a commission job is very rewarding and might be worth it. While your friends are racking up debt in college, you could be earning a lot of money selling things to people. Overall it's a win-win situation. The more you sell, the more the company and you both earn.