Need advice on how a commission job works

1. 82

   Dorsiposted 12 years ago

   Thought I'd ask here because there are so many knowledgeable people!
   
   This question is not about writing but about my day job. I'm presently working as art instructor at a childrens fine art studio. My employer has opened up a second location and would like me to work there on an hourly/commission basis but I've never done that. She is trying to build up business for the second location and can't really afford for me to just sit there for hours when they first opens so she is thinking about paying me some type of commission and or hourly rate. She was thinking of paying me half the tuition for every student I sign up - which would be $125 (my share) for someone signing up for 10 classes. Walk ins would be like $12.50 (my cut)
   
   I am trying to figure out what would work well for both of us. She said I could do whatever I want while there - write my hubs, use the studio materials, etc. I need to know I'm making enough though to at least cover my house expenses and commuting expenses.
   
   Does anyone have ideas on how commission jobs work? (and BTW, marketing and sales are one of my "fortes" so I'm not afraid of doing that part - I'm actually really good at it)
   
   Thanks for any advice y'all!

   replyreport
   1. 66

      JustMikeposted 12 years agoin reply to this

      Heres another thought aside from your current gig and deal figuring out the new thing. a lot of the children in my community go to this program after school one day a week for an hour called Kidz Art. Each family pays 50-60 dollars a month for basically 4 hours of instruction. It is actually a franchise you could buy. The children come home with a drawing or piece of art every week. But if you are an art teacher allready you wouldn't really need to buy the franchise you could just get the contacts in the school and teach the classes. The lady that does it here teaches this program in 3 different public elementary schools and then has two classes in the summer for one day just to get the parents ready for the school year and to let them know she's still around. This could be your side gig. Just sayin.

      replyreport
      1. 82

         Dorsiposted 12 years agoin reply to this

         Thanks JustMike. That's funny because I am actually a certified instructor for KidzArt. Worked there a couple years ago till the owner moved away and shut down her business. I am thinking about starting my own classes after thinking about all this...appreciate all the feedback!

         replyreport
         1. 66

            JustMikeposted 12 years agoin reply to this

            I see that as a great opportunity for someone in your position if there are enough children to support it in your area it could be a nice side income.

            replyreport
            1. 82

               Dorsiposted 12 years agoin reply to this

               Yes and after all the commission talk, the owner has decided to keep me on an hourly rate lol! But I have learned alot about it now from this thread. They decided it was more secure for me to have an hourly rate which I agree! But I am still going to think about having some classes of my own in my own area. I have several interested parents.

               replyreport
2. 71

   jacharlessposted 12 years ago

   Sounds fun, especially Art with children.
   A viable solution is to offer this to your employer:
   A competitive hourly rate, accrued against commission sales.
   In short, if the commission volume exceeds the total gross hourly per day, then the commission is 100% of the agreed volume ($125 per registrant}. If the commission falls below the benchmark, the pay is matched -the difference paid- based on the daily gross.
   
   So say the hourly is $20 and you work 8 hours daily. That's $160.
   If one client registers at $125, the difference would be an additional $35 paid to you, as salary. If two clients register at $125, your gross is $250 for the day, no hourly difference paid to you. As a sub-contractor/commission sales, you will have to pay taxes on the commission and the hourly difference, unless you employer pays cash on commission -like waiters tips, where you claim 20% as taxable income. Waiters receive 50% of standard hourly plus commission/rewards for service.
   
   James.

   replyreport
   1. 82

      Dorsiposted 12 years agoin reply to this

      Thank you James. I'm not totally sure what she has in mind yet. She was talking about lowering my current pay because I won't be instructing at first - I'll just be hanging out in a pretty empty studio for at least the first few weeks... and trying to register students.

      replyreport
      1. 91

         wildernessposted 12 years agoin reply to this

         It sounds reasonable to me, with a couple of concerns.
         
         Can you live on the lowered salary?  If not, you will have to think hard about the risk you are taking.
         
         How long will the arrangement go on?  Just until it is cheaper to pay you your normal salary?  If so, why would you take the risk for the business, without having any real reward?

         replyreport
         1. 82

            Dorsiposted 12 years agoin reply to this

            Yeah I have alot to the think about. I really wanted the pay I have and just leave it at that. I was originally just hired for the summer art camp program but we really clicked and she'd like to get me working full time, the thing is I'll have to drive further (about 20 miles each way) and I'm not sure how much walk-in traffic they will get and how interested people would be signing up for art classes. It's risky with alot of unknowns right now. I really love the job though and the owner is a very nice person. Constantly thanking me all day long for what I do.

            replyreport
            1. 81

               rmichaelfposted 12 years agoin reply to this

               Hi Dorsi,
               I sold cars for a year in LA years (and years...) ago.  We worked on a "Draw," which was a flat rate, which they determined (felt... although we could argue, or negotiate) to be a minimum on which we could pay our personal expenses  on a daily basis.  Costs to get to and from work, a rental amount for apartment, etc... I think mine was around $1200 then.  Which acted as a "guaranty".  Then we were actually paid our commissioned sales amounts at the end of the month.  If our commission checks didn't equal the $1200, we were given the $1200 and the company "financed" the difference.  When our commission checks exceeded the $1200 the company would withhold what had been paid out to date.  Why not discuss your needs to cover your base costs that you must have, against what the owner can comfortably budget for her company's needs and see if that might present a workable figure you can both live with.  Remember, you both have wants and needs and you both deserve recognition for what you both do.  And, you actually can put dollar amounts to these things in this kind of thoughtful fashion.   And you both can have a "stable" figure on which to plan your lives.
               
               I hope this helps, if I wasn't very clear, please ask me to clarify... I don't  mind and sometimes I over simplify (don't go into enough detail :-)
               
               michael

               replyreport
               1. 81

                  rmichaelfposted 12 years agoin reply to this

                  (Part 2 :-p)
                  The concerns wilderness posted in his two questions are valid.  She is the business owner.  In that definition, she is the one taking the risks of "losing" versus "winning" - that is her job.  You shouldn't have to place your life or money at risk for her to make money.  Unless, she wants to share with you... some of that money at the end of each year when she closes out her profit/loss and takes advantage of the benefits of business ownership.  I have also been paid that way, though I was single with no family to worry about then...
                  Good Luck!
                  michael

                  replyreport
                  1. 82

                     Dorsiposted 12 years agoin reply to this

                     Yes Paradigm) Life is just so da## complicated sometimes....
                     
                     rmichaelf, thanks for this info. On the draw basis, this means that you are not getting an hourly rate but paid commission upfront? So say she needs me certain hours then we would figure out the draw amount from those hours she needs me for the month?
                     
                     And so if I go over the amount on commissions..then what happens to that money? I don't quite get that?

                     replyreport
                     1. 81

                        rmichaelfposted 12 years agoin reply to this

                        Yes, you are getting commissions up front.  Which allays your stress so that you can do your job effectively and not be stressed about rent or food or gas, etc.. This is in the company's interest.
                        
                        And yes, doing it by calculating from an hourly equivalent is a great and easy way to go.  I didn't think to suggest that, oops....
                        
                        At Christmas that year, the company "forgave" all those who hadn't made enough to pay back their draws as a bonus even.
                        
                        You keep your total commissions.  You put in the hours, you made the sale, it's your money earned.  The draw is there to "guaranty" you a living while you are building your customer base for you and the owner.
                        
                        okay?

                        replyreport
                        1. 82

                           Dorsiposted 12 years agoin reply to this

                           That makes sense. Thanks, What about making more than the commissions expected? Let's say I end up selling lots of classes way over and above.... that is the bonus to the company then, correct?

                           replyreport
                           1. 81

                              rmichaelfposted 12 years agoin reply to this

                              Hi Dorsi,
                              Sorry I fell asleep... No, any commission sales figure that is yours above the draw is yours to keep.  As above, the draw is just there to remove any stress from you so that you can be effective as a salesperson; not worry about other things, keep your mind on sales.  You have to payback anything you don't eventually earn, so the company is never out of pocket in that sense.  Which is what they "want"...
                              
                              You keep everything from your commissions which is what you want.
                              
                              A "win-win" for many,
                              
                              michael

                              replyreport
                              1. 82

                                 Dorsiposted 12 years agoin reply to this

                                 Thanks so much Michael. I really appreciate your help. So out of the draw a certain amount of commissions would be expected and if I don't hit those figures then I owe them the money back at some point?
                                 I'm just trying to understand all aspects before I talk to my employer. She has never had commission based employees either.

                                 replyreport
                                 1. 81

                                    rmichaelfposted 12 years agoin reply to this

                                    Hi Dorsi,
                                    Ahh, refreshed... :-)
                                    Right, the draw is, in effect, a loan from your employer, paid back to your employer, say at the end of each month. (Or whatever time frame the two of you are comfortable with) With the commissions from your sales.
                                    
                                    ps I would try to factor in something, either say as a bonus after the fact, or a higher than "average" commission structure, based on the fact that it is a new location with no track record (things about which I know nothing from here...)
                                    As well as other things such as what you were making, how she will recognize you should you perform exceptionally... all those things which you are bringing to the table for her (the employer/business owner) benefit, both now... and the future.  The reason one wants to own a business is that there are so many benefits regarding tax structures and end-of-month dollar in your pocket benefits, but also that after your years of hard work and effective management, you then can sell that business for a substantial profit for your "next egg" afterwards....  Never forget though, you can also lose your shirt, however again, as an employee, that isn't your concern, you just want to be rewarded fairly for your contributions to the company... As an employee, that should translate to security but less reward: as a business owner, that should translate into reward but less security (speaking of course in the Now, not the Future)
                                    My Uncle pulled me away once by giving me a substantial percentage of the company and its profits for a rather substantial decrease in salary from where I was working.  It worked for me, but I have always  been labeled  a "high risk" kind of person :-) 
                                    (I used to go hunting for shark in the Red Sea, when I was in my teens!)
                                    I hope this helps.  Keep "shaking my tree" until you have the apples you are looking for.  Or need.
                                    michael

                                    replyreport
                                    1. 81

                                       rmichaelfposted 12 years agoin reply to this

                                       I just re-read my reply above and I apologize for getting off track.  But I was trying to give you an idea of the various things that came to mind... If I have muddied up the waters as a result, feel free to continue here or to email me from my Hub Profile page and we can go into as much detail and time as you need to be comfortable with making a decision.  I used to be a consultant and have owned several small businesses with all kinds of creative ways to fairly treat both sides of the equation.....
                                       Sorry if I made things worse :-p
                                       michael

                                       report
3. 60

   paradigmsearchposted 12 years ago

   Life is too darn complicated...

   replyreport
   1. 59

      MuscleEvolutionposted 12 years agoin reply to this

      I agree. LOL  I also work on a commission basis and it is not easy.  I quit corporate America two years ago to do my photography full time. I quickly learned that you cannot support yourself on that alone in Wisconsin. LOL  So I pursued my other passion which is health and fitness.  I am now also a certified personal trainer, sports nutritionist and natural figure competitor.  This is tough work as well when it comes to getting paid.!  Some good advice here on the page however that can be applied to any business. Thanks everyone.

      replyreport