The arithmetic is simple. The disagreements are about which base you calculate from, and those disagreements are worth real money, so here is the same job run four ways.
Written by JD Davenport, who still sells for a living. Updated 4 November 2026.
Roofing in the question because that is where the examples come from. The arithmetic is the same for any business that quotes the work, does the work and sends an invoice: landscaping, fencing, decking, power washing, painting, HVAC, plumbing, electrical, remodeling.
A roof sold at $20,000. Material $5,800. Labor $5,200. Disposal $520. Permit $180. Direct cost $11,700. Gross profit $8,300, which is 41.5 percent.
Ten percent of the sale. $2,000. Known the day it is signed. Does not move no matter what happens afterward.
Twenty percent of gross profit. $1,660. Cannot be known until the job is costed.
Twenty percent of gross profit above a 30 percent floor. Thirty percent of $20,000 is $6,000 of gross profit required. Actual is $8,300, so $2,300 sits above the floor. Twenty percent of that is $460.
Half of everything above the floor. Fifty percent of $2,300 is $1,150.
Same job, same rep, same month. $2,000, $1,660, $460 and $1,150. Nothing changed but the base, and the spread is more than four to one.
Say the job comes in at 25 percent gross profit instead of 41.5. Gross profit is $5,000.
Percent of sale still pays $2,000. The rep is unaffected by a job that went badly.
Percent of gross profit pays $1,000, down from $1,660.
Both floor plans pay nothing, because the job never cleared the floor.
That is the whole design question in one line. Decide how much of a bad job the rep should feel, then pick the base that produces it. Do not pick a percentage first and discover the answer later.
Three of the four need a cost number. If your costs land after payroll, three of the four cannot be paid on time, and a plan that cannot be paid on time is not the plan you are running regardless of what the document says.
Test it before you choose. How many days after a job closes can you state its full cost. If that number is longer than your pay cycle, run percent of sale until it is not.
Can the rep reproduce the number himself.
Every figure above came from four costs and a contract value. If the rep can see those five numbers, he can check his own pay in two minutes, and a plan he can check is a plan he will not quietly resent.
If he cannot see them, you are asking him to trust a figure. Most will, for a while. The first time one comes back lower than he expected and nobody can show him why, you have not had a pay dispute. You have had a trust failure, and it arrives with the next three paychecks attached.
State the base, the trigger and the window in writing before he starts. Percent of what, paid when, calculated from which document.
And never reprice completed work. If you change the plan, jobs already sold stay on the terms they were sold under. That one rule is the difference between a change people accept and a change people resent.
The four plans worked out in full, the statement a rep can check himself, and the plan document are The Commission Standard. The cost closing that three of the four depend on is The Job Cost Standard. More answers on the questions page.