There are four common structures and each one produces a predictable failure, so you pick the failure you can live with rather than hoping for one with none. A flat percent of the sale buys volume and invites discounting. A percent of gross profit buys margin discipline, and works only if you can close a job's costs inside your pay cycle.
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.
Fair is the wrong test. A commission structure is not a reward, it is a machine that produces behavior, and whatever it pays for is what you will get more of. Ask what it produces before you ask whether it is generous.
Pays a fixed share of contract value. Everybody understands it on day one.
What it produces: volume, and price concession. If the rep earns the same share on a job sold at the floor as on a job sold properly, discounting costs him almost nothing and costs you the whole margin. He is not being greedy. He is responding correctly to the machine you built.
When it is right: when your pricing is set centrally and the rep genuinely cannot move it. Then there is nothing to protect and simplicity wins.
Pays a share of what the job actually made.
What it produces: margin discipline, and a dependency. The rep now cares what the job costs, which is the behavior you wanted. He also cannot be paid until somebody closes the job's costs, which means your job costing is now a payroll function. If a disposal invoice shows up six weeks late, so does his money.
When it is right: when you can close a job's cost inside your pay cycle. If you cannot, this structure writes a check your office cannot cash on time, every single period.
The rate steps up after a threshold.
What it produces: month-end behavior. A rep sitting just under a tier will do things in the last week of the month that he would not do in the first. He will discount to close, he will pull a job forward that was not ready, and he will do it because the tier is worth more than the margin on the job that crosses it. That is arithmetic, not character.
When it is right: when the threshold is set on something that cannot be gamed by timing, and when you have looked at what the last five days of your month already look like.
Nothing is paid below a set margin. Above it, the rep takes a share of the excess.
What it produces: the cleanest incentive of the four, and the hardest conversation. The job that finishes one point under the floor is the job that gets re-litigated, and somebody has to hold the line on a number that costs a man real money. If you cannot show him the cost detail that put the job under, you will not hold it.
When it is right: when your job costing is good enough to defend a figure to the cent, because this structure will be tested on exactly that.
Every structure above assumes a cost number arrives on time and is right. If that is not true, the structure does not matter, because whatever you designed on paper is not what gets paid.
So before choosing: can you state a job's full cost, at leaf level, inside your pay period. If the honest answer is not yet, fix that first and run flat percent in the meantime. A simple plan paid accurately beats a sophisticated plan paid late.
Never reprice completed work. If you change the plan, jobs already sold stay on the terms they were sold under. That single rule is the difference between a change people accept and a change people resent, and it costs you one quarter of overlap to honor.
The four structures written out with the arithmetic, the plan document, and the rep-facing statement are The Commission Standard. The cost closing that every one of them depends on is The Job Cost Standard. More answers on the questions page.