In the working world, you can choose to pursue two types of income pathways. You could either choose to work for a salary or work based on commission.

The question is, which pathway should you consider? Ask any employee, and they will always tell you the more money they see coming in, the better. Based on that fact alone, a commission-based income is a clear winner. But commissions are not necessarily the best approach for everyone.

This guide will compare a real estate commission vs salary to determine their differences and similarities:

Real Estate Commission vs Salary: Differences

A salary is a fixed income or money paid to employees monthly. Payments can be made either weekly, bi-weekly, or monthly. With a fixed income, you don’t see an influx of money every month based on your performance. Oh, you will get rewarded for your good performance. But these salary increments usually happen once a year or once every six months, depending on the company.

On the other hand, a commission is a lump sum of money paid to the employee when they successfully sell goods or services. Employees who work on commission can generally expect 40% of their income to be derived from commissions. Commission-based incomes are straightforward. The more you sell, the more you earn.

Real Estate Commission vs Salary: Which Is Better?

That depends on what you prefer. With a salary, you have the security of knowing a steady paycheck is coming in every month. A salary offers certainty for those who rely on this regular income. Some people love the predictability of a steady paycheck, which suits them just fine.

Then others thrive on the challenge of beating their targets each month. Salespeople, business developers, real estate agents, insurance agents, and just about anyone who works with sales targets are the people who usually earn a commission. The extra income depends entirely on how they perform every month.

A commission will have you laughing at the bank when times are good. Especially when commissions usually far exceed what a steady paycheck can bring in. But when times are hard, working for a commission can be stressful. If you don’t make a sale, you don’t get the extra income boost you’ve accustomed to. Fortunately, you can rely on commission advances to help you stabilize your income.

Whether a commission is better than a salary is all about perspective. The best income for you will depend on what suits you best based on your approach to work, your appetite for a challenge, and your lifestyle. You’ll be set as long as your salary package can support you (and your family).

Advantages and Disadvantages of Earning a Salary

As mentioned earlier, with a salary, you don’t lose any sleep at night worrying about where your next paycheck is coming from. You won’t have to worry about paying all your bills on time each month. You know exactly when your payment is coming and how you will budget it until your next pay cycle. With a salary, you can rest easy knowing you’re covered every month.

Sure, there is always the risk of losing your job one day. But if you manage your money well, you could squirrel enough away for such an emergency to help you survive until you get your next job. That’s the advantage of the fixed monthly salary. The downside? Aside from looking forward to your annual bonus and salary increments, there’s no possibility of extra money coming in each month.

Pros and Cons of a Commission

The obvious upside to working for a commission is the possibility of maximizing your earning potential every month. Especially when you have a natural aptitude for sales, some people thrive on the challenge and use their excellent powers of persuasion to get what they want.

Those who work on commission love the thrill of being in charge of their destiny. They get a kick knowing they control how much they earn every month. They’re motivated by the possibility of maximizing their earnings, and they go all out, full of drive and passion every day.

The downside? You need to be tough to survive a livelihood that is based on commission. That’s because you never know when times will suddenly turn bad. A commission is not a guarantee of extra money coming in each month. For some people, that can be stressful.

A commission makes it hard to budget for the right lifestyle where you don’t find yourself living paycheck to paycheck. Your income may be variable, but your monthly bills are not. That’s the downside to earning an income that fluctuates. There is also the fact that those who work on commission generally have a low-income base.

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