What is a Float Commission?

A float commission allows the salon to reward their best sales people with an increased commission rate as their sales increase.  The commission is a series of graduated steps and an employee will be paid the commission amount for the achieved level of sales.  The employees commission will "float" among the steps and as they achieve higher sales they will receive higher compensation.

This can be used to push stretch goals during busy season and greatly increase revenue for the salon.  Since the compensation is revenue based, you can ensure that you always have a profit margin on the sale.  The example below has sales up to $500.00 receive a 5% commission.  If they can get up to $500.01 their commission can increase to 10% on sales from $500.01 up to $1,500.

Advantages

As your sales staff are paid on a commission basis they must directly help the company generate the revenue.  It allows the company can maintain lower labor costs while paying only to the performing employees who are able to generate more revenue.  This is a great source of motivation to bring positive competition among the employees to perform better than the rest.  

As the salon's sales staff learn more about the products and services that are sold, they are able to make better impression on the clients and have them return for more.  The possibility of higher commission rates allows the salon to retain the better employees reducing employee turnover rates.

Disadvantages

Since the float commissions are paid at one time each month, the sales staff may push for sales at the end of the month to reach the next commission step.  While good for revenue, it has been observed that the sales staff will push through sales at the end of the month and will not explain the products and services thoroughly to the clients.  Customers might be dissatisfied post sales because of incomplete or misleading information.