A career in logistics sales can be quite rewarding and lucrative. How rewarding and lucrative it can be depends on several factors, though. Are you able to overcome the challenges that come with being in sales? Do you enjoy creating and maintaining relationships? How do you get paid?
That last factor might be the biggest part of how lucrative your career can be. And, depending on where you decide to establish your logistics sales career, how you get paid will vary.
Anderson Trucking Service (ATS) has been in the logistics industry since 1955 — and we’ve been hiring logistics sales professionals for nearly that long. We’ve seen commission structures change over the years, so we’ve become well-versed in them.
Today, you’ll find several different ways logistics sales professionals can get paid, but there tend to be four common types of commission structures. Keep reading to learn more about the top four structures, along with the pros and cons of each.
What Are the Common Sales Commission Structures?
There’s a good chance you’ll find the four following types of commission in any industry with sales representatives, but they’re quite common in the transportation industry:
- Base salary + commission
- Commission only
- Draw against commission
- Percentage of salary
What is the Base Salary + Commission Structure?
Logistics sales positions that offer a base salary with a commission typically offer uncapped earning potential with some stability to go with it. In this case, you’ll always earn your base salary, no matter how much you sell. You’ll also earn more, above and beyond that base salary, depending on how much you sell.
The commission in this structure is usually dependent on your gross margins each month — meaning you’ll earn a set percentage of your monthly production.
For example, let’s say you’re a new sales representative earning a base salary of $45,000. You can expect you’ll come home with at least $3,750 each month, before taxes. Then, you’ll get a percentage of the profit margin on whatever freight you sell each month above and beyond that base salary. So you could come home with $4,000 one month and $8,000 the next. It all depends on how well you do from a sales standpoint.
What Are the Pros of a Base Pay + Commission Structure?
This commission structure is pretty common across the industry — specifically in a standard freight brokerage environment. While you’ll find caps on what you can earn at certain logistics companies, others (like ATS Logistics) don’t put a cap on how much you can earn.
If you do take a job with a standard brokerage, you’ll likely also be provided with support departments that help you fulfill the loads you sell. That way, you can focus on selling freight and let others handle the rest — potentially helping you earn more, faster.
What Are the Cons of a Base Pay + Commission Structure?
When it comes to this type of commission structure, because you’re guaranteed base pay, it can take longer to unlock the commission incentives. After all, you’re working for a business, so they need to be able to turn a profit too. If they’re guaranteeing you a paycheck each month, they’re going to want you to earn it.
So those commission incentives won’t kick in until you’ve hit your monthly target worth of freight each month. Commissions grow as you grow your book of business, so early in your career incentive checks may not be as lucrative until you've developed a larger book of business.
What is a Commission-Only Structure?
A commission-only structure can be great for experienced sales professionals who are confident in their selling skills. With this structure, you receive no guaranteed pay. None. Everything you earn each month is based on your ability to sell.
Why would you take a job with this type of commission if you’re not guaranteed anything, then?
What Are the Pros of a Commission-Only Structure?
The perk of commission-only is you earn a much higher percentage of the profit margin than you would with the base pay and commission structure.
So those $8,000 paychecks could turn into $10,000-$12,000 paychecks if you’re good at what you do. They could also turn into $2,000 paychecks if you have a tough month…
What Are the Cons of a Commission-Only Structure?
Instability with your paychecks is the most obvious con to a commission-only pay structure. It can be hard to set a personal budget if you don’t know what the number on your paycheck will be each month.
As far as transportation careers go, this type of pay structure would commonly be found in an agent-based brokerage. In that type of brokerage, you’re usually responsible for all aspects of moving the loads you booked — booking the freight, finding a truck, handling customer service requests, etc. — not just selling them. That can take your attention away from selling.
Another factor to consider is in agent-based brokerages, you’re commonly an independent contractor. Because of that employment status, you’re responsible for finding your own benefits.
What is the Draw Against Commission Structure?
If you sign up for a job that pays you in a “draw against commission” structure, you can usually set your guaranteed amount of pay — but it comes with a catch. What do we mean?
Let’s say you tell your employer you want to earn no less than $60,000 per year — or $5,000 a month. If that’s the number you settle on, that’s the number that counts “against your commission.” That means you won’t earn any commission until you hit that $5,000 mark.
What Are the Pros of the Draw Against Commission Structure?
This pay structure provides a consistent paycheck at a number you’re comfortable with. If you feel like the base pay plus commission structure starts at a lower base pay than you’re comfortable with, this could be a better option.
You may not see the big commission checks with this structure compared to others — since you’ll have to sell more to start earning commission — but you’ll have an easier time creating a personal budget.
What Are the Cons of the Draw Against Commission Structure?
Let’s go back to the guaranteed pay part of this structure. If you don’t hit $5,000 in profit margin, be prepared to pay the difference back with one of your future paychecks.
For example, if you only made $4,000 last month but you just finished a $6,000 month, you’ll actually only take home $5,000. That’s because you have to pay your employer the $1,000 you fell short last month.
That’s okay to do every now and then, but if you fall short two or three months within a short period of time, you’ll probably be out of a job in the near future. This pay structure tends to see a higher turnover rate than the others we include in this article, simply because salespeople can’t consistently keep up with their guaranteed pay.
What is the Percentage of Salary Commission Structure?
On this commission structure, you’ll earn a base salary, like most of the other structures, then you’ll earn commission up to a certain percentage of your base salary.
For example, if you earn $5,000 a month as a base salary with a commission of 50 percent, you can earn up to $2,500 in commission each month, based on your ability to hit certain objectives. The words to pay attention to here are “up to.”
What Are the Pros of the Percentage of Salary Commission Structure?
If money isn’t your main motivating factor when searching for a sales career, this could be a great pay structure for you. You’ll have much more consistency with your checks each month.
Not only will you have a minimum salary you can expect each month, but you’ll also know it won’t reach beyond 50 percent more than your base salary. That can make personal budgets easier to manage.
What Are the Cons of the Percentage of Salary Commission Structure?
The biggest disadvantage of this commission structure is the inability to earn beyond your cap. If you continue to do your job exceedingly well and hit the pay ceiling — especially if it’s consistently before the month is over — it can be hard to stay motivated.
After all, why sell something this month that won’t earn you any additional money when you can sell the same thing next month and make a profit on it? Why not just sit back and relax for a week or so?
What Commission Structures Will You See in Transportation Sales?
If you’re seeking a career in sales — particularly in the transportation and logistics industry — you’ll likely find four common commission structures:
- Base salary + commission
- Commission only
- Draw against commission
- Percentage of salary
Each has its own pros and cons, ranging from the consistency of the number on your paycheck to the actual number you can expect to see on your paycheck — some of which can be quite large.
The type of commission structure that makes the most sense to you will depend on what’s important to you. Is it the ability to earn more money than you could have ever imagined, or is it a consistent paycheck that you and your family can rely upon?
Whatever you decide, make sure to ask the employers you’re interviewing for the details of their commission structure. That could be the difference in whether or not you accept a job offer from them.
Earn More Money With a Stable Company
If the base salary with commission structure sounded like something you’d prefer — and you’re looking to find a career you can settle into — consider ATS Logistics. We’ve been in the brokerage business since 1989 and have had a home in the transportation industry since 1955.
Salespeople with ATS Logistics earn base pay they can rely on each month and have the ability to earn a commission with no cap. And, if you’re looking to progress in your career, there’s an established career path that will reward you for your hard work and tenure.
If you’re ready to take the next step in your sales career — or if you’re ready to get it started on the right foot — apply to be a national sales representative with ATS Logistics now.