Setting up commissions for services incentivizes your employees and service providers to perform more services. You can reward your employees by paying:
-
Tiered Commission by Revenue: Pay commissions as a fixed percentage or amount based on how much money the employee brought in.
-
Commission by Service: Pay a fixed commission based on what services the employee sold.
Commissions are paid based on when a booking is performed, not when a customer pays for the service. For example, consider this business that has a bi-monthly pay schedule, and the current pay period is January 1-15. A customer books an appointment for January 20 but pays for it right away on January 3. This means that the service provider will receive their commission at the end of the next pay period (January 16-31) because the appointment will occur after the immediate pay period.
Note
If any employee is set up for Tiered Commission by Revenue, only the settings on that tab will apply to that employee.
Tip
In the Payroll Configuration screen, toggle on Only Pay Hourly Rate or Commission (Whichever is Larger) to pay only the larger of their commission amount or total hourly pay for all or specific hourly pay rates. For example, if an employee worked 30 hours at $15/hr during a weekly pay period ($450 total) and also earned $2000 in commissions, you can choose to pay only the $1000 commission because it is more than the regular wages earned.
With Vagaro Payroll, you can also select whether to withhold PTO if the commission is greater than the total number of hours worked and their PTO balance, or to always give PTO in addition to the greater of their commission earned or total hourly pay. In the same example above, you can choose to withhold paying the employee's PTO because the earned commission is more than what would be earned during PTO.
Important
Do not set up commissions for employees with merchant accounts. If an employee has their own merchant account, the full amount of service or class sales will be deposited into their bank account. Setting up commissions for these employees will result in payment into their merchant account as well as receiving commissions.
Prerequisites: This feature is available for all Vagaro businesses. At least one employee profile must already be added and your Payroll Configuration must already be set up. In the US, Vagaro Payroll is recommended to pay your employees by direct deposit and withhold their income taxes.
This option allows you to customize multiple percentages or amounts based on how much an employee charges for a service.
To set up tiered commission by revenue:
-
Go to → → .
-
If you subscribe to Vagaro Payroll, ensure your employees have been added to the Payroll tab.
-
Scroll to the bottom of the screen, and then select the Services tab.
The Tiered Commission by Revenue tab will be the default selection.
-
Add additional tiers by selecting +Add, and then enter the range for each tier and enter commission percentages per Employee. (You can also enter flat commission amounts.)
For example, consider Anna who performed $300 worth of services. If you set up a Tier 1 commission for services worth $0.00 and $99.99 and a Tier 2 commission for services between $100 and $499.99, Anna would get the Tier 2 commission of 40%.
-
To copy the same commission rate amount to other tiers or employees, select the left/right and up/down arrows.
-
To delete a tier, hover over it, then select the Delete
icon.
-
-
Select Save.
Important
ONLY use Save and Run Payroll if you're ready to run the payroll at the same time you save the settings.
This option allows you to set a dollar amount or percentage commission for each service your employees perform. This gives your business more control over how much you pay your employees, including a way to offer an incentive for employees to upsell and perform specific services, such as mobile services.
For example, you can set tiered commissions by revenue for all your employees, and you can pay a higher commission for a specific service that you offer by entering it in the Commission by Service tab for each employee.
To set up commission by service:
-
Go to → → .
-
Select the Commission By Service tab. Your list of services will populate, so you can enter commission details for each one.
-
Select the Service Category to edit commissions.
-
Enter the commission for the employee.
For Miranda C, she will get a $10 commission for Makeup-Application. You can also set the commission to be a percentage of the service cost.
Note
For mobile services, commissions must be entered as a dollar amount, not a percentage.
-
Optionally, toggle on the Only Pay Hourly Rate or Commission (Whichever is Larger) switch, then select an option:
-
Apply to all hourly pay rates: If the commission earned during a pay period exceeds the total hourly pay, then only the commission will be paid. If the total hourly pay during a pay period exceeds the commission earned, then only the hourly pay will be paid.
-
Apply to specific pay rates: Whether only Select Pay Rates (created on the Hourly Pay tab) in the list will be paid the larger of earnings by their hourly rate or commissions.
-
Paid Time Off (Vagaro Payroll only): Whether to withhold PTO if the commission is greater than the total number of hours worked and their PTO balance, or to always give PTO in addition to the greater of their commission earned or total hourly pay. In the same example above, you can choose to withhold paying the employee's PTO because the earned commission is more than what would be earned during PTO
-
PTO will not be paid if the commission is greater than the combined total of hours worked and the PTO balance.
-
The employee will always receive PTO in addition to the larger of their commission earned or total hourly pay.
-
-
-
Select Save.
Use Save and Run Payroll ONLY WHEN you're ready to run the payroll at the same time you save the settings.
Note
If you set an employee's Tiered Commission by Service commission to $0.00, then they will automatically receive the percentage commission for services. If you would like to avoid this, set the commission percentage to $0 for that employee.
Comments
2 comments
Is there a way to pay employees a commission of the membership price per service? For example our membership is $55 but the regular price is $65. On the payroll report it's showing as a $65 discount so they aren't getting paid anything, but it should only be a $10 discount. Is there a way to configure payroll so they get paid commission on the membership price?
Hi, Grace. In the Payroll Configuration screen, there is a toggle to "Deduct Membership Discount from Commission." If it is enabled and the membership offers a partial discount, then the providers should get a commission based on the paid amount. If the providers get nothing at all and that toggle is on, then the membership may be covering the full cost of the services, so there is no commission from the service.
Please sign in to leave a comment.