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Set Up Commission for Products

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Kimberly Banow
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Setting up commissions for your products incentivizes your employees and service providers to sell more if they bring in more revenue. In the Payroll Configuration screen, you can set up:

  • Tiered Commission by Revenue: Pay commissions as a fixed percentage or amount based on how much money the employee brought in.

  • Commission by Product: Pay commissions as a fixed amount based on what products the employee sold.

Note

If any employee is set up for Tiered Commission by Revenue, only the settings on that tab will apply to that person.

Tip

For hourly employees, toggle on Only Pay Hourly Rate or Commission (Whichever is Larger) to pay only the commission amount if the commission earned during a pay period is more than the total hourly pay, and if the total hourly pay during a pay period is more than the commission earned, then only the total hourly pay will be given.

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.

The exception is if a customer pays a deposit via an invoice for an appointment that will take place in the next payroll period, then the commission will be paid in the immediate payroll period. So for that same business, if the same customer booked that same appointment and paid for it with an invoice, the service provider would receive their commission in the same pay period.

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 on the web, tablet, and Pay Desk. In the US, Vagaro Payroll is recommended if you want to send your employees direct deposits and withhold their income taxes.

What's in This Article?

Set Up Tiered Commission by Revenue

This option allows you to customize multiple percentages or amounts based on how much an employee charges for a product.

Note

Tiered Commission by Revenue is the default; product-specific commissions will override the revenue commission.

  1. Go to Reports → Payroll Configuration.

  2. If you subscribe to Vagaro Payroll, ensure your employees have been added to the Payroll tab.

  3. Scroll to the bottom of the screen, and then select the Products tab.

    tiered_product_web_2x.png

    The Tiered Commission by Revenue tab will be the default selection.

  4. Add additional tiers by selecting +Add. Provide a top range for each tier and enter commission percentages per Employee. (You can also enter flat commission amounts.)

    For example, if you set a Tier 1 commission for sales between $0.00 and $99 and a Tier 2 commission for sales between $100 and $499, an employee, who sells $300 in Products, would get the Tier 2 commission of 40% within the Payroll period. If she sold $600, they would get the Tier 3 commission of 45% within the Payroll period. You can add as many tiers as you need, giving you more control over how you pay your employees. This can be set up for Services, Products, or Classes.

    1. When you're filling in a box on one tier, you have the option to fill left/right and up/down with the same rate or amount to other tiers or employees.

      tier_rate_entry_2x.png

    2. You can remove a tier entirely by hovering over it, then selecting the displayed trash icon.

  5. Select Save to save these payroll settings.

    cancel_save_run_payroll_2x.png

    Use Save and Run Payroll ONLY WHEN you're ready to run the payroll at the same time you save the settings.

Set Up Commission by Product

This option allows you to set a specific commission for each product your employees sell. You can select a dollar or percentage amount. This gives you more specific control over how much you pay your employees when they sell retail products.

Tiered Commission by Revenue is the default, and any product-specific commissions will override the revenue commission.

For example, you can set Tiered Commission by Revenue for all of your employees and have a specific higher commission for one product. Do that by entering it in the Commission by Product tab for each employee.

  1. Select the Products tab on the Payroll Configuration screen, then select Commission by Product.

    commission_by_product_web_2x.png

  2. Select a Brand to edit.

  3. For each product, enter an amount or percentage for the commission you will pay when an employee sells that product.

    For example, you could set an employee to get a 10% commission for every Redken All Soft Shampoo sold, while another employee gets $3 for her commission.

  4. Manually enter commissions for each product or copy commission rates across all employees and/or products within that brand.

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