Commission ties pay to work, which is why barbershops, salons, and spas use it. It also turns every discount, refund, and package into a question about money a team member is owed. Answer those questions in writing before pay day, and the payout becomes arithmetic instead of a negotiation.
This guide covers the choices behind a commission plan, with the arithmetic for each. Onsuki works out each person's payout from the rules you choose. For withholding and anything else about tax, ask your accountant.
Choose the number the rate multiplies
Before you pick a rate, decide what it is a rate of. The two choices give the same answer until there is a discount.
| Paid on | A ₱1,000 service with a ₱200 discount, at 40% | Who carries the discount |
|---|---|---|
| The full price | ₱400 commission on ₱800 collected | The business, all of it |
| What the client paid | ₱320 commission on ₱800 collected | The business and the team member, in proportion |
Paying on the full price suits a business where the owner decides discounts, so nobody loses pay for a promotion they didn't choose. Paying on what the client paid suits a team that gives its own discounts, so a discount costs the person who offered it too. Pick one and keep it for every period.
Take VAT out before you share it
If your business is VAT-registered and your prices include 12% VAT, part of every sale is tax you have to remit. Commission on the full menu price pays your team a share of that tax. To find the price before VAT, divide by 1.12.
- Example: a color service is ₱1,120, VAT included.
- ₱1,120 ÷ 1.12 = ₱1,000 before VAT.
- At 40%, the commission is ₱400. On the full ₱1,120 it would be ₱448, so ₱48 of the payout would come out of VAT.
A business that isn't VAT-registered may pay percentage tax on sales instead. Which tax applies to you, and whether to take it out before commission, is a question for your accountant. In Onsuki, turn on Take out tax before commission and choose VAT included in prices, which divides sales by 1.12, or percentage tax on sales.
Pick a structure your team can check
The best structure is one a team member can recompute on their own phone. A plan nobody can check is a plan people argue about.
| Structure | How it works | Suits |
|---|---|---|
| By team member | Each person has their own rate | A small team where each rate was agreed one to one |
| By staff level | Each level has a rate, and a person's own rate can override it | A salon with Junior, Senior, and Master stylists |
| By service or product | Each item has its own rate | Services with very different costs, such as a cut and a treatment |
| By tiers | The rate rises once monthly sales pass a threshold | A team working toward a sales goal |
If you price services by staff level, a rate per level keeps commission in step with price. See How to price services by staff level.
Watch the cliff in a tier plan
Tiers reward a goal, and they have a sharp edge. When the highest tier reached sets the rate for all of a month's sales, one sale near the line changes the whole month.
- Example: your tiers pay 30% from the first peso and 35% from ₱60,000 a month.
- A stylist at ₱59,000 earns ₱17,700.
- One more ₱1,000 service takes them to ₱60,000 and ₱21,000: ₱3,300 more for ₱1,000 of sales.
That jump is what drives a push at the end of the month, so set thresholds you are glad to pay at. In Onsuki, the highest tier a person reaches in a month sets the rate for all of their sales that month, so the rate on sales from early in the month can rise later. Tiers are simplest with a monthly pay period. With weekly pay, a week's figures can grow after the week ends.
Set the pay period, then pay after it settles
Choose weekly, twice a month, or monthly, and work out every period from the same dates. Changing the period midyear makes every comparison harder.
Write down the edge cases
Most commission disputes are about the same few cases. Decide them once. Here is how Onsuki handles each, as a starting point for your own rules.
- Refunds take back exactly the commission the sale earned, even if your rates changed since.
- Package visits earn commission on the day of the visit, at the service's regular price unless you choose the package's price per visit. Selling the package itself earns none.
- Product sales earn commission for whoever sold them. A sale with nobody on it earns no one a commission.
- Tips stay outside commission and go to the team member whole.
- Allowances and adjustments are added to the payout with a note, so the reason stays on record.
Give each person a statement they can see
A team member who can see how their number was reached rarely disputes it. Let them see it during the period, not only on pay day, so a missing sale is caught while everyone still remembers it.
Onsuki's statement shows each person's sales by day, the total, any tax taken out, the commission, and the payout, and prints in one step. Commission Earnings in Reports exports the same figures for any dates. For your records, a statement can also show a withholding estimate at the rate your accountant gives you.
Onsuki's Commissions starts from a template such as Weekly barbershop or Salon by staff level, works out each person's payout every period, and prints the statement you pay from. See Commissions.
