Just like a salesperson in a retail store, the SA that works on commission makes profit on a percentage basis based on how the items sell. For instance, the SA could take a percentage of the final sale price of each item, the sale price of the item less selling fees, or a percentage of the total profit made by the owner of the items.
Clients often prefer commission for reasons that are mostly psychological, but it provides some challenges for the SA.
Advantages of working on commission
- Commission increases the level of trust between the SA and the client. The client knows that the SA will do everything in their power to get the maximum profit on their items because the amount the SA herself makes is dependent on the final value. Commission means the SA’s profit is directly proportionate to the sort of job she or he does (i.e., the more you sell it for, the more you make), and that gives a potential client more confidence in your service. It’s in both parties’ best interests to get the best price possible, and that gives the transaction a collaborative feeling of working together.
- A commission makes your service seem less expensive, even if it isn’t really. Even though a commission can often mean the client pays more in the end, a flat fee can sound higher because you’re giving them an exact total instead of talking about a percentage of a future number. It’s a mind game, but it works.
- The SA makes more on high-selling items than with fees. Remember that $4,000 designer luggage? Unless you’re charging a 0.1% commission, you’re guaranteed to be making more than $5 on that item.
Disadvantages of working on commission
- Profit becomes difficult to predict and can vary widely from item to item. You’ll take a gamble with every new client you take. Will their items sell for enough to be worth the work of listing them?
- Commission can corner the SA into a poor work-to-financial-return ratio on items that sell for very little. You spent 40 hours listing all those LPs, and they only sold for $10 total? No matter what your commission rate is, you made less than pennies per hour for your work. There are ways to avoid this situation, but you can still find yourself in it no matter how prepared you are.
- The SA makes no commission on items that do not sell.
Commission is a bit like betting the success of your business entirely on your selling skills and your ability to pick the right items. It can be an unreliable form of profit but, like the stock market, if you play it right, it can mean much greater profits than flat fee. Is a little unpredictability worth the chance of making more money?