Why pay commission at all
Straight hourly pay is simple, but it pays the same for a tech who fixes the drain and leaves as for one who also finds the failing shut-off valve and explains it well. A good commission plan rewards the tech for doing the whole job well. A bad one rewards overselling, rushing and skipping the cleanup. The design is what decides which you get.
Common ways to pay technician commissions
| Structure | How it works | Good for | Watch out for |
|---|---|---|---|
| Hourly only | Pay for hours worked | Apprentices, install crews | No reward for selling well |
| Hourly + commission | Base wage plus a % of sales | Most service techs | Needs clear rules |
| Commission with a floor | Paid the greater of commission or an hourly floor | Experienced sellers | Overtime math, state rules |
| Spiffs | Flat bonus per item | Pushing one item (memberships, water treatment) | Too many and they mean nothing |
Decide what you pay commission on
This choice matters more than the percentage.
- Total sale price: simple to explain, but a job with expensive equipment pays the tech a lot for parts they did not add value to.
- Sale minus materials: fairer on equipment-heavy jobs, and it teaches techs that parts are not free.
- Gross profit: the most accurate, but techs need to see the numbers or they will not trust it. See gross margin.
Pick one, write it down, and do not change it mid-month.
Worked example
These numbers are an example, not a recommendation. Harbor Line Plumbing pays Jordan Lee $28 an hour plus 10% of each job's sale price minus materials.
| Job | Sale | Materials | Commissionable | 10% |
|---|---|---|---|---|
| Drain clearing | $325 | $0 | $325 | $32.50 |
| Water heater swap | $2,400 | $1,100 | $1,300 | $130.00 |
| Faucet replacement | $480 | $160 | $320 | $32.00 |
| Week total | $194.50 |
Add a $25 spiff for each membership sold, and Jordan sees exactly why each dollar was earned. Run your own job prices through the job pricing and markup calculator first, so the commission fits inside your margin rather than eating it.
Write the rules down
Most commission fights come from rules nobody wrote down. Your plan should answer:
- When is it earned? On sale, on completion, or when the customer pays. Paying on collected invoices protects you from bad debt.
- Callbacks: if the tech has to go back to fix their own work, is the second trip unpaid, or is commission taken back? Tie it to your warranty callback policy.
- Refunds and discounts: who absorbs a discount the tech gave without approval?
- Split jobs: when two techs work a job, how is it shared? When a tech sells a job and an install crew does it?
- Leads: does a tech get anything for a replacement lead they pass to a salesperson?
- Pay timing: which payroll the commission lands in.
In California, commission agreements must be in writing and the employee should get a signed copy (summary of Labor Code 2751). Other states have their own rules, so have an employment attorney or payroll provider review your plan.
Do not forget overtime
The US Department of Labor says overtime for employees paid on a commission or other basis must be computed from the average hourly rate derived from those earnings (DOL Fact Sheet 56A). Some states add daily overtime too; California's labor department explains how commission earnings enter the regular rate (California DIR). This is the most common commission payroll mistake, so check it with your payroll provider.
Spiffs: use them sparingly
A spiff is a small flat bonus for one item. It works best when it is short and focused: a membership push in the slow season, a surge protector with every panel job. Run one or two at a time. Twelve spiffs at once means nobody remembers any of them.
Guard against overselling
- Pair commission with a callback or quality measure so rushed work costs the tech.
- Review a sample of high tickets with photos each month.
- Present options instead of one push; see good, better, best options.
- Make it fine to recommend the cheaper fix when that is the right fix.
Show techs their numbers
Techs trust a plan they can check. In SWITCHBOARD, commissions are figured from the job, time is clocked from the job with state overtime rules, and techs see their own hours and pay on their phone. Payroll then hands off to QuickBooks or a Gusto, ADP or Paychex file.
Questions people ask
What percentage commission do service techs get?
It varies by shop, trade and what the percentage is figured on. Set your rate from your own margins so the commission fits inside your profit, and write the plan down.
Do commissions count toward overtime pay?
Yes, under federal law commission earnings are part of the regular rate used to figure overtime. Some states, such as California, add their own rules.
Should techs be paid commission on sales or on collected payments?
Paying on collected payments protects the shop from unpaid invoices, but techs wait longer. Whichever you choose, put it in the written plan.
What is a spiff for technicians?
A small flat bonus for selling or completing a specific item, such as a maintenance membership. Spiffs work best when there are only one or two at a time.
Sources
- Fact Sheet #56A: Overview of the Regular Rate of Pay Under the FLSA, US Department of Labor (checked November 10, 2026)
- Overtime FAQ, California Department of Industrial Relations (DLSE) (checked November 10, 2026)
- California Labor Code 2751 summary, Maison Law (checked November 10, 2026)