PERSONAL SELLING:
INCENTIVES AND COMPENSATION

Acme Sign Co. manufactures indoor and outdoor signage primarily for several large international fast-food chains. Which of the following employees receives the largest paychecks?

  • A.
  • B.
  • C.
  • D.


SALES FORCE COMPENSATION

  • straight salary
  • straight commission
  • bonus
  • combination

The highest paying sales jobs are straight commission, the lowest paying are straight salary (usually clerical sales).

Please beware of:

  • draw
  • bonus
  • expense account

Note: when you see the sign on college campuses that says 'summer jobs - $10', it's not kidding. Here's what I want you to ask them: "ten dollars per what?" I have yet to get a straight answer. Some of the highest paying and most rewarding jobs are in sales, but be careful.

A draw is a loan against future commissions: you can quit your job and owe them money! It is not to be regarded as salary, even if it is a 'guaranteed' draw. A legitimate use of a drawing account is to ease income fluctuations when straight commission is used.

A bonus is paid only if you reach some specified level of sales or, sometimes, at the whim of the sales manager. A bonus is legitimate if the quota is set at an achievable point; used as an incentive or to direct goals.

Expenses are reimbursements for the cost of doing business: an expense account is not to be considered as income!

KleenKut Kutlery Kumpany offers you a summer job as a sales representative. You will receive a $1,000 per month draw, fifty percent commission, a $1,000 per month expense account, and a bonus of $1,000 if your sales exceed $100,000 in any one month period. You are told that your income potential is at least $5,000 'and more' per month.

What will be your likely income for the summer?