Differences between Straight Salary and Straight Commission Method

Straight Salary vs Straight Commission Method

The main differences between the straight salary method and straight commission method are explained below:

1. Basis: Straight salary method is based on the time spent on the job, and not on the volume of sales effected by the salesmen. But straight commission method is based on the sales effected by the salesmen and not on the time spent on the job.

2. Circumstances: Straight salary method can be used under any circumstances, whereas straight commission method can be used only in cases where the sales made by the salesmen can be measured.

3. Minimum Income: Straight salary method assures a minimum income to the salesmen. But straight commission method does not assure any minimum income to the salesmen.

4. Salesmen Reward: Under the straight salary method, salesmen’s rewards are not matched with their efforts. On the other hand, under the straight commission method, salesmen’s rewards are matched with their efforts.

5. Incentives to Salesmen: Straight salary method does not provide any incentive to the salesmen to do hard work. But straight commission method provides sufficient incentive to the salesmen to do hard work.

6. Efficiency: Straight salary method does not distinguish between efficient and inefficient salesmen. But straight commission method distinguishes between efficient and inefficient salesmen.

7. Control over Salesmen: Straight salary plan gives the management sufficient control over the salesmen. On the other hard, straight commission method does not give the management sufficient control over the salesmen.

8. Sales Costs: Under the straight salary method, sales costs are not matched with the sales. But under the straight commission method, sales costs are matched with sales.

9. Cost of Administration: The cost of administration of straight salary plan is less than that of straight commission plan.