Stop Guessing on
Sales Commissions
For sign shops under $2M ARR, complexity is the enemy. We analyzed the industry to find the single most effective structure for profitability and growth.
The Industry Landscape
Current Adoption Rates
We surveyed common practices in the custom manufacturing and signage space. While "Gross Revenue" seems popular due to simplicity, top-performing shops are shifting rapidly toward profit-based models to protect margins against inflation and material cost volatility.
The "Revenue Trap"
45% of shops pay commissions on Total Revenue. This is dangerous. If a rep discounts a job to win the sale, they still get paid the same, but the shop's profit evaporates.
The "Profit Shield"
35% of shops (and growing) pay on Gross Profit (GP). This aligns incentives: Reps only make money when the shop makes money. This is the SignShopOS recommended standard.
Why the "Revenue Model" Fails
Compare two identical $10,000 jobs. In the Revenue Model, the rep makes $500 regardless of the profit. In Job B, where margins slipped to 15%, the shop actually loses money after overhead, yet the rep still gets paid.
- ✘ Encourages discounting to "win the deal"
- ✘ Ignores material cost fluctuations
- ✘ Can result in negative net profit on jobs
The SignShopOS Recommendation
of Gross Profit
Paid upon payment collection
We believe in being opinionated. For shops under $2M, ignore sliding scales and tiered bonuses. Stick to a flat 10-20% of Gross Profit. This ensures you never pay sales commission on materials or outsourced labor.
Financial Impact Analysis
Comparison of a Sales Rep's annual earnings vs. Company Net Profit under both models. The GP Model (Blue) protects the company during low-margin periods while offering reps higher upside on profitable custom work.
Profitability Matrix
This heatmap visualizes the "Safe Zone" for commissions. SignShopOS automates this logic. Darker blue areas represent optimal profit/commission balance. Red areas are where revenue-based models bleed cash.
Ready to standardize?
SignShopOS includes the "GP Commission" logic out of the box. No PHD required. Set your percentage, track your costs, and pay your team fairly.