The Truth About Trailing Commissions: What You Need to Know
When it comes to earning a commission in the sales world, there’s no such thing as a free lunch. All commissions come with a price tag- and that price is often referred to as “trailing commissions.” What are trailing commissions, and what do you need to know about them?
Trailing commissions are a type of commission that is paid to a salesperson not only for the sale that they make, but also for any future purchases made by the customer. For example, let’s say you sell a customer a new car. If that customer comes back to buy another car from you two years down the road, you will still earn a commission on that second purchase- even though you didn’t do any work to earn it! This can be seen as an advantage or disadvantage, depending on how you look at it.
On one hand, trailing commissions provide salespeople with a passive income stream- meaning they can continue to earn money even after they have made the initial sale. This can be helpful in situations where someone is looking to supplement their income or build up their savings. On the other hand, some people view trailing commissions as a way for companies to take advantage of salespeople. After all, you are essentially doing free work for the company if they continue to earn commission off of your customers!
At the end of the day, it’s up to you to decide whether or not trailing commissions are right for you. If you’re comfortable with the idea of continuing to earn money off of your past customers, then they could be a great way to boost your earnings. However, if you’re not comfortable with that arrangement, then it’s probably best to steer clear of them altogether. No matter what you decide, just make sure that you are fully informed about the pros and cons of trailing commissions before making any decisions!