You can use various settings at the Organization level to control the commissions employees earn for services they perform and sale items* they sell.
(Sale item* is a common term for services, products, memberships, packages, free services, and gift cards.)
This article covers the following sections:
- Organization Level Commission Settings
To configure Organization level settings for employee commissions:
- Ensure that you are at the Organization level.
- Click Admin > Organization > Organizations > Settings tab > Employee section.
- Select or specify your entries based on your requirement for employee commission-related settings listed in the following section.
- Click Save.
Organization Level Commission Settings - Employee Section
Employee commission settings at the Organization level have a direct impact on employee earnings through commissions. Refer to the following settings and the impacts they have on employee commissions.
- Adjust commission slabs per employee based on scheduled days: Controls whether you want to adjust commission slabs based on the number of scheduled days for which the employee comes to work.
Example: Assume you have a pay period of 15 days. An employee is on planned vacation for 5 days during this period. This means the employee has worked for 10 days.
- Commission slabs (job or employee level) are configured based on the revenue they generate during this period.
In such a case, this setting controls whether you want to adjust commission slabs based on the number of scheduled days for which the employee does come to work.
If the commission slab for Services is set to $1000 - $5000, award 2% as commission, and the employee generated a revenue of $800, the employee does not qualify for the commission based on the commission slab. But you want to consider that the employee generated the revenue in 10 days and want to award the employee commission accordingly. In this case, if you select this option, Zenoti calculates the commission proportionately and awards the commission.
- Allow commission type for slabs to be defined at employee level: Select this checkbox if you want to specify slab based commissions at the employee level - these slabs use either the highest qualified level commission model or cumulative commission model at employee level.
If this checkbox is enabled, the Commissions tab at employee profile level shows two options:
Calculate employee commission (for the selected employee based on one of the following options)
a) Use default configuration (Shows the setting as defined at the organization level in brackets - that is, Highest qualified commission level or Cumulative commission level)
b) Cumulative commission or Highest qualified commission level (which overrides the organization level setting for this particular employee)
Note: The type of commissions (highest or cumulative) applies to all item types (except for Product sales per guest and Product to service ratio that always use the highest qualified level).
Note: Zenoti considers the latest value of this setting during a pay period to calculate commissions for the employee.
- Employee Commission Income: Controls how Zenoti calculates commissions when commission slabs are defined at the job or employee level.
Example: If you have defined commission slabs for product revenue as:
$1000 - $2000 - Award 2% commission
$2001 - $3000 - Award 3% commission
$3001 - $4000 - Award 4% commission
Assume an employee generates a product revenue of $ 3500. In this example, the commission the employee earns depends on the setting selected at the Organization level.
a) If the setting Calculate using highest qualified commission level is set: Then, the employee gets the commission defined for the highest qualified commission level, that is 4% of 3500 = $140.
b) If the setting Calculate by cumulative commission level is set: Then, the employee earns commission for each commission slab that the employee qualifies for. In this example, 2% of 2000 + 3% of 1000 + 4% of 500. that is, 40 + 30 + 20 = $ 90.
Note that Zenoti considers the balance amount from each slab for calculation. Therefore, 2000 +1000+500=3500 (which is the employee's product revenue in this example).
- Show commission setting details (in Employee Commission Details Report): Displays details of settings you have enabled for employee commissions in the Employee Commission Details report, when you export it (to Excel, .CSV, or .PDF).
Example: The exported report shows details such as:
> Payroll start and end date
> Date on which payroll is generated
> Organization settings that are used to calculate payroll such as Commission slab setting (Calculate using highest qualified commission setting or Calculate using cumulative commission level)
> Free service revenue setting
> Product commission slab setting
> Product revenue
> Employee schedule details
> Employee job details
> Bonus and penalty details and
> Invoice details (closed invoices the employee was responsible for)
- Do not consider invoices from other centers for payroll in base center: Applies to employees working on deputation (or on loan) to other centers and whether their commissions must be considered in the base center or in the other center.
If this option is selected, it means that when an administrator runs the payroll for your center, Zenoti will not consider closed invoices of your employees on deputation to other centers in your center's payroll.
Example: Assume Chris is a regular employee of Pike Street Center and is on deputation to Park Avenue Center. This setting is selected at the Organization level. Chris has delivered services and sold items at both the centers and is therefore eligible to earn commissions at both centers. When the administrator of Pike Street Center runs the payroll report, the payroll only considers the closed invoices that Chris was responsible for in Pike Street Center. Chris' earnings through commissions at the Park Avenue Street are processed in the payroll for Park Avenue Street Center.
- Reverse commissions on refunds: Select this checkbox to reverse commission awarded earlier in case the item (product, service, membership, package) is refunded. For example, if a guest is unhappy with a product or a service and asks for a refund, and if this checkbox is selected, then Zenoti reverses or rolls back the commission already awarded to the employee.
If a guest returns an item in the same pay period (that is, if the guest returns an item before the administrator runs the current payroll) there is no impact on the Employee Payroll reports (Summary, Details, and Employee Dashboard) as the employee's commission is rolled back on Zenoti's backend.
If a guest returns an item in a later pay period (that is, if the guest returns an item after the administrator runs the current payroll), then such commissions that are reversed show as negative values in the Employee Details report and in the Employee Dashboard (Payroll) section.
- Allow rounding of commission adjustment in an invoice to maximum of 100%: Limits splitting commissions among two or more employees at the invoice level. At times, you may want to award one employee 200% commission (that is, double the amount of commission) while you may want to award the second employee only 50% or half the commission.
If this setting is selected, Zenoti enforces rounding off the commission adjustment to a maximum of 100%. In such a case, you have to split the commission into percentages such as 90% - 10%, or 80% - 20%, or 50%-50%.
- Allow product sales commission based on:
a) Product to service sales ratio (highest qualified commission level)
b) Product sales per guest (highest qualified commission level)
c) Product revenue (based on Employee Commission Income setting)
Controls how commissions are awarded to employees when they sell products. See the following section for details.
Note: The Employee Commission Details report shows the relevant details (in the exported reports) depending on the choice you make here, as long as the checkbox Show commission setting details (in Employee Commission Details Report) is selected.
- a) Product to service sales ratio (highest qualified commission level): If you select this option, Zenoti awards commissions to employees based on two factors - revenue from products and revenue from services (the employees perform). In Zenoti, this is called the product to service sales ratio.
Zenoti awards commissions based on the revenue slabs set up for product sales at the employee or job profile level. Organizations promoting both their services and products in equal measure can set up this model of product commissions. Product to service sales ratio (%Retail) = Product revenue/ Service revenue*100 in a given period
For example, assume you have configured the following:
If the product retail sale slab (%Retail) is 300% to 500% - Award 5% commission.
Employee A sells products worth $1500 and performs services worth $ 500. The retail percentage (Product revenue/Service revenue) is 300%.
Employee B sells products worth $1000 and performs services worth $500. The retail percentage (Product revenue/Service revenue) is 200%.
In this case, only Employee A earns the commission since she falls in the commission slab. Employee A’s commission is $75 (5% of the product revenue $1500). Employee B does not earn any commission in this case as she falls below the retail percentage slab at 200%.
- b) Product sales per guest (highest qualified commission level): If this option is selected, employees earn commissions based on product sales per guest. If you want to promote your products among more number of guests, you should enable this setting for your Organization.
For example, if Employee A sells 10 products to one guest and Employee B sells 10 products to 5 guests, then Employee A earns a higher commission because the sale of products per guest is higher (for Employee A).
- c) Product revenue (based on Employee Commission Income setting): If this option is selected, employees earn commissions based on the product revenue they generate during a given pay period (irrespective of the number of guests they sold the products to).
- Commission type (all items) for item level definition: Controls whether you want to award commission on the Sale price before discount or on the Revenue earned for sale items such as services and gift cards.
Example: If the sale price of an item is $100 and there is a discount of $20, and if the option Sale price before discount is selected, the employee earns a commission on $100. If the option Revenue is selected, the employee earns a commission on $80.
- Commission type for product and membership (Employee-Job definition): Controls whether you want to award commission on the Sale price after discount or on the Revenue earned for products and memberships that employees sell when commissions are defined at the Employee or Job levels.
Tip: You should have already set up employee or job level commissions for this option to work.
Note: Revenue numbers include deductions, if any (such as shop cost, labor cost).
Example: Consider this example.
Price of a product = $100
Discount = $20
Shop cost = $5
Now, if the option Sale price after discount is selected, the employee earns a commission on $80 (that is, 100-20).
If the option Revenue is selected, the employee earns a commission on $75 (because revenue numbers include deductions- that is, 100-20 = 80 and 80-5).
- Apply weighted price for service redeemed in a package for commission calculation: Controls whether package commission should be awarded on the price of the individual service (usually, higher price) versus price of the same service when bundled in a package (usually, a lower price that is called weighted price).
Consider this example. A service costs $100 but the same service when bundled into a package of four sittings costs $300 (which means, each sitting in the package costs $75 (that is, 300/4)). Note that $75 in this case is the weighted price for the service.
Now, when a guest avails this service in a package, should the provider earn commission on $100 or $75? If you select this setting, the provider earns commission on $75. If this setting is cleared, the provider earns commission on $100.
- Allow commission on custom package: Controls whether you want to award commission for employees who sell custom packages. You can select Yes or No as per your requirement.
- Factor for commission on custom package: Performs the same function as Commission Adjustment on a service (field). Typically, you use this setting to promote custom package sales by awarding more commission to employees who sell custom packages. You could therefore, set this field to 200% - which means that the provider earns commission on double the custom package price.
- Deductions on Commissions: Specifies deductions on commissions. While you award commissions to employees for items they sell or services they perform, at times, you may also want to deduct a certain amount or a percentage on these commissions because of the costs you incur.
High-end spas or salons typically award commissions in the range of 40-50 percent and for this model to work, you need to deduct your costs, else there is a high chance of your center incurring losses. Applying deductions, you can offset these possible losses.
Businesses apply deductions on commissions to recover costs such as internal cost, guest, labor, and shop costs, and cost to center. These deductions apply to services, day packages, and promo packages.
- Deduct internal costs for employee commissions: If this option is selected, you may deduct internal costs such as cost of advertising.
- Deduct guest costs for employee commissions: If there was a cost involved in getting a guest to your center, such as when a guest comes to you as a result of a marketing event (say, a campaign), you may want to deduct part of the cost of running the campaign from commissions employees earn. You can choose to deduct such costs:
a) For all guests
b) For new guests
Note: You can set up the deduction (as a percentage or a flat amount) from the:
a) Service level (Organization level > Admin > Resources > Services > Name of the service > General tab > Guest cost)
b) Employee level (Center level > Employee > Employees > Name of the employee > Services tab > Guest Cost)
c) Day packages (Organization level > Name of the day package > General tab > Guest cost)
- Deduct shop cost from commissions and Deduct labor cost from commissions: You can deduct shop and labor costs from service revenue before you calculate employee commissions.
a) Shop costs: Shop costs are costs borne by the business in providing a service such as rent or mortgage, internet and phone bills, cost of maintaining a website, marketing costs, and insurance costs.
b) Labor costs: Labor costs are the costs the business bears for employee resources while they perform services. These costs include costs such as payroll and other taxes and benefits.
If you select these options here at the organization level, you can see options to deduct labor and shop costs in the Services page and the Employee page. In Zenoti, therefore you can set up deductions for labor and shop costs as a percentage or a flat amount, from the following places:
a) Service level
b) Employee level
- Zenoti considers only closed invoices for calculation of commissions.
- If you set up labor and shop costs for deduction, Zenoti deducts these costs from service revenue before employee commissions are calculated.
How Zenoti calculates commission if shop and labor costs are defined
Commissions are calculated using the following hierarchy:
- If service commission is set to Flat value: Though the costs do not impact the service commission since it is a flat value, Zenoti deducts both, the labor and shop costs from service revenue to stay consistent in the Employee Payroll report.
- If service commission is set to Percentage of revenue: Zenoti deducts costs defined at the service level from the service revenue when an employee provides a service.
- If service commission is set to Commission settings defined in employee or job profiles: Zenoti deducts costs defined at the employee level from the service revenue when an employee provides a service.
Zenoti uses the costs defined at the employee level when the commission is configured at either employee level or job leveI.
- If commission is set to “employee or job profiles”, but cost is 0 at employee level: In such a case, Zenoti considers the costs configured at Service level for that service.
- If a guest takes multiple services on her first visit: Zenoti deducts these costs for all services where the cost has been configured. For example, if the guest takes a foot massage, arm waxing, and haircut on the first visit and if foot massage and arm waxing have labor cost configured and arm waxing and haircut have shop cost configured, then Zenoti deducts the labor costs for foot massage and arm waxing and shop cost for arm waxing and haircut while calculating commissions.
- Apply standard deduction for employee commissions: There could be some standard deductions that you want to apply in your organization that apply to all employees. For example, you may want to deduct the cost of running your center (rent you pay to run your center) proportionately from employee earnings. Zenoti deducts this amount from revenue employee generates before calculating commissions based on slabs.
- Show commission amount in payroll post invoice-level deduction: If you choose this setting, the commission amount you see in the Employee Payroll Summary report, Employee Payroll Details report, Employee Commissions report, and Employee Dashboard (Payroll section) will reflect the accurate commission amount after invoice-level deductions.
Organization Level Commission Settings - Memberships Section
As a business owner, you can choose how employees earn commission on recurring membership sale - either once, at the time of initial sale or with every recurring payment.
To award commission on recurring membership sale:
- Ensure that you are at the Organization level.
- Click Admin > Organization > Organizations > Settings tab > Memberships section.
- For the option Membership commission, select one of these:
a) One time at initial sale only
b) Every payment (initial sale, recurring payments, renewals, upgrades, and downgrades)
Note: This option is selected by default.
- Click Save.
Employees earn commission for the sale of recurring memberships based on this setting.
Points to Consider
- This setting is versioned. This means that when a membership sale invoice is created, Zenoti populates the Sale By field based on the current organization setting. If the org setting is changed after the invoice is created, the Sale By is not changed.
- When the recurring membership commission is set to One time at initial sale only:
a) Zenoti stops assigning the name of an employee in the Sale by field of recurring invoices, renewals, upgrades and downgrades.
b) Center-level revenue numbers will not match with Therapist Earnings unless you filter out the unassigned Sale by invoices.
- If commission setting is modified from One time at initial sale only
to Every payment, past recurring payments will anyway not have an employee name assigned in the Sale by field of the recurring invoices, so no commission is awarded.
- Consider this example for switching the setting. Your setting was set to Every Payment and commission was set to say $5 for every recurring payment. In this case, over a 12-month period, employee earns a $60 commission.
Now, you switch to One Time commission of $50, for a recurring membership that is already sold. Say, 3 months have passed, so employee has earned $15 till now. After the switch, the employee won’t get commission for rest of the 9 months.
The reverse case also holds true.
- If commission setting is modified from Every payment to One time at initial sale only, the change impacts all employee financial reports including Therapist Earnings report, Employee Sales report, Employee Commission report, Split commission report, Employee Performance Metrics report, Revenue by Employee report, Payroll Summary report, and Employee Commissions report with respect to sale of recurring memberships and commissions earned as a result.
- If you used setup fee route for one-time commission, you can make the switch to Every Payment and turn off the setup fee too.