What 10% from dollar one actually means
Thresholds, tiers and clawbacks quietly cost producers six figures a year. Here is how to read a commission plan before you sign it.
Ten percent from dollar one is the most quoted phrase in freight forwarding recruiting, and one of the least examined. The percentage is the headline. The definitions underneath it decide what you actually earn.
Ten percent of what
Gross profit is not a fixed term. Ask what is deducted before the calculation: overhead allocation, credit insurance, bad debt reserve, chargebacks for detention, or an internal margin split with the origin office. A plan paying 10% of a heavily deducted number can be worth less than 7% of true GP.
- Who defines the deduction list, and can it change without your signature?
- Is house-to-house margin credited to you, or split with the destination station?
- Are you paid on invoice or on cash collection, and what happens at ninety days?
The threshold problem
Many plans pay from dollar one only after a threshold is cleared — and the threshold resets. Annual, quarterly, or on the anniversary of hire: each reset date changes your effective rate materially. A quarterly reset on a seasonal book can erase an entire strong quarter's upside.
Model the plan against your last two years of actual GP, month by month. If the number surprises you, it will surprise you again in December.
Account protection is the real term
The clause that matters most is rarely negotiated: what happens to your commission when an account is reassigned, when it is designated house, or when you leave. Get the reassignment rule, the house-account definition, and the post-termination payment window in writing before you accept.
- Is there a cap, a soft cap, or a 'review' above a certain number?
- Is the plan document attached to the offer letter, or issued later?
- Is there a clawback on unpaid invoices, and after how many days?
Producers rarely lose money on the percentage. They lose it on the definitions.