When Roofing Sales Commission Is Eating Your Margin: A Pay-Plan and Funnel Fix

You closed a clean month. Revenue is up. The crews stayed busy, the showroom of completed jobs looks great on social, and your top rep just hit a number that would make a car salesman jealous. Then you sit down with the P&L and your stomach drops, because after the commission checks clear, the company kept almost nothing. The rep got paid. The lender got paid. The supplier got paid. You, the person carrying the warranty and the workers' comp and the truck notes, are the one eating the thin slice nobody wanted.

That feeling has a cause, and it is almost never "my reps are overpaid" in isolation. Commission eating into margin is a symptom of three things stacked on top of each other: a pay plan that rewards the wrong number, a price that was never built to carry the rep cost, and a funnel that makes your people work too hard for each signed contract. Fix one without the others and the problem comes right back next quarter.

This is the operator's walkthrough for diagnosing exactly where the money is leaking, rebuilding the commission structure so that what's good for the rep is good for the company, and tightening the front of the funnel so you're paying commission on jobs that were efficient to win in the first place. Real numbers, real worked examples, and the edge cases that wreck pay-plan rollouts.

First, get honest about what "margin" you're actually measuring

Most roofing owners who say commission is eating their margin are looking at the wrong margin. There are at least four different numbers that all get casually called "margin," and a rep, a sales manager, and an accountant will each mean a different one. Before you touch a pay plan, everyone in the room needs to agree on definitions, because a commission rate that looks generous against one number is reckless against another.

The four margins, defined plainly

• Gross revenue (the contract price). What the customer signed for. This is the number reps love to quote and the number that means the least about whether you made money.
• Gross profit on the job. Contract price minus the direct cost of producing that job: materials, labor (sub or in-house crew), dump fees, permits, equipment rental, and the credit-card or financing fee if the customer financed. This is the number a commission plan should orbit around.
• Contribution margin. Gross profit minus the variable selling cost of that specific job, the most important of which is the commission itself, plus appointment-setting cost, the cost of the leads consumed to produce the sale, and any sales-specific tools.
• Net profit. What's left after all of that and after overhead: office rent, your salary, software, insurance, admin payroll, marketing that can't be traced to a single job, trucks, and so on.

Here's the trap. A rep paid "10% commission" sounds cheap. Ten percent of a $14,000 retail re-roof is $1,400. Feels fine. But if that job carries 38% gross profit, you made $5,320 of gross on it, and the $1,400 commission is not 10% of your money, it's 26% of it. Then subtract the lead cost, the setter's cut, the financing fee, and overhead, and the commission you waved off as "only 10%" is a quarter to a third of the only dollars that were ever yours to keep.

Build the one-page job economics sheet

Before any pay-plan conversation, build this for a typical job at your company. Use your real averages, not a fantasy job.

Now the picture is concrete. The rep is paid $1,400. The company nets $1,250. Your salesperson out-earns the business on every single job, and that's before you account for the fact that you carry every risk on the job and they carry none. That is what "commission eating into margin" actually looks like on paper, and you cannot fix it until you can see it this clearly.

Run this sheet for at least three job archetypes: a clean retail re-roof, a storm/insurance restoration job, and your most common repair or partial. The margins are wildly different across those three, which is the single biggest reason a flat commission rate quietly destroys profitability. Hold onto these numbers, because every decision below references them.

Why flat percentage-of-revenue commission is the root cause

The most common roofing pay plan in North America is some flat percentage of the contract price, usually landing somewhere between 8% and 12% for a closer, sometimes higher for self-generated work. It's popular because it's simple to explain and simple to calculate. It's also the structure most responsible for the margin bleed, for four reasons that compound.

Problem 1: It pays the same for a fat job and a skinny job

A percentage of revenue is blind to gross profit. Two jobs at $14,000 pay the rep the same $1,400 whether one ran at 42% gross profit and the other got discounted, upgraded with freebies, and squeezed by a difficult tear-off down to 22%. The rep is indifferent to which one they sell. You are not indifferent. You make almost three times the gross on the first job. A revenue-based plan tells your best people that protecting your margin is none of their concern, because their check doesn't move when your profit collapses.

Problem 2: It rewards discounting with house money

When a rep drops the price $1,500 to close a wavering homeowner, the rep's commission only falls by $150 (10% of the discount). The company's gross profit falls by the full $1,500. The rep keeps 90% of the value of your concession. That asymmetry is exactly backwards. Your pay plan is paying the rep to give away your margin, because for them a discount is cheap and a lost deal is expensive, while for you the discount is expensive and a lost lead is just a sunk cost you've already paid.

Problem 3: It quietly inflates as ticket prices rise

Material and labor costs have climbed hard over the last several years, and contract prices climbed with them. A flat percentage means commission dollars rose in lockstep with revenue even though much of that revenue increase was just passing through higher costs, not higher profit. A rep selling a $22,000 job today on the same 10% earns far more than they did selling a $15,000 version of the same roof a few years ago, while your gross-profit percentage may actually be thinner. Revenue-based plans let cost inflation silently transfer to the sales team.

Problem 4: It ignores the cost of acquiring the lead

A flat plan pays identically whether the rep closed a referral that cost you nothing or a job that consumed four expensive marketed appointments and a re-quote before it signed. The rep's efficiency at converting your lead spend is invisible to their pay, so it stays invisible to their behavior. They'll happily burn ten appointments to close two, because they get paid on the two and you eat the ten.

None of this means commission is bad or that your reps are villains. People optimize for exactly what you pay them for. If the plan pays for revenue regardless of profit, you'll get revenue regardless of profit. The fix is to pay for the thing you actually want.

The fix, part one: move the commission base from revenue to gross profit

The single highest-leverage change is to stop paying a percentage of the contract price and start paying a percentage of the job's gross profit. This is sometimes called a "profit-based" or "margin-based" pay plan, and it realigns the rep's incentive with yours on every deal.

How gross-profit commission works

Instead of "10% of the sale," the rep earns, for example, 30% to 40% of the gross profit on the job, with gross profit defined exactly and in writing as contract price minus a published, agreed cost build (materials, labor, dump/permit, financing fee). The moment you do this, three good behaviors appear on their own:

• A discount now costs the rep proportionally. Drop the price $1,500 and the gross profit drops $1,500 and so does the rep's commission base, by a real, felt amount. Suddenly your closers hold price like it's their own money, because now it is.
• Selling the upgrade, the better underlayment, the additional accessory, the larger scope, all increase gross profit and therefore the rep's check. They start selling value instead of selling discounts.
• Fat jobs pay more than skinny jobs, so reps gravitate toward the profitable work and away from the margin-destroying discount-to-close reflex.

Worked example: same job, two plans

Using the job sheet from earlier, gross profit is $5,500.

Notice two things. First, on the clean job the gross-profit plan actually pays the rep more ($1,925 vs $1,400), which is how you sell the change to your team. Second, and this is the whole point, when the rep discounts, the gross-profit plan makes them feel 3.5x more pain ($525 vs $150). You've made holding price personally lucrative and made discounting personally expensive, without ever lecturing anyone about margin.

Set the rate by working backwards from contribution margin

Don't pick the gross-profit percentage out of the air. Decide what contribution margin you need the average job to clear after commission, then solve for the rate. If your average job runs 39% gross profit and you need to keep at least 22% contribution margin after all variable selling costs, you can afford to spend roughly 17 points of gross on commission plus lead and setter cost combined. Allocate that budget across the three variable costs and the gross-profit commission rate falls out of the math. This is the discipline most shops skip, and it's why their "competitive" rate was never affordable to begin with.

The transparency objection, and how to handle it

The most common pushback is "I don't want my reps seeing my costs." Understandable, but you don't have to expose true supplier pricing. Publish a standard cost for each system, a fixed, agreed material-and-labor figure per square or per job type that you use for commission purposes. The rep calculates gross profit against the standard cost, not your real invoice. Your actual buying power stays private, and you've also handed your team a clean, predictable way to quote their own commission on the spot. Most shops that adopt margin-based pay use standard costs precisely to keep real costs confidential while still aligning incentives.

The fix, part two: tier the rate so behavior bends toward profit

A single flat gross-profit rate is already a huge improvement. You can go one step further and tier the rate by the margin the rep actually delivers, which turns the pay plan into an active steering wheel rather than a passive split.

Margin-banded commission

Tie the commission percentage to the gross-profit percentage of the job. The richer the margin the rep protects, the higher the rate they earn on it. A simple band looks like this:

Now a rep who fights to keep a job at 44% gross profit earns 38% of a bigger pie, while a rep who discounts down to 28% earns 25% of a smaller pie, a double penalty that lines up perfectly with how the company experiences those two outcomes. The math does the coaching for you. Set the bands using your own job-economics sheet so that the top band is genuinely profitable for the company and the bottom band still clears your minimum contribution margin, never below it.

Guardrail: a margin floor with manager override

Put a hard floor in writing. Any job priced below a stated gross-profit percentage (say 25%) earns reduced or zero commission unless a manager signs off on the exception. This stops the death-spiral job, the one a rep gives away just to keep a streak alive, from costing you both the margin and a full commission. The override matters because there are legitimate strategic discounts (a neighborhood cluster, a referral source, a job that fills a gap week), and you want those decided by a manager who sees the whole board, not unilaterally by a rep protecting their pipeline.

Don't tier so steeply you create perverse incentives

A word of caution learned the hard way: if the jump between bands is too large, reps will manipulate the quote to land in a higher band, padding scope, mis-categorizing line items, or steering customers away from legitimately lower-margin but still-profitable work like repairs. Keep the steps moderate, audit a sample of quotes monthly, and make sure your repair and maintenance work still pays the rep something fair, or your team will simply stop selling it and you'll lose an entire profitable product line to your own pay plan.

The fix, part three: stop paying commission you'll later claw back

A quietly enormous source of margin leakage is commission paid on revenue that never fully materializes or on jobs that lose money after the sale. The pay-plan timing and the chargeback rules matter as much as the rate.

Pay on collected cash, not on signed contracts

If you advance full commission at contract signing and the job later cancels, shrinks, or the customer disputes and underpays, you've paid out on money you never kept. The cleaner structure pays commission in stages tied to cash collection: a portion when the deal is signed and the deposit clears, the balance when the job is complete and the final payment lands. This protects you from cancellations and from the rep who's great at signing but whose deals melt before they fund.

Define chargebacks before anyone's first check

Write the chargeback rules into the comp agreement and have every rep sign it. Spell out what happens when:

• A job cancels after commission was advanced (commission reverses against future earnings).
• A job's final cost overruns the standard cost because of a callback, a missed measurement, or a change the rep promised the customer for free.
• A warranty callback within a defined window traces to a sales-side promise or a scope the rep wrote wrong.
• A customer charges back a financed amount or the financing falls through after work began.

Be aware that commission chargebacks and deductions from earned wages are regulated and vary by state. Some states sharply limit an employer's ability to deduct from wages already earned, and the enforceability of clawbacks depends on a clear, signed, written agreement and on whether the commission was "earned" under your state's rules and the U.S. Department of Labor's standards. Have your agreement reviewed against your state labor department's wage-payment rules before you rely on it. The goal isn't to nickel-and-dime your team; it's to make sure you're not paying full commission on revenue that walks out the door.

Account for the cost of rework in the rep's number

If a rep consistently writes scopes that crews can't execute at the quoted cost, that's a margin problem that lives in the sales seat, not the production seat. Track callback and overrun rates by rep. A salesperson whose jobs routinely overrun standard cost by 8% is silently eating margin even on "profitable" deals, and the gross-profit-based plan only catches it if you reconcile against actual cost periodically rather than against standard cost alone. Reconcile quarterly and coach (or part ways with) the reps whose actuals consistently undercut their quotes.

The fix, part four: attack the real margin killer, cost per acquisition

Here's the part most owners miss when they fixate on the commission rate alone. The commission percentage is rarely the whole problem. The problem is how much total it costs you to produce one signed, profitable job, and commission is only one line in that stack. If your reps have to chase six bad appointments to find one good one, you're paying for six appointments, six tanks of gas, six hours of windshield time, and a demoralized rep, all to land one sale, and then you pay commission on top. The pay plan didn't eat your margin. The funnel did, and the pay plan just took the blame.

Do the cost-per-acquisition math honestly

Total what it actually costs to acquire one job:

• Marketing/lead spend divided by jobs closed (your true cost per acquisition from marketing).
• Setter and admin time per closed job.
• Rep windshield time and fuel, valued at a real hourly cost, multiplied by appointments-per-close.
• Re-quote and follow-up labor.
• Then the commission.

When you add it up, plenty of shops discover the commission is the smallest controllable line in the acquisition stack, and the appointments-per-close ratio is the line quietly draining the account. Cut appointments-per-close from 5 to 3 and you've often saved more real money than any commission cut would yield, while keeping your sales team paid well and motivated, which is the combination you actually want.

Sell more profit per appointment, not merely more appointments

If each appointment your rep keeps is more likely to be a roof that genuinely needs work, soon, and is therefore an easier, higher-margin close, your cost per acquisition falls without touching the pay plan at all. This is the difference between handing a rep a stack of cold addresses and handing them a route of doors where the roof is demonstrably near or past the end of its service life or was in the path of a storm hard enough to have done real damage. Same rep, same commission rate, far fewer appointments burned per signed job, and the jobs that do close skew toward legitimate, fundable scope rather than marginal repairs you discounted to win.

Where roof-condition and storm data tighten the funnel

This is the point where the targeting data we build at RoofPredict does real work on the margin problem, and it's worth being precise about what it does and doesn't do. RoofPredict reads aerial and satellite imagery to estimate a roof-age range for individual addresses, house by house, and models storm exposure per roof, which hail and wind events actually passed over a given property and how hard. It then ranks the doors, routes, and mailing lists so your reps and your canvass spend land first on the roofs that are aging out or that a storm most plausibly wore down. It also enriches your existing CRM or owned mailing list with those roof-age and storm signals, so the list you already paid for gets sharper rather than being replaced.

What that does to the commission-vs-margin problem is straightforward: it raises the share of appointments that sit on a roof with a real reason to buy, which lifts close rate and average margin per appointment, which drops appointments-per-close, which drops cost per acquisition. The commission line can stay generous, because the total acquisition cost behind each profitable job came down. You're paying your reps well on jobs that were efficient to win.

Honest limits, because targeting data oversold is worse than no data. A roof-age estimate is a range, not a birth certificate; imagery infers condition, it doesn't open up the deck. Storm modeling gives you odds and exposure, not proof that a specific shingle failed, and never a promise that any job will be approved by anyone. Nothing here replaces a rep climbing the roof and documenting what's actually there. What it does is point the rep at the right roofs first so fewer hours and fewer commission-bearing appointments get spent on doors that were never going to convert. It improves the input to your funnel; your sales process and your pay plan still have to do their jobs.

Putting it together: a step-by-step pay-plan rebuild

Here's the sequence to actually roll this out without a revolt or a stack of legal problems.

1. Build the job-economics sheet for three archetypes (retail re-roof, storm restoration, repair/partial). Get real averages from your last 30 to 50 jobs. Until you have these numbers, every rate you pick is a guess.
2. Set your minimum acceptable contribution margin per job. This is the line below which a job isn't worth doing. It anchors every rate decision downstream.
3. Define standard costs per system so reps can compute gross profit without seeing your true supplier pricing. Publish them. Update them on a schedule (quarterly) as material and labor costs move.
4. Choose a gross-profit commission rate, or margin bands, by working backwards from your minimum contribution margin and your budget for lead plus setter cost. Make sure the top band is genuinely profitable and the bottom band still clears your floor.
5. Write the margin floor and manager-override rule. Below a stated gross-profit percentage, commission is reduced or zero without sign-off.
6. Write the payout timing and chargeback rules, tie commission to collected cash, and have every rep sign the agreement. Have it reviewed against your state's wage-payment law and DOL standards first.
7. Model the change against last quarter's actual jobs before announcing it. Run every closed job from last quarter through the new plan and see what each rep would have earned. This catches the perverse incentives and the surprises while they're still on paper.
8. Sell the change to your team on the upside. Lead with the fact that on clean, well-held jobs the new plan pays more, show them the worked example, and frame it as "hold price and sell value and you make more," because that's true.
9. Tighten the funnel in parallel. Improve targeting so appointments-per-close drops. This is what lets you keep the comp generous, and it's the half of the fix that pay-plan-only operators forget.
10. Reconcile actuals quarterly. Compare standard cost to real cost by rep, watch callback and overrun rates, and adjust standard costs and coach reps accordingly.

A sequencing warning

Do not change the pay plan and overhaul the lead source in the same week and then try to read the results. If revenue dips, you won't know whether it was the comp change spooking reps or the targeting change shifting the mix. Stagger them by a few weeks and keep notes, so you can attribute cause and defend the decisions to your team with data instead of vibes.

Edge cases and what pros get wrong

Self-generated versus company-provided leads

A rep who knocks their own doors and generates their own pipeline has saved you the entire marketing line, so they reasonably earn a higher rate than a rep closing company-furnished appointments. The clean way to handle this is two rate schedules, a higher gross-profit share for self-generated work and a lower one for company leads, with a clear, non-gameable definition of what counts as self-generated. The mistake shops make is paying the same rate for both, which either overpays for company leads or underpays the hunters who fill your pipeline for free, and the hunters are the ones you can least afford to lose.

The storm/insurance restoration job

Restoration work has different economics and different rules, and the pay plan has to respect both. The job's value is whatever the insurer approves plus the homeowner's contribution, and the timeline to cash is longer, so the staged, paid-on-collection structure matters even more here. Be careful that your comp plan never incentivizes a rep to cross legal lines to inflate a job. Your salesperson's role is to inspect the roof, document the condition and storm damage thoroughly with photos and measurements, and prepare an accurate, Xactimate-aligned estimate to repair their own scope of work, then hand that documentation to the homeowner. The homeowner files the claim, and the insurer decides coverage.

What a commissioned rep must never do, and what you should never pay them to do: negotiate or "handle" the claim for the homeowner, interpret what the policy does or doesn't cover, promise a specific approval or payout, promise the deductible will be waived or absorbed, advertise a "free roof," or otherwise represent the homeowner against their insurer. That last bundle is unlicensed public adjusting in most states and it puts your license and your customer at risk. Build the do-not-say list into your sales training and your pay plan, and reward thorough documentation and accurate estimating, not claim outcomes you have no legal right to promise. A pay plan that pays on "approved" claim value can quietly push reps toward conduct that gets a contractor in real trouble, so structure restoration commission around the signed, documented scope and collected funds, not around a payout you didn't decide.

Sales managers and overrides

If you pay a sales manager an override on team production, make sure the override is on gross profit too, or your manager will coach for revenue and volume while your margin bleeds. The manager's incentive has to point at the same number the reps' does, or you've built a chain of command that's optimizing against you one level up.

Draws against commission

A draw (a guaranteed advance the rep "earns back" against future commission) keeps people fed during slow stretches and ramp periods, but an unrecoverable draw is just salary you're calling commission, and a recoverable draw that digs a deep hole will run your best new rep off before they ever produce. Cap the draw, define recovery clearly, and watch for reps perpetually underwater, that's a hiring or training problem wearing a comp-plan costume. A practical rule: set the draw at a level a competent rep clears with two average closed jobs a month, recover it only against future commission and never against base wages your state protects, and put a hard limit on how many consecutive months a rep can ride an unrecovered balance before the arrangement converts to a coaching conversation or a parting of ways.

The veteran rep on a grandfathered plan

The rep who's been with you eight years on a fat legacy revenue-based plan is often the single biggest margin leak and the scariest one to touch. Don't spring a cut on them. Bring them into the redesign, show them the job economics, and design a transition, often a blended rate for a couple of quarters, or grandfathering on existing pipeline while new deals move to the new plan. Losing your best closer over a clumsy comp change can cost you more than the margin you were trying to recover, so handle this one with a conversation, not a memo.

Bonuses and spiffs that quietly undo the plan

The well-aligned gross-profit plan gets silently sabotaged by a "sell 10 jobs this month and win the trip" volume spiff, because the moment a rep needs one more job regardless of profit, every margin incentive you built evaporates at the worst possible time. If you run contests, tie them to gross profit delivered or to held-margin percentage, not to raw job count or raw revenue, so the short-term game and the long-term plan pull in the same direction.

A simple monthly margin scorecard for the sales seat

You manage what you measure. Put these on a one-page scorecard per rep, reviewed monthly, and most of the margin problems surface before they hit the P&L.

That last row is the headline. If commission is running at, say, 45% of gross profit across the team after all the fixes, you still have a structural problem, either the rate is too high, the jobs are too thin, or the funnel is too expensive. If it's running in the low-to-mid 30s on healthy-margin jobs, your sales engine is paying for itself and your reps are getting paid well, which is exactly the equilibrium you want.

Two more profit-protecting plan structures worth knowing

The gross-profit base plus margin bands solves the majority of cases. Two additional structures are worth having in your back pocket for specific situations, because the right pay plan for a five-rep retail shop is not the right plan for a 30-rep storm operation, and copying the wrong model is how shops end up back where they started.

Profit-pool / shared-pool plans for tight-knit teams

Instead of paying each rep purely on their own deals, you fund a commission pool from total gross profit delivered by the sales team and distribute it on a points system that weights individual gross profit, held margin, and team contribution. The upside is that it kills the lone-wolf behavior where a rep hoards a hot neighborhood or refuses to hand off a lead they can't service, and it makes senior reps willing to mentor juniors because the pool rewards lifting the whole team's margin. The downside is real and you should respect it: pool plans can let a weak rep coast on the group's results, and they're harder to explain. Reserve them for small, high-trust teams where everyone can see everyone's numbers, and always keep a meaningful individual-performance component so your best closer never feels they're subsidizing dead weight.

Per-square or per-job flat plus a margin bonus

Some high-volume storm shops pay a flat dollar amount per square or per completed job, then layer a quarterly bonus tied to the team's or rep's held gross-profit percentage. The flat base keeps the math dead simple for reps moving fast through a hail zone, while the margin bonus claws back the discipline a pure flat plan lacks. The trap to avoid: if the flat-per-job number is set without reference to job profitability, you've recreated the revenue-plan problem in a different costume, because the rep is again indifferent to whether a job is fat or thin. Tie the bonus tightly enough to held margin that the rep can't ignore it, or the simplicity will cost you the same margin a flat percentage would.

Match the plan to your sales cycle and rep tenure

New reps in their first 90 days need a recoverable draw and a simpler plan so they can survive the ramp and learn the product before the full margin-banded structure applies. Veterans who've internalized your pricing can handle the full banded plan and the margin floor without hand-holding. Storm reps working a fast, perishable hail season need speed and clarity; retail reps working a 30-day consultative cycle can absorb more nuance. The mistake is one rigid plan for everyone regardless of tenure or sales motion, which either crushes new hires before they produce or bores your veterans into leaving for a competitor who'll pay them on profit.

What changes in the first 90 days after the rebuild

Set expectations with yourself and your team about the order in which results show up, because the lag between the change and the payoff is where most owners lose their nerve and revert.

• Weeks 1 to 3: Expect noise and questions. Reps re-learn how to quote their own commission against standard costs. Some will test the margin floor and the override. Hold the line and answer every "what would I have made on this deal" question with the modeled numbers you already ran.
• Weeks 4 to 8: Discounting starts to fall first, because it's the behavior most directly tied to the rep's check now. Watch average discount rate and average gross-profit percentage per job on the scorecard; these move before close rate does.
• Weeks 8 to 12: Mix shifts. Reps lean into higher-margin scope and value-selling, and if you tightened targeting in parallel, appointments-per-close starts dropping. Cost per acquisition follows it down.
• Quarter close: Reconcile standard cost against actual cost by rep, review the full scorecard, and adjust standard costs and bands for the next quarter. This is also when you spot the rep whose actuals consistently undercut their quotes, a problem the standard-cost-only view hid.

If revenue dips slightly in the first month, that is often the plan working, not failing: you've stopped buying low-margin revenue you were never keeping anyway. Judge the rebuild on contribution margin and net profit, not on top-line revenue, or you'll undo a good change for the wrong reason.

The mindset shift that makes all of this stick

The owners who solve this stop thinking of commission as a cost to be minimized and start thinking of it as a price they pay for a specific, measurable output: a signed, fundable, profitable job won efficiently. From that frame, the question is never "how do I pay my reps less." It's "how do I make sure every commission dollar buys margin instead of just buying revenue," and "how do I lower the total cost of producing each profitable sale so the commission line is comfortable rather than terrifying."

That reframe is why the four fixes work together. Pay on gross profit so the rep's interest and yours converge on every deal. Tier or floor the rate so the plan steers behavior toward profit on its own. Tie payout to collected cash and write clean chargebacks so you're not paying on revenue that evaporates. And tighten the front of the funnel, with better targeting so fewer appointments and fewer commission-bearing hours get spent on roofs that were never going to convert, so the whole cost-per-acquisition stack shrinks and the commission line stops being the thing that keeps you up at night.

Do all four and the math changes permanently. Your reps make good money on good jobs. You keep real net profit. And the next time you close a strong month, the P&L confirms what the activity already told you, that the company got paid too.

If the funnel half of that fix is where you're stuck, that's the part where pointing your reps at the right roofs first, the ones aging out and the ones a storm most plausibly wore down, does the heavy lifting. That's the data RoofPredict builds: a roof-age range and a per-roof storm-exposure model that ranks your doors, routes, and lists and enriches the CRM you already own, so your commission dollars land on jobs that were efficient to win. See how the targeting works at https://roofpredict.com/, run it against your own market, and judge it against the one number that matters, your cost to produce a profitable, signed job.

FAQ

Should roofing commission be based on gross profit or gross revenue?

Gross profit, in almost every case. A percentage of revenue pays the rep the same whether a job runs at 42% or 22% gross profit and only costs them a tenth of any discount they give, so it rewards discounting with your money. Paying a share of gross profit (commonly 30% to 40%) makes the rep feel discounts proportionally and pushes them to sell value, which aligns their check with your margin on every deal.

What is a typical roofing sales commission rate?

Revenue-based plans commonly land between 8% and 12% of the contract price for a closer, with self-generated work paid higher. But the rate that matters is commission as a percentage of gross profit, where a 10% revenue rate can quietly equal 25% to 30% of your actual gross profit on a thin job. Set your rate by working backwards from the minimum contribution margin you need each job to clear, not by copying a market percentage.

How do I switch reps from a revenue-based to a gross-profit-based pay plan without losing them?

Model the new plan against last quarter's actual jobs first, then lead the conversation with the upside: on clean, well-held jobs the gross-profit plan usually pays more than the old revenue plan. Use standard costs so reps never see your true supplier pricing. For veteran reps on rich legacy plans, design a transition such as a blended rate for a couple of quarters or grandfathering existing pipeline, rather than springing a cut by memo.

Can I legally charge back commission if a roofing job cancels?

Often yes, but it depends on a clear, signed, written agreement and on your state's wage-payment laws, which vary and can sharply limit deductions from wages already earned. Tie commission payout to collected cash rather than to signed contracts, spell out chargeback triggers in writing, have every rep sign, and have the agreement reviewed against your state labor department's rules and U.S. Department of Labor standards before relying on it.

Why does commission feel like it's eating my margin even when revenue is up?

Usually because contract prices rose with material and labor inflation while gross-profit percentage stayed flat or thinned, so a flat-percentage commission grew in dollars without you making more. It's also because commission is only one line in the cost of acquiring a job; if appointments-per-close is high, you're paying for lead spend, windshield time, and re-quotes on top of commission. Measure all-in cost per acquisition rather than the commission rate alone.

What is a margin floor and why do I need one?

A margin floor is a stated gross-profit percentage below which a job earns reduced or zero commission unless a manager signs off. It stops the death-spiral deal, the one a rep gives away just to keep a streak alive, from costing you both the margin and a full commission. Pair it with a manager override so legitimate strategic discounts (a neighborhood cluster, a referral source) are still possible but decided by someone who sees the whole board.

How does better lead targeting reduce my commission cost?

It lowers appointments-per-close. If more of the appointments your reps keep sit on roofs that genuinely need work soon, close rate and margin per appointment rise, so fewer commission-bearing hours get spent on doors that never convert. That shrinks the whole cost-per-acquisition stack, which lets you keep commission generous while still protecting net profit. The commission rate often isn't the real problem; the appointments-per-close ratio is.

How should I pay commission on storm and insurance restoration jobs?

Use a staged, paid-on-collection structure because the timeline to cash is longer, and base the commission on the signed, documented scope and collected funds, not on a claim payout you have no legal right to promise. Your rep's job is to inspect, document damage thoroughly, and prepare an accurate Xactimate-aligned estimate to repair their own work, then hand it to the homeowner who files the claim. Never pay reps to negotiate the claim, interpret coverage, promise approval, or erase a deductible, that conduct is unlicensed public adjusting in most states.

Should self-generated leads be paid a higher commission than company leads?

Yes. A rep who generates their own pipeline saves you the entire marketing line, so a higher gross-profit share for self-generated work is fair and keeps your best hunters motivated. Run two rate schedules with a clear, non-gameable definition of what counts as self-generated. Paying the same rate for both either overpays for company-furnished appointments or underpays the people filling your funnel for free.

What metrics should I track to keep commission from eroding margin?

Build a monthly per-rep scorecard: average gross-profit percentage per job, average discount rate, appointments per close, all-in cost per acquisition, standard-cost-versus-actual variance, callback/overrun rate, self-generated versus company-lead mix, and the headline number, commission as a percentage of gross profit. If that last figure runs in the mid-30s on healthy jobs, your sales engine pays for itself; if it's in the mid-40s or higher, the rate, the job margins, or the funnel needs work.