Arizona State Board Nail Technology Practice Exam

What type of compensation is most likely for someone working solely on a commission basis in a salon?

1. A flat rate salary

2. Revenue share

3. Commission-based income

4. Hourly wage

The correct answer is: Commission-based income

In a salon environment, someone working solely on a commission basis is compensated based on the sales they generate or the services they provide. This type of income structure incentivizes employees to maximize their performance and client satisfaction, as their earnings directly correlate with their ability to attract and retain clients. Commission-based income allows for variability where high-performing individuals can earn significantly more than fixed salary employees, as there is no cap on potential earnings based on individual effort and success. The other options reflect different compensatory structures that do not align with a purely commission-based model. A flat rate salary provides stability but does not reward individual performance, while revenue share typically involves a division of overall business income and is less common in salon settings. An hourly wage offers consistent pay per hour worked, regardless of sales performance, which is not suitable for someone who relies on commission as their sole source of income.