Two clinics can both pay "15% commission" and spend very different amounts on provider pay. The difference is what the 15% is calculated on.
Three common bases
Gross revenue
Commission on the list price before discounts. The provider is paid on revenue the clinic never collected. When promotions or member pricing are common, the clinic pays commission on money it gave away.
Net revenue
Commission on the price the client actually paid, after discounts, refunds and member pricing. The provider and clinic share the effect of discounts.
Margin
Commission on net revenue minus product cost. Provider pay reflects the true value created and encourages careful product use.
A worked example
A treatment lists at $600. A promotion reduces it to $480. Product costs $200.
- 15% of gross: $90
- 15% of net: $72
- 15% of margin ($480 − $200): $42
Across hundreds of treatments a month, these differences add up to a large amount.
What about package and membership sales?
Decide in advance how commission works when a package or membership is sold versus when sessions are performed. Paying commission at the time of sale on revenue that has not yet been earned can mean paying twice for the same work or paying for sessions never redeemed.
Card fees and financing fees
If a client pays through a financing program that costs the clinic a fee, consider whether commission should be calculated before or after it. Document whatever you decide.
Make the plan clear and written
Ambiguity about commission causes more disputes than the rate itself. A written plan should define the base, how discounts, refunds, touch-ups, packages and memberships are treated, and when commission is paid. Review the plan's design with an employment advisor, especially when changing it.
Choosing the right base
Many clinics find net revenue a fair middle ground. Margin-based commission aligns incentives best but needs accurate product cost per treatment. Whatever you choose, model last quarter's numbers under each option before deciding.
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