A heating and cooling shop wants more maintenance members before winter. The owner announces a $25 spiff for every membership a tech sells on a repair call, paid on the next paycheck once the first payment clears. Techs who never mentioned the plan start offering it on every no-heat call. That's a spiff doing its job: a small, specific reward that changes one behavior for a season.
Spiff vs commission vs bonus
All three are forms of performance pay, but they reward different things.
| Spiff | Commission | Bonus | |
|---|---|---|---|
| Paid for | One specific sale or action | A share of sales value | Hitting a goal over a period |
| Amount | Fixed dollars per unit | Percentage of revenue or gross profit | Fixed or tiered, per period |
| Best for | Nudging one behavior | Rewarding overall selling | Rewarding sustained results |
| Example | $25 per membership sold | 5% of completed revenue | $500 at $40,000 monthly revenue |
| Counts toward overtime? | Yes, if promised in advance | Yes | Yes, unless truly discretionary |
A commission rewards the size of the ticket; a spiff rewards the act. That's why spiffs work well for items whose value to the business isn't obvious from the price, like a membership whose real value is the next five years of tune-ups and repairs.
What do trade shops pay spiffs for?
| Spiff target | Why it's worth rewarding | Pay it when |
|---|---|---|
| Membership sold | Recurring revenue and a customer who calls you first | First payment clears |
| Replacement lead turned over | Biggest tickets in the business start with a tech's recommendation | The lead closes, not when it's created |
| Add-ons such as surge protectors, filters or water alarms | High margin, quick to explain | The invoice is paid |
| Review or referral that converts | Cheap marketing | The referred customer's first invoice is paid |
| Seasonal push, such as pre-winter tune-ups | Fills shoulder-season capacity | Visit is completed |
The common thread is paying for the outcome you actually want. A spiff per lead created gets you more leads; a spiff per lead that closes gets you more replacement sales.
How do you know if a spiff pays for itself?
Compare the extra gross profit the spiff produced with what you paid out. The hard part is "extra": some of those sales would have happened anyway.
Formula
| Illustrative 90-day membership spiff | Before spiff | With $25 spiff |
|---|---|---|
| Memberships sold on repair calls | 20 | 50 |
| Extra memberships over baseline | 30 | |
| First-year gross profit per membership (example) | $180 | |
| Extra gross profit | $5,400 | |
| Spiffs paid (all 50 sales) | $1,250 | |
| Return | ($5,400 − $1,250) ÷ $1,250 = 3.3× |
Two mistakes to avoid in this math. First, you pay the spiff on every sale, including the 20 you'd have made anyway, so count all spiffs as cost. Second, use gross profit, not revenue, or the spiff will look better than it is. For the long-run value of a member, run the numbers through the calculator below.
Free calculatorMembership program revenue calculatorSee what a maintenance membership program is worth over three years.Do spiffs count toward overtime?
Usually, yes. Federal rules exclude a bonus from the regular rate only when the employer keeps sole discretion over both whether it's paid and how much until near the end of the period. A bonus announced in advance to get people to work more steadily, rapidly or efficiently is part of the regular rate, and the rules say the label doesn't decide it.1 A spiff is, by definition, announced in advance, so it goes into the overtime math.
In practice: add the week's spiffs to straight-time pay and other commissions, divide by total hours, and pay an extra half of that rate for each overtime hour. Our article on hourly, commission and hybrid pay plans works through this with numbers, including bonuses paid monthly.
For withholding, the IRS lists bonuses, commissions, awards and prizes as supplemental wages, and its 2026 Publication 15 keeps the optional flat federal withholding rate at 22%.2
Manufacturer and distributor spiffs
Some equipment manufacturers and distributors run spiffs of their own, paid to the contractor or sometimes to individual salespeople for selling a particular product line. Treat these with care. Know who is paying, who receives it, and whether it pushes your team toward equipment that isn't the best fit for the home. Ask your accountant how any spiff paid directly to your employees by a third party should be reported, and tell customers plainly if a recommendation comes with an incentive attached.
How to run spiffs that keep working
Spiff rules worth writing down
- Exactly which item or action qualifies, by price book item where possible
- When it's earned: sale, completion or payment
- What happens if the sale is canceled or refunded, and for how long
- Who gets credit when two people are involved
- Start and end date, so it can be retired cleanly
- Which payroll period it lands in
Keep only a few spiffs running at once. When there are ten, techs stop remembering any of them. Retire spiffs once the behavior is routine, or when the numbers show they no longer move sales. A membership spiff is often worth keeping year-round; a surge protector spiff might not be.
How TradesWork handles spiffs
In TradesWork performance pay, a spiff is one of four rule types: a fixed amount per unit, per line or per membership sold, filtered by job type, price book category or specific items. Each rule pays when sold, when the job is completed, or as it's collected, and canceled memberships claw back only within the window you set. Techs see each spiff on My pay in the field app, worded like the rule that produced it.
Footnotes
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29 CFR 778.211, Discretionary bonuses, Electronic Code of Federal Regulations. ↩
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Publication 15 (2026), Employer's Tax Guide, Internal Revenue Service, section 7, Supplemental Wages. ↩
