What Is a Spiff? - Definition & Overview

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  • 0:01 Definition of a Spiff
  • 0:35 Examples of Spiffs
  • 1:46 Ethical Issues
  • 2:23 Lesson Summary
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Lesson Transcript
Instructor: Shawn Grimsley
Have you every wondered why a salesman keeps pushing a particular brand? It may be due to spiffs. In this lesson, you'll learn what spiffs are and the ethical issues related to them. A short quiz follows.

Definition of a Spiff

A spiff is bonus money paid to salespeople for meeting a specific sales goal. Manufacturers of products often provide spiffs. A spiff is also referred to as push money. At the end of the relevant period when the spiff is offered, the salesperson will submit proof of the sales to the manufacturer, and the manufacture will cut a check. Of course, a spiff is a form of compensation and will have to be reported on your tax return.

Examples of Spiffs

Let's look at few examples of spiffs. Let's say that you work as a shoe salesman in an upscale department store with an inventory of over 100 different dress shoes. A shoe manufacturer is running a promotional event during the weekend and has offered to pay $5 for each pair of shoes sold during the event. You work your tail off over the weekend and sell 75 shoes. You submit your sale results to your manager, who forwards it to the manufacturer. A couple weeks later, you receive a check for $375.

Sometimes the spiff may be based upon a graduated scale. For example, let's say you work in an appliance store. A new manufacturer is trying to gain market share and is offering to pay salespeople at your store $10 for each sale of a Class A washing machine sold, $20 for each sale of a Class B washing machine, and $30 for each sale of a Class C washing machine in a 30-day period. You sell 10 Class A machines, 6 Class B machines, and 3 Class C machines for a total spiff payment of $310.

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