There’s no doubt that you want a top-performing, motivated, and effective sales team selling your products or services. What you may not realize, though, is that the type of sales compensation you offer might play a big factor in the performance and motivation level of your reps. Show All sales compensation plans should push sales reps to find and pursue opportunities, whether individually or as part of a team, in order to increase revenue. But sales compensation plans vary widely in structure, and you need to ensure that you implement the right plan for your business goals and your team. Otherwise, your plan could end up hurting your efforts. To get you on the right path, here are the pros and cons of different sales compensation plans. Straight SalaryStraight salary is just what you’d expect: you offer your reps a yearly salary, and that’s it. No commission or any other type of compensation on top. Pros:
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Salary plus CommissionSalary plus commission is one of the most common sales compensation plans used in sales organizations. It combines a lower base salary with commission, typically on a percentage of sales, to arrive at total compensation. Pros:
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Commission OnlyCommission only compensation plans offer remuneration only on sales made. There is no guarantee of income if revenue isn’t generated. Pros:
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Profit Margin/RevenueRewarding your sales people based largely on how your company is performing is known as profit margin or revenue-based sales compensation plans. Pros:
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As you can see, all sales compensation plans have their pros and cons. Not every plan will be right for your type of organization. The size of your workforce, the products or services you sell, the age and stability of your company, the goals you have, and the type of sales people you want to attract will all need to be factored into your decision when designing a compensation plan. Rhys MetlerRhys is a tenacious, top performing Senior Sales Recruiter with 15+ years of focused experience in the Digital Media, Mobile, Software, Technology and B2B verticals. He has a successful track record of headhunting top performing sales candidates for some of the most exciting brands in North America. He is a Certified Recruitment Specialist (CRS) and has expert experience in prospecting new business, client retention/renewals and managing top performing sales and recruitment teams. Rhys enjoys spending quality time with his wife, son, and daughters, BBQing on a hot summer day and tropical vacations. What is a commission based salary?What is commission-based pay? A commission is a payment made to employees based on the sales they bring to your business. With commission-based pay, employees are paid a percentage of sales attributed to them. The commissions may be calculated based on gross profit, quota, or revenue.
What does it mean plus commission?The more you sell in a salary plus commission system, the more money you make through commission, and employers add your additional earnings to your paycheck.
What is base and commission?Base Plus Commission / Salary Plus Commission: This is the most common form of compensation in sales. With this structure, a salesperson will receive a pre-determined and fixed annual base salary. Commission earned is based on the number of completed sales.
How do you calculate commission salary?Typically, companies pay out a percentage based on total sales revenue. Commission can be calculated with this formula: commission = total sales revenue * commission rate. Base pay can also be incorporated into this equation by simply adding it to the commission earned.
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