How to Structure Commissions
How to Structure Commissions
Last week I wrote about Time Management for Sales Managers. As promised, here is the follow up on the best-case-practice for structuring your commission plan. Look at this grid below…
Based on $1,000,000 in sales
|
Plan |
Base |
Commission |
Total |
|
A |
$50,000/yr |
3% |
$ 80,000/yr |
|
B |
$40,000/yr |
10% |
$140,000/yr |
|
C |
$30,000/yr |
20% |
$230,000/yr |
|
D |
$ 0 |
30% |
$300,000/yr |
As I mentioned in an earlier post, I’m not a fan of base salaries. If you can afford to pay a base salary, you can afford to pay a commission. In this example, based on $1,000,000 in sales, there is a huge incentive to go 100% commission. You will have to adjust numbers to fit your own situation, but I think you’ll get the general idea. Study this chart, sketch out a possible scenario for your business, and feel free to give me a call to discuss.
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