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What is the Commission % as part of total sales comp?
In the technology/software space, what are some opinions regarding the optimal % that commision should represent as part of total sales comp (for an organization with aggressive growth targets)? 50%? 70%? Other?
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2 Answers
Nick, I think there are a lot of variables that go into an overall compensation package including volume, margin, sales cycle length, payment schedule, etc. Therefore answering your question specifically without details is hard.
However, generally speaking I what sales team members to make half their compensation from commission and half from base salary. The base has to be enough for them to cover their general living costs.
The sales goals have to be realistic enough that they are achievable and motivational as opposed to pipe dreams that will eventually be de-motivational.
Short-term contests with some financial reward can also keep the heat up during long sales cycles.
Good luck.
Nick,
I am a new user here on Focus, but found your question one that I tend to hear quite a bit. As a general rule, we tend to see plans in the technology/software space that vary greatly but tend to cluster in the 60/40 base to variable ratio range.
If you have aggressive growth targets but are uncertain about the sales potential of individual territories, you may want to consider a commission plan structure versus a sales incentive structure (http://www.netcommissions.com/blog/bid/121895/Sales-Compensation-Plan-Fundame...).
I can see its been about 16 months since you posted the question, how has everything turned out?
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