7 years ago
April 13, 2017

4 Types of Sales Commission Plans

There are many different ways you can be paid in the sales industry. This blog post outlines 4 common Types of Sales Commission Plans for sales professionals.

Claire McConnachie Recruiter
Claire McConnachie

One of the unique aspects of a sales career is that there are many ways you can get paid for your efforts. While some sales jobs are salaried, a large portion have a commission component, allowing you to be paid for your performance, an appealing pay structure for those who are willing to go above and beyond to close deals and meet sales goals.

However, there are many factors that can impact salary expectations when on commission plans – what you are selling, the industry, and the type of sale are all factors that require consideration.

4 Types of Sales Commission Plans

To help you gain a better understanding of the type of sales commission plans that are being used, we’ve put together the following list:

1. Commission on gross profit:

Under this form of commission, you will receive a commission percentage of the gross profit on a sale. So, the higher the profit margin on the sale, the more commission you will earn.

2. Sales revenue commission:

You receive a pre-defined percentage of all the sales you make. So, the more sales you make during a pay period, the higher the commission cheque you will receive.

3. Placement fees:

This is a set fee you will receive per sale. For example, if the placement fee is $10, you will receive $10 each time you make a sale, incentive for you to sell as many units as possible.

4. Performance gates:

The more you sell, the higher commission percentage you will receive. Often, there are a number of revenue tiers, and each time you achieve a certain number of sales or revenue targets, your commission will increase.

In addition to the plans mentioned above, there are also many hybrid versions that use elements of each.

It’s important for you, as a sales rep, to have a deep understanding of the commission plan that is part of your compensation package. Know what is required of you and how commission can impact your pay before accepting a sales role.

Regardless of the commission structure used by an employer, “the worth of a commission plan is based on two factors: The products or services being sold and the sales professional who is doing the selling,” says Thomas Phelps on the balance.

Learn More About Sales Commission and Pay Structures

Get more info about common compensation plans for sales reps by reading these blog posts:

Top 5 Common Ways Sales Professionals Are Paid

Top 4 Ways to Structure Your Sales Compensation Plan

SalesForce Search is a sales recruiting company which specializes in the recruitment and placement of sales professionals. We recruit sales people in every sector of the economy including, software, manufacturing, financial services and medical devices. Find the right sales person for your organization, start your search here.

Claire McConnachie Recruiter

Claire McConnachie

Claire has 4+ years of experience in sales and recruitment. As a Director of Client Services, her main objective is to connect great people to great companies by building strong relationships with both top clients and candidates in the sales industry. She specializes in sales roles of all seniority levels for both enterprise and start-up clients North American wide. When Claire isn't networking with top talent, she enjoys being outdoors, traveling and spending time with friends & family.