There are numerous ways to structure commission for salespeople and there’s no right choice for every unique business, the Entrepreneur.com article “Setting Up the Perfect Compensation Plan for Your Sales Team” explains. Remember that you get what you pay for, and the cheapest option might not be the most profitable. Offering better compensation should not only boost overall sales, it will help you recruit and retain more qualified personnel. Then again, you don’t want to overpay for sales that were largely going to happen regardless of technique. It’s all about finding the perfect balance. Don’t be scared to test different approaches and adjust as you go. Check out these options and see if you can find the one that fits your business best:
Profit-based: Commission is based on profit margin on sales. All sales are not created equal, and employees are rewarded for selling products/services that make the business more money.
Revenue/Quota: Compensation is determined strictly by volume sold, whether it’s based on a scale or simply meeting a quota.
Balanced: Margin, revenue, and a third component, like quota attainment are combined to determine the compensation level.
Team: All employees receive a bonus when the team quota is met.