Sales Compensation Plans

Base Salary + Commission – What’s the Optimal Mix?

Posted by David Wallace on September 14, 2021

The debate is ongoing about what percentage of total compensation should be base vs. commissions.  Ideally, you want to pay enough base salary so that your sales rep doesn’t need to worry about meeting basic obligations such as food, rent/mortgage and car payments. But you want to avoid paying too much.  You don’t want your […]

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Sales Compensation Plans – Why Pay a Base Salary?

Posted by David Wallace on September 1, 2021

I see many postings by companies looking to hire sales professionals on straight commission.  Their logic is that if a sales representative is good, the rep will have no problem “eating what they kill.” Sounds too good to be true, huh? Well it is, because you usually “get what you pay for.”  Let’s look closely […]

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How Much Commissions Should I Pay?

Posted by David Wallace on February 18, 2020

When designing a sales commission plan, you need to take into account your expected cost of sales as a percentage of the total revenue. The cost of sales has two parts, a fixed component (salaries, benefits, car allowances, etc.) and a variable component (commissions, awards, bonuses, etc.). The graphic below shows sales commissions as a […]

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Element 6: Drive Specific Performance

Posted by David Wallace on December 19, 2019

Effective sales managers motivate their sales team to achieve higher performance levels that are specific to strategic success. They often employ three tactics: clear communication of expectations and strategy, incentive compensation and non-monetary incentive programs. Clear communications — If you clearly identify a goal and lay out a strategy or path to the goal, your sales […]

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Can I Recover an Outstanding Draw When My Employee Quits?

Posted by David Wallace on August 24, 2018

I’ve recently received a number of questions about recovering outstanding draws when an employee leaves a company. I’ve heard from both sides of the issue, employer and employee. This week, I received the following note: I am an employer with an employee owing a large amount on his recoverable draw. I now find he is being […]

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A Question about Draw and Commissions

Posted by David Wallace on June 14, 2016

Today, I got the following question from a sales rep about the repayment of their draw. I am paid a $2,000/month draw and required to sell $22,500 in services each month.  I am paid 15% commission on all sales.  This has been the case since I started 5 years ago.  I consistently meet and exceed […]

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Some Observations on Sales Compensation Plans

Posted by David Wallace on November 16, 2010

I apologize for not having posted to this blog for a while.  In March, I agreed to lead the turn around of a business in the coin handling (high-speed sorting, counting, dispensing) industry.  Much of my time has been devoted to that endeavor. Last weekend though, Norm Eagle — Director of Sales for Meta Health Technology, sent […]

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Sales Compensation Plan – Real-Life Example, Part 2

Posted by David Wallace on January 28, 2010

In our last post, we read about the negotiations a new business sales rep was having with her employer. Here is the conclusion.

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Sales Compensation – Real Life Example

Posted by David Wallace on January 25, 2010

Last week I had an email exchange with one of my readers. This sales rep was in the process of negotiating (and re-negotiating) the sales compensation package. I thought you might be interested in the exchange.

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Sales Compensation Plan – Draw Against Commission

Posted by David Wallace on November 19, 2009

When you bring a new sales representative into a territory, he will often ask about a “draw.”  The first time you hear the term, you may not know what it is or why it’s important.  A draw is a pay advance against expected earnings or commissions.  It can be important to both your sales representative […]

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