Opinions on this comms structure?
What are your thoughts on this commission structure?
For context, the base salary is set at 30k.
The commission is structured based on annual sales thresholds, where we earn a percentage on every sale:
- Up to 50k: 6%
- 50k – 100k: 10%
- 100k – 150k: 15%
- 150k and above: 25%
Your commission structure seems well thought out and incentivizes higher sales effectively. Here are some thoughts:
Progressive Incentives: The tiered approach encourages employees to push for higher sales, as they can see immediate rewards for reaching the next threshold. This can motivate high performers to aim for significantly higher targets.
Flexibility: The fact that commissions are calculated over the calendar year means that sales reps can have fluctuations in their performance without facing immediate penalties, allowing them to plan their strategies accordingly.
Competitive Rates: The percentages seem competitive, especially at the higher tiers. A 25% commission on sales over 150k can be a strong motivator for top salespeople, potentially attracting talent to your organization.
Challenges for New Sales Reps: For new sales reps or those not yet reaching the higher tiers, the initial commission rates might feel low. It may be worth considering a ramp-up period or additional support for new hires to help them reach those thresholds sooner.
Overall Compensation: Given that the base salary is 30k, the commission structure has the potential for significantly higher earnings, which is appealing. It might be beneficial to provide clarity around how commissions impact total compensation to ensure everyone understands the earning potential.
Market Competitiveness: If possible, it may be worth benchmarking this commission structure against industry standards to ensure it remains competitive to attract and retain top talent.
Overall, if communicated effectively and supported with sales training and resources, this structure can drive strong performance and company growth.