Sales Commission

A portion or percentage of each sale that is paid directly to the sales organization, a sales person or someone who has arranged the sale in reward for the sale being transacted.

Sales commissions are often dictated by industry or company structure. A large company may have the ability to fund a draw or a salary while a leaner, smaller organization may prefer straight commission.

Commissions are wonderful ways to have people paid for performance. However, they must attract a certain type of dynamic person that is willing to take risks in exchange for rewards. Some find these people highly self confident, while others find them braggadocios. Finding star commission sales people can be a challenge. May talk a good game but never deliver.

Be careful with whom you hire. Some commission sales people seem willing to do anything to close a sale and then let the operations people solve the problems that may incur. When you run across this type of commission sales person, get rid of them fast, they will harm your company delivering bad services.

Remember, most of your profits come from second, third and ongoing sales. Rarely from one shot deals.

Also keep in mind, when you hire great salespeople on commission, many times, highly successful sales persons can wind up making more than senior management. Many times, egos get in the way and you end up getting rid of a sales star to keep senior management happy. Yet, without sales an organization ceases to have income.

Budget: This is a tough one: 5% - 30% of gross sales