Share on Google Plus Share on Twitter 6 Share on Facebook Share on LinkedIn Share on PInterest Share on Fark! Share on Reddit Share on StumbleUpon Tell A Friend (6 Shares)  
Printer Friendly Page Save As Favorite View Favorites View Stats   No comments

General News

Seven Different Ways That Sales People Are Compensated

By (about the author)     Permalink       (Page 1 of 2 pages)
Related Topic(s): ; , Add Tags Add to My Group(s)

View Ratings | Rate It

opednews.com

Become a Fan
  (1 fan)
- Advertisement -

Entering the world of sales means that you will also be entering the world of commission. Having a salary that is partially or wholly linked to a commission means that your job performance is directly linked to your paycheck. That means as an employee, you have more control over your earning potential.

Depending on your contract, it may even be possible to earn an uncapped amount based on how good of a salesperson you are, and how successful you are at executing your employer's sales goals.

However, key to earning money on a commission structure is knowing and understanding the different commission structures. Finding the right commission plan for you involves knowing your strengths and weaknesses, assessing your long-term work ethic, and carefully negotiating a contract that will best suit your style and compensation needs.

The following are the most common commission structures in sales, and each structure's pros and cons.

1. Straight Salary:

With this compensation method, the amount of money that can be earned per year is determined up front. An employee's pay cannot be changed unless the contract is re-negotiated.

Pros: Your salary is in no way impacted by your sales performance, and you can rely on having a certain amount of money in the bank every month. 
Cons: There is no incentive to excel, and it is easy to become complacent about your job. A great salesperson may also realize he/she could earn more with a commission-based structure.

2. Salary Plus Bonus:

- Advertisement -

This is one of the most reliable pay structures in the sales world. An employee who agrees to this method of compensation will receive a pre-determined salary each pay period. At specific interval(s), an employee will also receive an additional bonus if performance hits or exceeds earning goals.

Pros: Pay is not impacted by performance. 
Cons : Earnings are somewhat capped. A talented employee who is successful in completing sales may earn less with this structure than with a commission-based structure

3. Base Plus Commission/Salary Plus Commission:

This is the most common form of compensation in sales. With this structure, a salesperson will receive a pre-determined and fixed annual base salary. Commission earned is based on the number of completed sales.

Pros: You're always guaranteed a steady stream of income from your base salary. 
Cons: The commission rate will probably be lower than the commission rate tied to a salary that is straight commission.

- Advertisement -

4. Straight Commission:

Straight commission means there is no base salary. An employee earns a percentage of each sale, but this is the only way to make money.

Pros: The amount of income you earn is entirely under your control. 
Cons: Pay is not tied to hours worked. If you cannot close sales, you will not earn any money.

Next Page  1  |  2

 

About Ken Sundheim: 31 year-old business owner of an executive search firm by the name of KAS Placement based in New York City. KAS Placement was started in 2005 from studio apartment by the CEO and now has clients from over 30 countries in 100 different industries . As a business writer, Ken's articles have been syndicated or published in: WSJ.com, Forbes.com, NYTimes.com, USAToday.com, (more...)
 

Share on Google Plus Submit to Twitter Add this Page to Facebook! Share on LinkedIn Pin It! Add this Page to Fark! Submit to Reddit Submit to Stumble Upon


Go To Commenting

The views expressed in this article are the sole responsibility of the author and do not necessarily reflect those of this website or its editors.

Follow Me on Twitter

Contact Author Contact Editor View Authors' Articles
Related Topic(s): ; , Add Tags
- Advertisement -

Most Popular Articles by this Author:     (View All Most Popular Articles by this Author)

Why Good Grades Are Important To Start A Successful Career

Seven Different Ways That Sales People Are Compensated

8 Huge Misconceptions Regarding Social Media

John D. Rockefeller Teaches The Young Entrepreneur

A Condensed History of Social Media

Comments

The time limit for entering new comments on this article has expired.

This limit can be removed. Our paid membership program is designed to give you many benefits, such as removing this time limit. To learn more, please click here.

Comments: Expand   Shrink   Hide  
No comments