Sales commission
Sales commission is the variable part of a salesperson's pay calculated from results, usually as a percentage of revenue, margin or the number of closed deals.
What it is
Most sales teams are paid in two parts: a fixed base and a variable part that depends on what the person brought in. Commission is that variable part. It tells people what the company values: volume, profit, new clients, repeat business or collected payments.
How it looks in practice
Common schemes: a flat percentage of revenue; a percentage that grows after the plan is reached; a bonus for plan completion; commission on margin instead of revenue; separate rates for new and returning clients.
An illustrative calculation: base pay plus 3% of revenue up to the monthly plan and 5% above it. A rep with a plan of 100,000 who sold 120,000 gets 3,000 + 1,000 = 4,000 in commission. In collection teams the variable part is often tied to the amount actually returned rather than promised.
Why it matters
The commission scheme is the strongest message a manager sends to the team. People quickly learn what pays and do more of it. A good scheme connects personal income with company results and keeps strong people. A bad one makes them leave or teaches them to game the numbers.
The typical mistake
Paying for something that can be inflated without real value: deals that are later cancelled, discounts that kill margin, promises that are never paid. Another mistake is a scheme so complex that nobody can calculate their own pay, which destroys trust. Pay for confirmed results, add a quality condition, keep the formula simple enough to explain in one minute, show people their progress during the month, and change the rules only with notice, never retroactively.
More in Signals
- Sales team motivation: what to pay for when sales happen in chatSales motivation works when the variable pay is tied to money actually paid, not to activity: message counts and time online are easy to inflate. You need a clear formula, a fair way of assigning clients and every rep seeing their own results. Non-cash motivation in chat means recognizing specific conversations, not saying generic words.
- How to grow a company: where to start when the money is made in chatsThe fastest way to grow a company is not new clients but the ones who already wrote: reply on time, take promises through to payment, bring back those who went quiet or bought once. That requires the client base and numbers to belong to the company rather than to individual reps, bonuses tied to money actually paid, and a leader who sees every week where the money leaks. A new ad budget only makes sense after that.