KAS Sales Article

The Different Ways That Sales Reps. Are Compensated

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:

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. Article Continued

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