Know-How Exchange : Research/Metrics

Usually the objective in a sales position is to close sales, so the commission is based on a percentage of sales. If there are other requirements, then they can be added ... but the focus should still be on closing sales (if that's the primary function of the job).

As a side note, sometime there are different commission rates for different items in the line you're selling. For example, if you are selling both capital equipment and consumables, then there might be a different percentage assigned to the capital equipment than to the consumables.

But either way, the metric that makes most sense for you and for the company is probably sales.

What am I missing?

The commission rate varies according to the industry. For some technology products to can be as high as 25% for commodities it can be as low as 5%.

If you would like to provide some details off line, I may be able to assist. I can be reached via my profile.

The question is whether there is recurring sales. From your side you want to get commission on repeat sales for a set period of time.

Michael

Commission can vary a lot depending on the product/price point/industry/etc. So speaking in general terms, we have a quarterly quota and our sales execs receive a commission based on whether or not they hit their quote. For instance, <100% quota = x%
100-125% = y%
>125% = z%
where x < y < z
Regarding recurring revenue, we only pay commission on recurring revenue if the sales exec is managing the account.

I agree with the others - commissions vary greatly based by industry, so we are currently unable to give advise.

The basics though is there should be some target pay that is you are full time sales and sell a certain amount, your base pay and commission together adds up to a certain amount (which is usually comparable to what a decently paid salary non-sales person makes). If you sell more, you do better. If you don't reach the target, you do worse.