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4 Parts of a Winning Sales Compensation Plan

Following are the 4 essential components of a winning sales compensation plan:

Base Salary

The base salary is the foundation of your compensation plan and is typically a fixed amount that you pay to each salesperson on an ongoing basis. The base salary should be enough to attract, hire and retain top talent in your organization, but it shouldn’t be so high that it attracts unqualified candidates or becomes too costly for the company. It’s important to remember that there are other benefits besides cash compensation when evaluating whether a candidate will accept your offer of employment; therefore, don’t make assumptions about how much money they’ll need based solely on their current income level.

Performance Bonus (Profit Sharing)

A performance bonus is a great way to reward salespeople for achieving specific goals or quotas within a specified time frame (e.g., quarterly). However, it’s important to understand that profit sharing plans are typically more costly than commission-based plans because the company must pay out bonuses even if they’re not making a profit in any given quarter. Therefore, you should only use this type of plan when your business has consistently been profitable over the past several years and can afford to share some of its profits with employees who have contributed significantly towards helping achieve those results by exceeding their quota requirements during specific periods throughout the year.

Commission or Draws on Sales Volume (Sales Incentive Compensation)

Commission-based compensation plans are popular among many companies because they provide financial rewards for achieving specific goals or quotas within a specified time frame (e.g., quarterly). However, commission-based plans can also create some challenges if not properly designed and implemented such as increased turnover rates due to fluctuating commissions which may result in lower productivity levels from salespeople who aren’t receiving consistent payments each month or quarter depending on their performance levels at any given point in time during the year. Therefore, commission-based plans should only be used by companies with strong management teams who have developed effective strategies for monitoring production levels throughout the year while providing support through training programs and coaching opportunities as needed during periods when salespeople may struggle with meeting their quota requirements due to seasonal fluctuations in demand for products/services offered by the business (i.e., holiday shopping season vs summer vacation season).

Other Benefits and Perks

Other benefits and perks that you may choose to include in your sales compensation plan can include:

  • Base salary increases based on length of service (e.g., 2% increase after one year, 3% increase after two years, etc.)

  • Bonus opportunities for achieving specific goals or quotas within a specified time frame (e.g., quarterly) (Note: This is different than the performance bonus mentioned above because it’s not tied to profit sharing; therefore, this type of incentive should only be used when your business has consistently been profitable over the past several years and can afford to share some of its profits with employees who have contributed significantly towards helping achieve those results by exceeding their quota requirements during specific periods throughout the year.) Additionally, if you decide to implement this type of program then it’s important that you clearly define what these goals/quotas will be so there are no misunderstandings between management and salespeople about what they must accomplish before receiving any additional income from bonuses paid out under this program.

  • Vacation days/paid holidays Personal days

  • Sick leave

  • Health insurance

  • Dental insurance

  • Vision care Life insurance

  • Disability coverage Retirement savings plans

  • Stock options

  • Employee stock purchase plan

  • Company car or vehicle allowance

  • Cell phone reimbursement

  • Flexible spending account

  • Tuition reimbursement

  • 401k matching program

  • Profit-sharing retirement plan

  • Paid training programs

  • Professional development seminars

  • Seminars related to product knowledge

  • Training courses related to selling skills Training courses related to leadership skills

  • Other types of training as needed

In order to hire and retain top sales talent, organizations need to be flexible & transparent in their sales compensations! With increasing revenues & increasing number of sales reps, it becomes difficult to bring flexibility & transparency in sales compensations unless you use tools like Elevate.


With Elevate, you can plan, design & manage both commission plans as well as quota-based plans with the utmost ease.

Elevate aspires to bring transparency in sales compensation. Sales reps can view all details regarding their commissions’ payout, quota attainment & revenue goals. Leaders can track the performance of every team member, manage product-based & territory-based revenue targets.

Automate Sales commissions, focus on productivity!

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