Designing an effective salary plus commission structure involves several considerations:
Base Salary: Determine a reasonable base salary that ensures financial security for employees while being sustainable for the business. Commission Rate: Set a commission rate that is attractive yet feasible. Common rates range from 5% to 20% depending on the industry and sales cycle. Performance Metrics: Clearly define performance metrics such as sales targets, revenue goals, or customer acquisition numbers. Ensure these metrics are measurable and achievable. Commission Caps: Decide whether to cap commissions to manage costs. While caps can protect the business, they may also limit employee motivation. Payment Schedule: Establish a clear commission payment schedule, whether monthly, quarterly, or annually, to maintain transparency and trust.