The base salary is also an important part of a sales commission plan
A sales manager or sales director has to always find the right combination of base salary and commissions for sales representatives. There are different scenarios and characteristics that influence in adjusting a sales rep’s base salary to achieve a good commission mix. Here’s a quick guide on how to define a suitable salary for your sales reps.
Let’s start by defining what a base salary is: a fixed amount of compensation that salespeople receive, regardless of their performance or the deals they close. One undeniable thing is that it should cover basic living expenses, but at the same time, you want to avoid paying so much that your sales reps don’t worry about making the extra efforts to increase their sales.
Keep in mind that no sales rep receives a salary for “just showing up”. Therefore, your sales commission plan should be clear in establishing the activities for which reps are paid a base salary. Also, base salary should be paid for the completion of administrative and other tasks associated with the generation of business volumes.
One of the ways you can estimate a salary is trying to target it at about one-third of the total compensation of 100% quota completion. This ratio can change according to the level of total on-target earnings and the nature of the sales process. When the total on-target earnings is above $300 K or the sales process is less than one month, it is a good decision to offer a maximum salary of 25% of the total target earnings.
Remember to always establish a base salary and commission mix that ensures reps’ freedom, competitiveness and security. Find the right balance between salary and commissions, and allow Blitz, the best commission tracking software, to automatically manage these plans for you.