How to setup payment structure for commission only sales reps?

money for commission reps imageThe payment structure for commission sales reps is organization specific. It varies in accordance with the sales jobs. One thing is for certain, those who wish to motivate their sales force can do nothing better than providing an attractive commission structure. A straight percentage of the sales price is an ideal method for making payments to the representatives. In scenarios where there are no straight prices available, it is possible to go for a fixed percentage of the gross margins. This makes better sense too because giving the commission only sales reps an independence in negotiating the final sales price signifies improved business.

This system motivates the independent representatives to manipulate sales at higher prices.In other words, the agents will refrain from selling the product at lower rates simply to facilitate closing deals.  Being paid a fixed percentage of the gross margins signifies that the commission sales reps become entangled with the well-being of the organization indirectly without actually becoming a part of it. From the very first it is necessary to go for a marketing agreement with the representatives with regards to the commission structure. This does away with confusions and hard feelings in the future.

The commission structure of the commission sales reps can be setup by taking into consideration certain factors. This includes the amount of new business which is being brought in by the representative. For example, the revenue being generated from new customers can be commissioned at comparatively increased rates. Also, there may be separate bonuses given to the agents for every new signup. The sales performance can be compared on a yearly basis with new businesses commissioned separately at higher rates. All these strategies included in the commission structure motivate the agents to bring in new leads and increase sales.

Sometimes the structure of the commission being paid to the sales representatives can be based on specific products or the product ranges. Some of the reasons for this may be the difficulty involved in selling certain items compared to others. Also, the age of various product lines may be an important factor, or the profitability issues related to it.  On product lines which are more profitable, higher commission rates can be given. Similarly when products are being sold in bulk, higher rates can be given to the representatives. Other criteria to be taken into account for commission sales reps payment set up include differing conditions of business and type of customer focus.