I’ve always been fascinated by the power of sales and how it can make or break a business. When managing content for a leading sales training company, I used the opportunity to learn everything I could about the sales world. I spoke to leaders and reps firsthand, enquiring about their vision, challenges, struggles, compensation, sales commissions, and more.

 

Regarding sales commissions, I clearly remember what Jassi Singh, head of sales training at TALSMART, casually said in our first few conversations: “A well-structured commission plan is a bridge between ambition and achievement.” He implied sales commissions were not just about rewarding results but also powerful tools to align motivation, drive performance, and foster a culture of growth within the sales team.

This inspiration has stayed with me, and since then, I’ve kept going deeper into what goes into crafting sales commissions. In this blog, I’ve compiled everything I’ve learned about determining the best sales commission structure for your sales team or yourself.

Table of Contents

• What is a sales commission?
• Why is a sales commission important?
• What is a fair commission rate for sales?
• Sales Commission Structures With Examples
• What is a sales commission agreement?
• What is the sales commission structure?
• How to Put a Sales Commission Structure in Place
• Sales Commission Tips
• Sales Commission Rates
• Average Sales Commission Rates by Industry
• Sales Commission Agreement Templates

The easiest way I understand sales commissions is they’re like a carrot at the end of the stick. Typically, commissions for sales push reps to close deals and surpass targets. The same commissions act as potent tools for leaders to inspire teams, manage performance, and drive business growth.

What is the sales commission structure?

A typical sales commission structure formally outlines how much an organization will pay its salespeople for each sale. I’ve seen leaders put in quite some work, factoring in several aspects to plan a well-rounded sales commission structure.

This includes factors like:

• How much of their budget they can allocate for sales commission.
• How much they’ll pay for different levels of sales output.
• Employees’ base salaries.
• Any potential bonuses or incentives they’re willing to include.

When I was discussing sales commission structures with Sim Aulakh, founder of EstablishCred, he shared his mantra: “The best commission structures align individual goals with company success.”

For context, Aulakh explained they set clear KPIs for their reps, like driving guaranteed placements for new clients or nurturing long-term partnerships. This ensures they see how their efforts directly contribute to overall revenue growth. By tying commissions to measurable outcomes, such as boosting placements in top-tier outlets by 15%, they give their team the highest incentives to meet and exceed expectations.

While this is Aulakh’s approach, the ideal commission structure may differ depending on your company’s unique needs. Do you want to learn how to create a sales commission structure that marries your company interests and individual goals? Let me walk you through a step-by-step guide that I would follow.

How to Put a Sales Commission Structure in Place

From what I’ve learned, my ideal approach to creating a well-rounded sales commission structure would involve the right mix of research, combining what I’ve found and communicating it well. Here’s a step-by-step rundown.

Step 1. Review annual sales goals.

I’d start by reviewing the big picture: the company’s annual sales goals. This would clarify where the company wants to go, the revenue potential, and any gaps in the pipeline. It would also highlight areas where my team can improve. Such clarity is essential to designing the right sales commission structure.

For instance, let’s assume one of the company’s goals is to increase the sales of a new service by 15% while retaining 30% of current customers. I would explore a combination of different commission structures for such an objective. Perhaps introduce a residual commission plan for customer retention and an absolute commission plan to encourage selling the new service. I’ll be talking in detail about these later.

Step 2. Evaluate each sales role for commission.

Every salesperson on a team is unique, and I’ve found that their roles often evolve, especially in diverse organizations with multiple products and channels. Given that, next I’d look at each role closely — things like how they source leads, close deals, and their overall performance feedback.

While doing this, I’d try to ascertain where the commission could drive the most impact and tailor the commission structure to focus more on those areas. I’ve seen firsthand how much this helps ensure the sales commission plan is effective and every salesperson feels valued for their contributions.

Step 3. Review budget and revenue goals.

Budget constraints are always part of the equation, right? So, before making any sales commission promises, I’d also dig into the sales budget numbers. Some aspects I would think about include:

• How much can the business realistically afford to pay in commissions?
• How can I use the sales commission plan to help the team drive revenue growth?

My efforts would then focus on ensuring that the commission structure motivates the sales team and is simultaneously sustainable for the business.

Step 4. Check KPIs for each sales position.

Sales goals are another team motivator and help sales reps measure their performance. I’d plug in efforts to have reps engage with these numbers regularly, not just during monthly meetings. I’ve found this handy tool to simplify calculating essential KPIs like deal size, win rate, and commission rate.

I’d investigate these numbers for each team member and role to identify current sales performance patterns. I’d also examine individual performance and overlaps in territory, schedule, product choices, etc. This insight would steer me toward a sales commission structure that effectively rewards the team for their efforts.

Check out our free Sales metrics calculator.

Step 5. Develop an initial commission plan.

So far, I’ve primarily discussed my approach to research for developing sales commission frameworks. With that in place, my next step would be putting it all together to create the first draft of the commission plan.

For this, I’d balance different needs, such as the sales team’s expectations, the company’s strategic goals, and the stakeholders’ input. Then, I’d choose the best-suited sales commission structure and build a flexible plan — after all, sales goals are moving targets, right?

Once I have a simple and easy-to-understand sales commission plan draft, I’d give myself time to step back and reflect on it. In my experience, I’ve rarely seen a perfect sales commission plan in the first step. Once I identify any shortcomings, I’d tweak it until it feels right.

Step 6. Review the sales commission proposal with stakeholders.

The next stage is introducing the new commission structure, which is a significant shift for any company, both financially and culturally. I’d want full support from all key stakeholders for this, so I’d plan my presentation and present it clearly, using data, visuals, and examples to explain decisions.

I’ve seen that the best leaders are open to feedback at this stage, even when it’s hard to hear. And that’s because, often, these conversations lead to valuable refinements that strengthen the plan. So, I’d mirror that. After all, this is all about collaboration and ensuring that everyone, from the leadership to the sales team, sees the value in the structure I’m building.

Step 7. Decide on timing.

Timing makes or breaks a sales commission plan.

I first realized this when Barry Stingmore, the head of sales at Eleven Writing, pointed out to me, “An annual performance objective may be appealing for its administrative simplicity, but sales teams can quickly become demotivated if they realize three months in that they’ll never hit quota.”

He had a fair point. I delved deeper to note that timing has two aspects:

• When you plan to launch.
• When the teams receive their paychecks.

While there’s no magic formula for timing, the best bet is to work with key teams to determine the best launch date — whether it’s tied to the fiscal year or another company milestone. As for when commissions will be paid, it’s best to collaborate with the finance team to set a clear and consistent schedule. This way, everyone will know what to expect.

Step 8. Start offering sales commissions to your team.

This is one of the most exciting and nerve-wracking steps. I’ve learned that transparency is critical when sharing a commission plan. So, in the spirit of that, I’d go for a structured rollout instead of one-on-one conversations to simultaneously present the plan to the entire team.

While presenting, I’d prepare well beforehand to answer any questions in as much detail as possible. I would do everything possible to ensure every team member understands the plan and feels confident about what’s next.

Now that I’ve shared my ideal approach to working around a sales commission structure, let me share some sales commission pro tips I’ve accumulated.

Sales Commission Tips

With all my research on sales commissions, one resource that particularly stood out to me is Marc Wayshak’s book The High-Velocity Sales Organization. Drawing from Wayshak’s insights, my observations, and the suggestions I gathered from experts, here are some tips on creating an effective commission structure.

1. Don’t cap salaries.

Salary caps are the highest salaries an employee can make at a company. Capping decreases the earning potential of your salespeople. I’ve figured this isn’t the best strategy for motivating people to do their best. The best sales management teams always support their team and want individuals to make as much as possible in return for their hard work.

2. Get it right the first time.

I can‘t emphasize this enough: Sales compensation doesn’t have room for do-overs. Take my word for it — each time you introduce a new compensation plan, you’ll move your sales team’s goals and targets, diminishing your reps’ morale and motivation. So, do your best and spend extra time to get it right at the onset.

3. Keep it simple.

Ensure the compensation and commission plan is clear. This will ensure the commission structure is easy to implement and without loopholes.

Do you want to hack around this? If I were to check simplicity, I’d ask myself if a salesperson could fill in these blanks quickly: If I do X, I will make $Y. If they don’t get it right, it’s a sign to simplify things.

4. Focus on the right products.

I’ve learned that not all products are created equal in commission-based sales. While letting reps focus on their preferred products boosts engagement, it’s also essential to consider the bigger picture when choosing products. After all, sales commissions also impact supply chains, profit margins, and sales turnover. So, I’d suggest prioritizing products aligning with team strengths and business priorities.

5. Connect commissions to business goals.

Sales goals directly impact business strategy. Many people are involved in these processes, and I’ve seen firsthand how this can create a situation where different teams have divergent priorities.

In that vein, a super valuable approach I’ve found is using financial goals as a starting point for defining the sales commission structure. This helps ensure the team focuses on the right priorities.

6. Inflate targets from requirement.

I owe this pro tip to Derek Jankowski, the head of sales at Arketa. He pointed out to me that “quotas should be higher than the business needs your team to deliver.”

In his experience, sales organizations that consistently hit their business goals give their sales reps a quota of at least 20% higher than the business goal. Jankowski explained that the expanded quota allows reps wriggle room to take PTO, sick days, or just have a lousy month without risking the business.

7. Keep reps in mind when adjusting quotas and territories

Sales quotas are excellent tools for letting reps know what to aim for, and territories help simplify complex markets. However, though valuable, these approaches can present unique challenges for individual reps.

So, when building your commission structure, I’d stress that you account for these differences. Whether it’s balancing workloads or recognizing distinct market dynamics, tailor quotas and territories to individual circumstances to create a fairer and more effective system.

8. Use data to guide decisions.

Make data your go-to resource for building and refining commission plans. Historical performance metrics can offer a solid foundation. I’d swear by them to ensure the sales plan is fair and achievable.

Beyond planning, I would also rely on data to track how the team responds to the commission structure over time. This will help adjust strategies, keep everyone motivated, and drive growth.

So far, I’ve shared my steps for creating a well-rounded sales commission structure and pro tips. When you get into the game, it also helps to have a fair knowledge of the fundamentals. Let me take you through that, in case you’re unfamiliar.

Sales Commission Rates

Sales commission rates are the percentage of profit or any other compensation sales reps get to meet goals. Goals might include making a sale, meeting a quota, or succeeding as a team.

There’s no exact science to determining that figure, but referencing average commission rates for your industry is a good starting point.

Let’s look into these in detail:

1. Base Salary Plus Commission

The base salary plus commission plan is the most conventional commission structure. With this plan, salespeople receive a base salary plus commission. The standard salary-to-commission ratio is usually around 60:40, with 60% fixed and 40% variable.

When to Use It: This structure is ideal for companies where sales rep retention is critical to the sales organization‘s success. The company actively invests in each rep’s success while encouraging their performance.

Sales Commission Rates Example: Base Salary Plus Commission

With a base salary plus a commission plan, a salesperson working for a high-end retail outlet might earn a base salary plus 5% of sales.

Pro tip: This combination of security and rewards often motivates sales reps to grow.

2. Straight Commission Plan

With this plan, sales reps’ income comes directly from their sales — no base salary.

When to Use It: This structure is best suited for startups or businesses lacking reliable access to capital. In many ways, it amounts to a pay-as-you-go plan, which often suits firms that lack the resources to provide competitive base salaries.

Sales Commission Rates Example: Straight Commission

With a straight commission plan, a sales rep at a B2B SaaS startup might earn a 15% commission on every sale. For example, if they land a deal worth $10,000, they would earn $1,500 on the sale — but they wouldn’t receive any base compensation beyond that.

Pro tip: High-performing sales reps typically thrive in environments set by this plan, but the structure doesn’t lend itself to stability.

3. Relative Commission Plan

With a relative commission plan, a rep’s typical commission for sales is directly proportional to how much they hit a set quota. That compensation comes on top of a base salary, giving reps more safety net than a straight commission plan.

When to Use It: This plan is the more secure answer to a straight commission plan. It‘s still directly tied to performance, but it doesn’t alienate reps who might be running into trouble, leading to less turnover.

Sales Commission Rates Example: Relative Commission

As you can see in the example above, the quarterly deal quota is $120,000, and the rep meets only 75%. So, they receive the same percentage, or 75% of the quarterly commission, in addition to their base salary.

Pro tip: This commission structure is great for more complex organizations. It offers an opportunity to reward every rep, even if their pipelines look wildly different. For example, I’ve seen some territories pull in more sales than others. This works great for those cases. You can adjust the quota by territory and align the commission with that territory. This way, the commission structure rewards reps for putting in equal effort. This structure can also flex with changing business goals while remaining relatively stable for sales employees.

4. Absolute Commission Plan

An absolute commission plan pays reps for hitting set goals and performing specific activities, like acquiring new customers. An absolute commission structure can help incentivize underperformers like the relative commission plan. That said, the emphasis is less on revenue and more on activity.

When to Use It: This strategy is most often employed to help direct sales reps’ focus. If a business needs to improve its numbers for a specific activity, it’s a good bet to use an absolute commission plan that revolves around that activity. However, I’d say it’s a big no if your deal size is lower than the flat commission amount.

Sales Commission Rates Example: Absolute Commission

A salesperson working with an absolute commission plan might receive a flat $ commission for every new customer they acquire — regardless of deal size. As you can see in the example above, the rep is paid an absolute commission, irrespective of the revenue each customer generates. Since this is calculated at $500 per new customer, they get $2500 for five customers, over and above the base pay.

Pro tip: This structure is easy for sales reps to understand and deliver on. The more intuitive the commission plan is, the more likely it is to motivate your team to perform.

5. Straight-Line Commission Plan

A straight-line commission plan rewards salespeople based on how much or little they sell. As the name implies, it‘s rooted in a straight correlation — a trend that typically holds even after reps meet their quota. It’s one of the better ways for businesses to encourage underperformers to meet quota. At the same time, it doesn’t slow overperformers down.

When to Use It: A straight-line commission plan works best for organizations that want to incentivize reps to reach their full potential.

Sales Commission Rates Example: Straight-Line Commission Plan

Like a sales rep working within a relative commission plan, a salesperson working within a straight-line commission plan will receive compensation proportional to how much of their quota they hit. The difference is that commission earnings would continue after reps meet their quota.

In the example above, the rep has achieved sales above the quota. So, they’re compensated proportionally for the superlative results. This includes the payment of commission to the extent they’ve closed business — in this case, 104% of the quota. So, they’re paid 104% of the typical commission for sales.

Pro tip: To make the most of this plan, ensure your business has the resources necessary for an uncapped commission structure.

6. Tiered Commission Plan

A tiered structure encourages reps to put in extra effort by providing higher commissions as they hit substantial sales milestones. Reps can be paid increasing commissions as they meet their quota, exceed it, and continue to close more deals than expected.

When to Use It: A tiered commission plan is ideal for organizations with salespeople who consistently reach (but don’t exceed) their goals. It also offers more control over commission rates than the straight-line commission plan.

Sales Commission Rates Example: Tiered Commission

As you can see in the example, with a tiered commission plan, a rep might receive:

• 5% commission on all sales up to $50,000
• 7% on sales between $50,000 and $100,000
• 10% on sales $100,000 and above

Pro tip: Tiered commission structures require careful alignment between different parts of the business. For example, if a specific product or type of client brings in higher-value deals, other teams must be ready to meet potential increased demand in those areas.

7. Territory Volume Commission Plan

With this commission structure, salespeople work with clients in clearly defined regions. The team operating in each specific territory gets paid on a territory-wide, team-oriented basis rather than one revolving around individual sales.

When to Use It: A territory volume commission plan suits businesses with presences in multiple territories. It’s also ideal for team-based organizations that want to fortify specific service areas.

Sales Commission Rates Example: Territory Volume Commission

As you can see in the example above, if a team of five generates $750,000 in sales within their territory at 10% commission, they would split the money and receive $15,000 each.

Pro tip: This sales commission plan relies on teamwork and shared responsibility for relationship maintenance. This strategy could be a good fit if your team has a long purchase cycle with many touchpoints to close a transaction.

8. Recoverable Draw Against Commission Plan

With a recoverable draw against a commission plan, a sales rep receives their commission in advance. It usually comes out at the beginning of a payor sales period as a predetermined lump sum. At the end of that sales period, that lump sum or “draw” comes from that rep’s total earned commissions.

When to Use It: A recoverable draw against commission plan is typically used to get reps off the ground in some capacity. It often compensates newly hired reps, ramping them up as they onboard. It could also be a good choice for a rep acclimating to a new territory.

Sales Commission Rates Example: Recoverable Draw Against Commission

With this commission plan, a sales rep might receive a $15,000 draw at the beginning of a given quarter. If they only reach 75% of their quota, they’d pay $3750 of that $15,000 back to their employer.

Pro tip: This strategy guarantees some income to sales reps as they ramp up in a new territory or role. However, the recoverable aspect of this commission can be confusing.

For example, some employers might want to recover this draw immediately or cap these payments. Others will wait a set period to collect. Deciding on recovery timing early on is essential to maintaining strong employee relationships.

9. Non-Recoverable Draw Against Commission Plan

A non-recoverable draw is essentially a fully guaranteed commission stipend. Like its recoverable counterpart, it starts with a firm giving its reps a predetermined lump sum. But with a non-recoverable plan, reps aren’t expected to pay any of that money back.

When to Use It: This plan isn‘t particularly sustainable or motivating. It’s typically used as a short-term measure during company, industry, or broader economic uncertainty to ensure that sales reps have a stable source of income.

Sales Commission Rates Example: Non-Recoverable Draw Against Commission

With a non-recoverable draw against commission plan, a sales rep‘s employer would give the rep $15,000, assuming they’ll hit the quarterly quota. If they don‘t, the employer can’t recoup that draw.

Pro tip: This strategy can help a business maintain long-term beneficial employee relationships during stressful times.

10. Residual Commission

A residual commission structure is based on the long-term value of individual accounts. With this structure, salespeople who close deals continue to receive commission from those accounts on an ongoing basis — so long as they continue to generate revenue. This particular structure can have higher stakes than most.

On one hand, salespeople can build a breadth of solid, productive income streams over time. On the other, losing an account — for reasons that might have nothing to do with the salesperson who landed it — can mean a sizable commission hit that might be hard to recover.

When to Use It: This structure is best for businesses that build long-term client relationships, like ad agencies or consulting firms.

Expert perspective: Stingmore favors this commission structure “for service-based companies as it encourages the sales team to consider longevity when qualifying leads and reduces the temptation to close ‘poor fit’ deals that reps know will churn in a few months.”

Sales Commission Rates Example: Residual Commission

A sales rep who works within a residual commission plan might bring in a large account. If that account pays a quarterly recurring payment of $250K per month, a rep making a 7% commission would earn $17500 per quarter in residuals from that client, in addition to base salary.

Pro tip: This strategy is helpful for both client and employee retention. It also incentivizes consistent follow-up, upselling, and cross-selling with current customers.

Take it further: Want more details on a typical sales commission structure? Check out this ultimate guide to sales compensation. It offers a more detailed view of sales commission structures and compensation plans.

Now, let’s look at industry averages.

Average Sales Commission Rates by Industry

I’ve seen the best leaders track the typical commission for sales and overall compensation in their industry when working it out for their organization. This visibility and clarity on how their sales commission plan compares to the rest of their industry is super important to be fair and ensure everyone is satisfied. It also lets salespeople see how their sales compensation plan stacks up.

To help you quickly review that, I’ve compiled the table below on average sales commission rates by industry. It uses wage data from the BLS Occupational Employment Statistics (OES) survey and reflects the median average pay for each industry. The commission rate will depend on the company and the commission structure they choose.

INDUSTRY	MEDIAN PAY
Wholesale and Manufacturing Sales Representatives	$ 99,710
Insurance Sales Agents	$ 59,080
Advertising Sales Agents	$ 61,270
Real Estate Brokers and Sales Agents	$ 58,680
Securities, Commodities, and Financial Services Sales Agents	$ 76,900
Sales Representatives, Services, SAAS, Business Support, All Other	$ 65,630
Door-to-door sales Workers, News and Street Vendors, and Related Workers	$ 34,910
Retail Salespersons	$ 33,680
Sales and Related Workers, All Other	$ 44,610

1. Wholesale and Manufacturing Sales Representatives

Median pay: $99,710

These sales representatives sell goods for wholesalers or manufacturers to businesses, government agencies, and other organizations. Their job security and livelihood are often almost entirely intertwined with the volume of merchandise they can sell, and their commission structure tends to reflect that. I’ve marked that these reps are often paid with absolute or base salary plus commission plans.

2. Insurance Sales Agents

Median pay: $59,080

Insurance sales agents contact potential customers to sell different kinds of insurance. Agents spend time directly interfacing with clients, completing paperwork, and preparing presentations. They also fulfill other customer-facing and administrative responsibilities.

I’ve seen that the commission for this brand of sales is generally paid on a base salary plus a commission. The commission percentages vary by the type of insurance agents are selling.

3. Advertising Sales Agents

Median pay: $61,270

Advertising sales agents sell advertising space to businesses and individuals. They often work across various industries and media, including advertising agencies, radio, television, and Internet publishing. I’ve noticed that advertising sales agents usually have strict quotas and receive a commission for meeting or exceeding them.

4. Real Estate Brokers and Sales Agents

Median pay: $58,680

Real estate brokers and sales agents help clients buy, sell, and rent properties. Every state requires real estate sales professionals to be licensed, which could mean completing courses or passing a state-specific exam. Because they’re often self-employed, I’ve seen many exercise the flexibility to define their commission structure.

5. Securities, Commodities, and Financial Services Sales Agents

Median pay: $76,900

Securities, commodities, and financial services agents buy and sell securities or commodities in investment and trading firms. They can also provide financial services to businesses and individuals. Some advise customers about stocks, bonds, mutual funds, commodities, and market conditions. In my research, I’ve noticed that most of these salespeople often charge flat-rate commissions per share or trade.

6. Sales Representatives, Services, SAAS, Business Support, All Other

Median pay: $65,630

This sales category encompasses salespeople in positions and industries in various service-based businesses, including business support, technical consulting, electronics, telecommunications, computer systems and electronics, and software as a service. It excludes advertising, insurance, travel, and other categories. Given this category’s wide range of industries and companies, I’ve not been able to identify its most common commission structure.

7. Door-to-Door Sales Workers, News and Street Vendors, and Related Workers

Median pay: $34,910

This category includes several different kinds of salespeople, including professionals in telecommunications, residential building construction, and subscription programming. Like the previous one, the wide range of industries and companies in this category makes it hard to pin down a standard commission structure.

8. Retail Salespersons

Median pay: $33,680

Retail sales refers to reps who sell merchandise (such as clothing, furniture, or appliances) in a brick-and-mortar environment. These environments include general merchandise stores and dealers specializing in specific wares, such as sporting goods or musical instruments.

Since success often depends on foot traffic rather than sales activity, I’ve seen that retail salespersons are usually compensated by a base salary only. However, retail environments with high-ticket items frequently pay flat commission rates.

9. Sales and Related Workers, All Other

Median pay: $44,610

This sales category encompasses salespeople in positions and industries that don’t fall into the abovementioned industries. This can include roles at automobile dealerships, in non-depository credit intermediation, and with food and beverage retailers. The range of roles that fall into this category is broad, so the variety of the commission structures used tends to be as well.

Whatever the sales commission approach, employers and reps should be crystal clear on the commission structure and compensation plan before the rep joins the job. The sales commission agreement is where to share or gather this information formally.

A sales commission agreement:

• Outlines the commission structure.
• Details the nature of the employee-employer relationship.
• Establishes a time frame for employment.
• Specifies the employee’s commission percentage.

The idea behind it is to ensure employers have clear terms of employment to protect themselves from legal recourse if an employee has an issue with the commission structure they‘re working within. At the same time, employees know exactly how they’ll be compensated for their efforts. Therefore, both parties must thoroughly understand what’s in it.

Key Elements of a Sales Commission Agreement

1. Authorization

This section allows the salesperson to sell products or services on behalf of their employer. The employer often limits the selling by restricting the regions or territories where the offerings are sold and prohibiting the rebranding and reselling their products.

2. Documentation

The salesperson must agree to use documentation and tools approved by the company to track their sales activities. These might include resources like CRM databases, software, or forms.

3. Non-Compete Clause

A non-compete clause requires the salesperson to refrain from representing or selling on behalf of a competitor for a period of time after leaving their employer.

4. Non-Disclosure Clause

The non-disclosure clause ensures the employee agrees to refrain from sharing confidential information or intellectual property.

5. Commission Structure

This is the section with details of the commission structure. After reading this section, the employee and employer have a clear understanding of:

• The compensation structure (such as commission, performance incentives, and bonuses).
• When a commission is earned.
• When commissions are paid.
• Consequences of cancellations, refunds, or default of payments from customers.

6. Agreement

The salesperson and their employer agree to the details of the sales commission agreement by signing and dating the document.

While these are the generic and most common elements, there can be specifics. If you want any additional recommendations and insight, consult your legal team or seek the advice of a lawyer to help you craft your sales commission agreement carefully.

Want a headstart in developing a sales commission agreement or strategic business plan? Check out these templates I’ve found to help you get started.

Sales Commission Agreement Templates

1. Sales Commission Agreement Template from PandaDoc

Edit and customize this sales commission agreement template to fit your needs. Your recipients can sign it, and you‘ll be able to track the document’s opens and views.

2. Sales Commission Agreement Template from FormSwift

This sales commission agreement template builder will help you outline the working relationship between employee and employer. It includes general information (like address and phone number), commission structure, documentation, and non-compete and non-disclosure clauses.

3. Sales Commission Agreement Template from RocketLawyer

With this fill-in-the-blank sales commission agreement, you can quickly plug in the details for your document. It includes a progress bar to show you how much more of the agreement needs to be completed.

Plan your commission structure for long-term success.

My exposure to the sales world has made one thing clear: A well-designed commission structure is integral to hitting sales targets and keeping top-performing reps engaged.

I’ve seen the most effective sales commission plans to balance the organization’s goals and the sales team’s motivations, ensuring both thrive. That’s what your aim should be, too!

If I were to summarize all my research on this topic, my preferred approach to crafting a solid sales commission structure would involve thorough research, clear communication, and a focus on industry benchmarks to stay competitive. Whatever plan you put together, ensure there is no ambiguity regarding earnings. Formalize it with a solid sales commission agreement to lock in clarity and trust.