Dear SaaStr: What percentage do commissioned salespeople earn on gross sale or profit?
It’s amazing to me that across so many industries, 20% of revenues or profit (yes, very different, but depending on the industry) ends up being the natural cadence.
- In industries where Gross Margins are high (e.g., software), the % is generally on all revenue.
- When Gross Margins are low (e.g., cars), the % is generally on profit.
Many B2B companies with lower margins also pay commissions based on margin contribution, on gross profit, not all revenue booked.
But in any event, 20% of the net profit generally goes to sales. In software, it’s often split 50/50 between base and bonus.
These all get tweaked, and if you are well-funded and want to grow fast, you may push this up to 30% or more. If you are super lean, you may push it down.
But in the end, 20% of revenues or profits, often split 50/50 in salary and commissions, seems to end up working out to a “working wage” for sales professionals, and not be such a high % of revenues that it kills the model.
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- Source: https://www.saastr.com/how-much-percentage-do-commissioned-salespeople-earn-on-gross-sale-or-profit/