In sales, how you pay your team matters just as much as what you sell. Commission-based compensation remains one of the most powerful levers to drive sales performance, motivation, and accountability. But what does “commission-based” really mean - and how does it influence results?
This article explores how commission-based pay impacts motivation, compares it to other remuneration models, and offers insight into which approach best aligns with different business goals.
Commission-based pay means an employee earns part or all of their income based on performance - typically a percentage of the revenue or profit they generate. It's commonly used in jobs that are commission based, like generic sales roles, real estate, tech sales, finance, and insurance sales.
A commission-based salary can include:
Straight commission: 100% of pay is based on performance
Base + commission: A fixed salary plus a variable incentive
Draw against commission: An advance is paid and later offset by earned commissions
Let’s break down how commission pay works using a simple model:
If a rep closes $50,000 in deals and earns 10% commission:
Commission = $50,000 x 10% = $5,000Their commission-based earnings for the period would be $5,000.
For more complex commission pay examples, tiered rates or accelerators may be used to boost earnings as performance increases. If the company succeeds, so does the sales rep. This is a way of including employees in the shared success of the company, without having to wait for the books to be closed or an external valuation and ultimately a take-over of the business. At the same time, the company will have full control of its liquidity and don't risk to pay more than they can handle financially.
Tying pay directly to outcomes fosters a high-performance culture where reps act like business owners.
With the right sales KPIs, you can guide behavior - rewarding not just revenue but profitability, product mix, or retention.
Top reps are drawn to uncapped earning potential. Jobs that are commission based often appeal to entrepreneurial personalities.
Since pay scales with performance, companies avoid overpaying during low-revenue months.
Without a stable base salary, some reps may face financial stress in slow periods.
Poorly designed plans can drive short-termism or encourage reps to hoard leads.
More advanced commission-based salary models may require software like Bentega to track accurately.
| Model | Stability | Motivation | Alignment | Use Case |
|---|---|---|---|---|
| Base Salary Only | High | Low | Weak | Junior roles, support staff |
| Commission-Based Pay | Low | High | Strong | High-volume transactional sales |
| Base + Commission | Medium | High | Strong | Most B2B sales roles |
| Team-Based Commission | Medium | Medium | Medium | Collaborative sales environments |
Compensation plays a key role in sales performance management. It acts as both an incentive and a feedback system. Key sales KPIs such as:
Revenue closed
Average deal size
Customer retention
Sales cycle length
…can all be influenced by a well-structured commission-based compensation model.
A mid-sized SaaS firm using a 50/50 base + commission plan saw a 30% increase in average revenue per rep after introducing tiered accelerators. By aligning pay with key sales KPIs, performance naturally improved.
Understanding the nuances of commission-based pay is essential to building a motivated, high-performing sales team. From simple commission-based models to advanced, data-driven incentive structures, compensation strategy is one of the most effective tools in sales performance management.
If you're ready to align earnings with outcomes, start by reviewing your current plan - or reach out to Bentega for expert guidance.
Power Up Your Commission-Based Compensation Strategy with Bentega - Automate commission tracking, align incentives with sales goals, and motivate your team effectively. Learn More