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Software Sales Commission Structure

 
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chorba

posts: 5

Aug 14, 2007 1:38 AM ET    Quote  Report Abuse
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For the past year my company has been developing an enterprise software product for Arts and Entertainment Industry. We are at the point where I would like to bring on a sales rep (or two) to focus on software sales.My question is: what are typical sales commission structures in the software industry? And what are the common percentages that commissions are paid on?

-Thanks in advance for your help!

pepperlegal

posts: 153

Aug 14, 2007 12:46 PM ET    Quote  Report Abuse
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I`ve spent many years as an in-house attorney for large software companies, and now represent many of them as part of my private practice.  I can tell you that the commission structures vary widely (anywhere between 3% to 250%).

Some of the criteria that are used to formulate the structure include:
  • type of account (major or smaller customer)
  • whether support services will also be sold, and if so, whether they are charged on a recurring, annual basis
  • the date of the sale during the company`s fiscal year (during certain slower fiscal quarters, there are "kickers" for selling during those times
  • the amount of discount taken from the "list" price
  • how much will be fixed salary versus commission
  • quota size


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chorba

posts: 5

Aug 15, 2007 4:51 PM ET    Quote  Report Abuse
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Thanks pepperlegal! Those are great criteria to consider.

Aug 21, 2007 2:59 PM ET    Quote  Report Abuse
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To PL`s advice, I`d also add that oftentimes it`s best to offer a tiered commission structure. We typically offer a realtively low base salary, then offer a different percentage for each tier.

For example, a $25 k base, then 5% of the first dollar after $5k/mo in sales. The next tier may be10% of the first dollar over $30k/mo in sales, and so on. It`s a great incentive to reach those high numbers!

Jack_smith

posts: 1

May 03, 2010 3:53 PM ET    Quote  Report Abuse
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Hello

Are there any sales commission software which calculates different tires of sales commission for different executives, leaders  based on their post and heirarchy?



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johnnirvaha

posts: 2

Feb 15, 2011 5:22 PM ET    Quote  Report Abuse
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To answer Jack_smith's question, lots of commission software products out there such as qcommission, nirvaha, xactly etc..

sales commission

johnnirvaha

posts: 2

Feb 21, 2011 5:04 PM ET    Quote  Report Abuse
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Depends on number of factors. Some of them could be if the company makes b2b or b2c products,  if the revenue is based on transactions/monthly subscription, if there are any setup/support costs etc..!

 

http://www.nirvaha.com/sales-commission.html

  

KimberlyJones

posts: 44

Apr 20, 2011 2:09 AM ET    Quote  Report Abuse
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R you want  to purchase software for your business  or for any other purpose then  must purchase with it software for wholesalers because they gives you extra facility.



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