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3 years, 2 months ago

What is the best way to structure a compensation package for someone to sell enterprise software? Ex. Base + Commission, 1st year revenue?

We sell enterprise software ($50-$60K), consulting services ($2500/mo) and software as a service ($600 - $2500/mo). What is the salary range and terms (like commission for any future sales, etc).
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jsarmiento | 3 years, 2 months ago
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Base salaries for an experienced person in this field are typically going to be in the low to mid six figures and can typically double in commission for on target performance. The salary part could vary depending on metro area (ex. NY, LA, SF are going to be higher). The reason why the base is high, is that this kind of sale typically has a longer cycle, so you can't have this person starving while waiting for that to happen. Also, it's just kind of the industry standard, so it's what you will need to do to be competitive in attracting top talent (although that landscape may be changing due to the economy). On the variable portion of the comp, make sure you think through that aspect thoroughly. A straight percentage of sale commission is ideal in the mind of the sales rep, but could be problematic from a company perspective. For example, do you make less profit on one product vs. another? If you do, you don't want to weight that product equally to the more profitable one. Also, do you have a new product that you want to emphasize? You may want to weight that one higher. Whatever you do, don't cap commissions. The last thing you want to have happen is dis-incentivize a star performer (unless your infrastructure can't support that level of performance for some reason, in which case you want to solve that issue so you don't have to cap commission).

If you can't afford the high base, then another approach you could try is to hire a less experienced/high potential person and train them up. The caveat here is that you may have to hire more people, wait longer for some of them to figure it out, and then have to weed out the losers. That approach could be more expensive though in the long run, especially if you don't have the time to train properly (you really need to commit to training) or wait on the revenue to come in.
source(s):
salary.com
glassdoor.com

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