Dear SaaStr: What Percentage Do Commissioned Salespeople Earn on Gross Sales or Profits?

Dear SaaStr: What percentage do commissioned salespeople earn on gross sale or profit?

It’s amazing to me that across so many industries, from automobile sales to software sales … 20% of the profit on each deal (yes, very different, but depending on the industry) ends up going to the sales reps closing the deals.

• 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.  Accelerators can push this up.  For example, car salespeople often get a higher commission (25%) on used cars than new cars.  Used cars are more profitable.

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.

A related post here:

A Framework For Your First SaaS Sales Comp Plan (Updated)

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