Sales commissions are performance-based payments for sales employees or agents, often a percentage or fixed fee, for facilitating commercial transactions.
Primary Implication
Most prospects that become customers need to be persuaded before they buy. They don’t readily appreciate your unique selling proposition nor clear on how your product and services can benefit them. If you struggle to meet your revenue goals, then you should consider incentivizing people to generate new sales.
Overview
Sales Commissions involve a mutually agreed upon percent, or fixed fee, accruing to an agent, broker, or salesperson for facilitating, initiating, and executing a commercial transaction. For salaried sales employees, the sales commission is the additional amount these employees receive over and above their salary, often for exceeding sales performance targets.
The upside of Sales Commissions is when they are paid, they are paid for results through pay at risk tied to sales incentives paid for sales produced instead of getting a guaranteed hourly, or weekly pay. The payment for results with incentives for exceeding them makes Sales Commissions a better sales compensation model. This means the amount of commission earned by sales talent varies depending on their sales success.
New sales are the lifeblood of every business. Your ability to generate the sales you need to realize your profit plan goal can be enhanced through a well-designed sales commission plan that rewards your sales representatives at the point of persuasion.
Monies accounted for here are sales commissions or bonuses paid based on actual sales results for a stated goal or target by an employee or representative of your company. Guaranteed wages and employee bonuses not tied to a specific sale should be accounted for where that employee’s wages are recorded, not here.