Sales Commission
After reading this:
You’ll be able to work out how much commission you’re owed or will be paid for sales you make in your new role
As Most salespeople and business development staff are on some form of commission structure. This means that they are incentivised in that the more products / services they sell, the more money they will make over and above their basic salary.
When you’re leaving your job to go to a new role, you need to assess how much commission you think you’re entitled to but for a number of reasons this may not be as easy as it sounds.
Your Contract of Employment:
Your employment contract may detail your initial commission structure however, the longer you are with the same company and the more successful you are, this structure is likely to change. In this case, you should have been informed of these changes in written form without necessitating a change of contract. Dig these proofs out because you’ll need them!
What type of commission are you on?
Commission can be paid on sales in a number of ways:
1. Simple Commission
The most obvious is to pay commission as a percentage of value of the product or service sold. So for example, if sales person sells 10 printers for £150 each and is on a commission of 5%, then he will be entitled to £75.
If you are on a similar “percentage of sale” commission structure then calculating how much you are owed at the end of your employment should be relatively easy.
2. Accumulative Commission.
Slightly more difficult is if you are on an “accumulator” commission package where you are paid say 3% for the first ten products / services sold in a set period and then a higher percentage for the next ten. This is also often used for revenue bands.
3. Pyramid Commission.
Another form of accumulator commission is where for example, the manager of a sales force gets not only their own commission for items sold but also receives a share for the number of items sold by the rest of the team. Also known as “Pyramid commission or override commission “, this is very common in many companies and calculating the amount of commission one has earned can be a minefield so in other words make sure you write it all down,keep a record.
4. Percentage of Profit Commission
This applies if you are on a “percentage of profit” commission structure, especially if profit is related to both the profit on a given sale and the company’s profit overall. For example, an Account Manager within an Internet firm may be paid commission on any profit made from the building of a client web site. In other words, profit made from one individual project. They may also be promised payment on the whole company’s performance over a year. Commission thus becomes more a question of trust using figures that you may not have immediate access to.
Finally:
Whatever the case, when calculating commission, ensure that:
- You check your employment contract.
- You find and refer to any new commission structures that you’ve been notified of but may not form part of your original contract.
- In case of doubt, always speak to your Manager or HR department.