Getting Commission Right Matters
Your commission structure is the single biggest factor in attracting and retaining quality sales agents. Get it right and you will build a motivated, high performing sales channel. Get it wrong and agents will deprioritise your product in favour of competitors who pay better.
Common Commission Models
The most straightforward model is a flat percentage of revenue. This typically ranges from 5% to 20% depending on the product, deal size, and industry. Higher margin products can afford more generous commissions, while high volume, low margin products usually sit at the lower end.
Tiered Commissions
Tiered structures increase the commission rate as agents hit higher sales thresholds. For example, an agent might earn 10% on their first $50,000 in sales, then 15% on everything above that. This incentivises agents to push harder and rewards top performers.
Residual Commissions
For subscription based or recurring revenue products, consider paying agents a residual commission on renewals. This encourages agents to bring in customers who will stick around, not just anyone who will sign a contract. Residual rates are usually lower than initial sale commissions, often in the range of 3% to 8%.
One Time Bonuses
Some businesses add bonuses for specific achievements, such as signing a certain number of new accounts in a quarter or landing a deal above a certain value. These bonuses add excitement and can drive focused bursts of activity.
What Agents Expect in Australia
In the Australian B2B market, agents generally expect competitive commission rates, transparent reporting, and prompt payment. Monthly payment cycles are standard, and agents will quickly move on if payments are late or disputed. Zepys helps manage this process by tracking sales activity and automating commission calculations.
Protect Your Margins
Before setting commission rates, model your unit economics carefully. Make sure you can afford the commission on every deal while still maintaining healthy margins. It is better to start with a sustainable rate and increase it later than to offer an unsustainable rate and have to reduce it.