Getting the rate right matters

Commission rates are the single most important factor in attracting and retaining good sales agents. Set it too low and nobody will bother selling your product. Set it too high and you erode your margins to the point where growth becomes unsustainable.

The right rate depends on your industry, product margins, sales cycle length, and the level of effort required from the agent.

Typical commission ranges in Australia

Here are some common benchmarks across different sectors.

SaaS and software: 10% to 25% of the first year contract value, sometimes with smaller recurring commissions on renewals.

Professional services: 5% to 15% of the project value. Higher for new client acquisition, lower for upsells to existing accounts.

Physical products: 5% to 20% depending on margin. High margin products like supplements or premium goods can support higher rates.

Financial products and insurance: 20% to 50% of the first year premium or fee, reflecting the high lifetime value of each customer.

Real estate: Typically 1% to 2.5% of the sale price, but the absolute dollar amounts are significant.

How to calculate your rate

Start with your gross margin on each sale. If you sell a product for $1,000 and your cost of goods is $400, your gross margin is $600 or 60%.

From that $600, you need to cover your operating costs, marketing spend, and profit. If you allocate 15% of revenue to sales commission, that is $150 per sale.

Ask yourself: would a motivated agent pursue $150 per deal? If the answer is no, you may need to increase the rate or find ways to make each sale faster and easier for the agent.

Factors that let you pay lower rates

Short sales cycles mean agents can close more deals per day. Volume compensates for a lower per deal commission.

High conversion rates from warm leads reduce the agent's effort per sale.

Recurring revenue products that pay ongoing commissions create long term income for agents, making a lower initial rate acceptable.

Factors that require higher rates

Long or complex sales cycles where the agent invests significant time per deal.

Cold outreach required with no inbound leads.

High ticket products where each sale requires multiple meetings and relationship building.

The Zepys approach

On Zepys, you set your commission rate when listing your product. Agents browse listings and choose what to sell based on the combination of commission rate, product quality, and sales difficulty. The market itself tells you if your rate is competitive. If agents are not applying, your rate probably needs to go up.

One rule of thumb

If you want the best agents, pay in the top 25% of your industry range. The difference between a 12% and an 18% commission might seem significant on paper, but a top performing agent at 18% will generate far more revenue than a mediocre one at 12%.

Generosity in commission rates is not a cost. It is an investment in the quality of your sales channel.