How commission
actually gets calculated
Plan structures, worked arithmetic, and the parts that break in practice. Written for the person who has to run the numbers, not for the person buying software.
Commission structures
The eight shapes a commission plan comes in, and what each one does to behaviour.
There are only about eight commission structures in common use. Everything else is a combination of them, or one of them with a condition bolted on.
Plan templates
Six plans written out in full, with the arithmetic showing.
A commission plan is a contract that has to survive contact with a bad quarter, a disputed deal and a departing rep. The parts people leave out are always the same four: when the commission is considered earned, when it is paid, what reverses it, and what happens if someone leaves before payment.
Rates by industry
What reps are actually paid, by sector, and why the spread is so wide.
The question people ask is what commission rate is normal for my industry. It is the wrong question, and answering it directly does more harm than good.
How to calculate commission
From flat rate to tiered accelerators, worked one line at a time.
Anyone can multiply a sale by a rate. The reason commission disputes are so common is that the multiplication is the last step, and every step before it involves a decision somebody made without writing it down.
ISO and agent residuals
Buy-rate spreads, portfolio splits, and why residuals break most tools.
Most commission guides assume a deal closes, a rep gets paid, and everyone moves on. Residual compensation breaks that assumption on day one.
Loan officer commissions
Basis points at funding, split three ways, clawed back on early payoff.
Lending is one of the few industries where the compensation rules are partly written by regulators instead of entirely by the company. That makes the plans less varied than in software sales and considerably more consequential to get wrong.
Insurance agency commissions
First-year versus renewal, carrier overrides, chargebacks on lapse.
Agency compensation is long-tailed in a way that almost no other industry matches. A producer who leaves today has policies that will pay the agency for another eight years, and a producer who joins today will wait two years before their book carries them.
Clawbacks
How to take money back without losing the rep, and what the law allows.
Every business that pays commission before revenue is certain needs a way to reverse it. The mechanism is simple and the human consequences are not, because a clawback lands on a person and never on a spreadsheet cell.
Sales incentive programs
Designing the extra money, and what it does to everything it is not attached to.
A sales incentive program is everything a company pays salespeople on top of the commission plan: product pushes, contests, quarterly kickers, trips, awards. Designing one is mostly arithmetic.
Incentive compensation management
Running variable pay as a process rather than a monthly rescue.
Every company paying commission already does incentive compensation management. The open question is whether it happens on a schedule with a named owner, or gets improvised in the four days before payroll by whoever understands the spreadsheet.
Territory management
Drawing the boundaries that decide who can earn what, before anyone sells.
Two reps on the same plan, the same rate and the same quota will earn very differently if one boundary holds twice the reachable money of the other. The commission engine will pay both of them correctly, and one of them will read as a weak performer.
Setting sales quotas
Top-down, bottom-up, and the coverage ratio that reconciles them.
A quota is the denominator under nearly every rule in a commission plan. Set it twenty percent too high and every gate, band and accelerator in the document is twenty percent out of position, while the rates sit there looking innocent because nobody touched them.
The glossary
Every term a comp plan is written in, defined plainly and shown with the arithmetic. Start here if a word in a plan document is doing more work than you expected.
The calculators
Work out a payout from a flat or tiered plan, or what an on-target earnings figure is actually worth. Free, and nothing typed into them leaves the browser.
Reading about it is
slower than seeing it
Bring your comp plan and a month of deals. We will run them through Commish and show you every payment traced to the rule behind it.