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  • Writer's pictureBlackbox Inisghts

How to create Sales Commission


Type of Sales Commission

Example

Commission-based plan

Sarah, a sales representative at a software company in Malaysia, earns a 10% commission on all software licenses she sells. If she successfully closes a deal worth RM50,000, her commission would be RM5,000.

Tiered Commission

Amir's commission structure in Malaysia is tiered. He earns:

  • 5% commission on sales up to RM100,000

  • 7% commission on sales between RM100,001 and RM200,000

  • 10% commission on sales over RM200,000

If his sales total RM250,000, his commission would be RM22,500.

Draw against Commission

Sales representative receives a monthly advance (draw) of RM2,000 against future commissions. If they earn RM1,500 in commissions for the month, they still receive the RM2,000 draw. This creates a deficit of RM500, which will be deducted from their commissions in the following month.

Profit sharing

Ali's company distributes 10% of its annual profits among the sales team. If the company's profit for the year is RM1,000,000 and Ali contributed 20% of the total sales, he would receive RM20,000 as his share.

Performance-based bonuses

Prakash, working for a telecommunications company in Malaysia, receives a bonus if he surpasses his quarterly sales target by 20%. The bonus is calculated as 5% of the extra revenue he generated beyond the target.

Sales Incentive Plan

Amy's company introduces a sales incentive plan. If she surpasses 120% of her monthly sales target, she earns an all-expenses-paid trip to a tropical destination as a reward.

Residual Income

Liyana earns a 10% commission on a subscription-based product. As long as the customer remains subscribed, the sales representative continues to receive 10% of the monthly payment as residual income.

Team-based compensation

Sales team is assigned a collective sales target. If the team successfully achieves the target, a bonus is distributed among team members based on their individual contributions.

Territory-based compensation

Fuzi is assigned a specific territory and is compensated based on the sales revenue generated within that territory. For instance, if their territory generates RM1,000,000 in sales and they have a 2% commission rate, they would earn RM20,000 in commission.


All these examples if apply correctly will boost everyone spirit in pushing for more sales. Salespeople are more likely to be highly motivated and driven to achieve their targets when they feel that their efforts are directly correlated with fair financial rewards. On top of that, adequate compensation contributes to overall job satisfaction. Salespeople who feel they are being fairly compensated for their skills and efforts are likely to derive greater satisfaction from their roles. 


Proper compensation correlates with enhanced job performance. Salespeople who are satisfied with their compensation are more likely to consistently deliver high-quality work, resulting in improved overall performance. When salespeople believe they are being compensated correctly, it generates a positive ripple effect on motivation, job satisfaction, team dynamics, and overall job performance. It contributes to a positive workplace culture where employees feel recognized, valued, and motivated to excel in their roles.


However, designing and implementing sales compensations plan might be a challenge to some of the company. This is because there are many things to be taken in consideration before we can plan our compensation properly. There are many things need to be checked on before we can implement a good sales compensation plan for everyone. For example, we need to establish performance metric and do market research to understand current benchmark in the industries to make sure our packages are beneficial and competitive enough.


But, with a dashboard like Performance Plus offered by Blackbox Consultancy, we can automate your sales compensation plan and you can step into serenity, leaving all the troubles behind. We can tailor payouts to perfection. Performance Plus allows you to easily customize and automate complex payout calculations, ensuring accuracy and fairness in every compensation cycle. Plus, they create custom plans efficiently to align with your business goals and motivate your sales team effectively


In conclusion, a well-structured sales commission plan is a powerful motivator for sales teams, fostering job satisfaction, performance excellence, and a positive workplace culture. The diverse commission types, from tiered structures to profit-sharing and bonuses, cater to different sales scenarios and individual preferences. However, crafting an effective compensation plan can be complex, requiring thorough research and understanding of industry benchmarks.


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