Typical Sales Commission for Manufacturing Business?

by a searcher from United States Air Force Academy

1 month ago

I'm looking at a small manufacturing business in the agriculture sector. Annual revenue is about $2M and products are wholesaled to agricultural retailers. The owner works with a salesman who also sells other agricultural products and he pays this salesman 5% of total revenue. Is anybody familiar with incentive structure for salespeople? Is 5% common or are there other common structures (i.e. a base salary plus a certain percentage)? Thanks for your replies.

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searcher from Humber College

There are many ways to incentivize/compensate folks in sales, as others have mentioned, the structure has to be compelling enough to motivate the salesperson. Also as others have mentioned, margins matter. Commission on gross sales can be problematic depending on how much leeway (if any) you give your sales team to discount your product or service to make a sale. There is some evidence that sales staff on salary perform better than those on commission, saying that, some folks love the unlimited potential of commission... and then there's everything in between, salary + commission, or salary + bonuses based on targets, etc.

1 month ago | like reply | 0 likes

searcher from Concordia University

I had from 2.5% to a very established account up to 10% for a new mfg rep who initiated a few new accounts (all B2B) and the agreement was to lower to 7.5% then to 5% with annual sales volume increasing beyond set thresholds. The objective is to compensate the higher efforts/expenses they have onboarding a new client and then it goes down but still enough incentive for them to actively promote the offerings and provide customer service including AR.

1 month ago | like reply | 1 like

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