SALES RECRUITMENT, SALES RECRUITERS & SALES RECRUITMENT AGENCY

How Does A Commission Plan Differ From Other Variable Payment Plans?

There are three types of variable payment plans commonly used to incentivise salespeople in Australia as defined below:

Bonus / Profit Share

A bonus plan or profit share program is a compensation system in which employees are awarded a share of the company's profits to encourage increased productivity.

Incentive Plan

An incentive plan is a planned activity designed to motivate an individual to achieve predetermined organizational objectives or KPIs. The payment may be in the form of a bonus, commission or other non-monetary awards such as merchandise and travel.

Commission Plan

A commission plan is a type of variable payment plan where the salesperson knows their sales target and how much they will be paid if they reach their sales target. This payment is generally based on a percentage of gross revenue or gross profit.

Type of Plan	Metric	Value to Salesperson	Example
Bonus / Profit Share	Based on the company or business unit's overall performance	Low - Known only after the performance period has ended	Staff member is eligible for profit share, which is 5% of profit divided among 50 staff Profit is $1,000,000 Value to each employee is $1,000.00 Profit is $10,000,000 Value to each employee is $10,000.00
Incentive plan	Based on an individual and / or team performance against predetermined objectives or KPI's	High - Known from the start of the performance period	Target variable pay is paid on achieving 100% against objectives or KPIs Employee achieves 100% of objectives Value to employee is $10,000 Employee achieves 75% of objectives Value to employee is $7,500
Commission plan	Based on a percentage of gross revenue or gross profit	High - Known from the start of the performance period	3.0% of gross sales to target and 5.0% of all sales above target Employee achieves sales of $1,000,000, commission is $30,000 Employee achieves sales of $1,200,000, commission is $40,000