Porcorosso profile picture
Porcorosso profile picture

Porcorosso

VP of Sales

Executive
Contributor
Member

Commission on Implementation

A very software specific question. How does your org feel about giving commission on implementation and servicing (if not 100% I've seen 50% or even 25%). I'm head of sales at a startup and we give no commission on servicing but I definitely want to change that before hiring more headcount. I'm already getting the CEO off % of revenue team commission and no commission on follow-on deals in the same org in the same 12 months. Two rules that they were insistent about. Any articles or support for giving commission on servicing? 

The next two battles are commission on implementation and accelerator on quota instead of # of deals closed. Wish me luck. 
🍾 Commission
📠 Startup
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14 comments

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braintank
Politicker
6
Enterprise Account Executive
Does the company make a profit on implementation?
unclespacejam
Politicker
5
ur dad’s brother
That’ll be what it comes down to. Otherwise the answer will be “fuck no” or you guys will have to totally redesign implementation costs and increase pricing to support additional COGS

As a caveat, I don’t disagree with paying a little commission % on implementation costs for the reason that if reps aren’t comped on that, that’s gonna be the first place they discount (cuz they don’t give a fuck)
jefe
Arsonist
3
🍁
^^^ We'll always find ways to bring the deal in with minimal impact to what we take home. Businesses need to plan accordingly.
punishedlad
Tycoon
3
Regional Partnership Manager
As someone who works for an org that doesn't commission implementation costs, we heavily discount it whenever we get pushback on price lol
jefe
Arsonist
3
🍁
What else could you do?! It's an inevitability
jefe
Arsonist
3
🍁
We make money off implementation and get paid out. I've been at another company that gave a lower percentage commission on it but still paid out.

As @braintank said - it all comes down to margins/profitability. If they're making money, then so should the reps. If they ain't, well the pricing/business model probably needs some tweaking but either way the reps won't.
TennisandSales
Politicker
2
Head Of Sales
depends on the philosophy of the company.

my org charges a premium for services / implementation. reps get a % of services completed WHEN they are completed.

So a deal that $200K ARR + $75K of services (this includes implementation for us, and then integrations and customizations)

The rep gets paid a % of that $75K when it gets completed.

I like this approach since if the reps did not get comped at all on it, then they would not be incentivized to go after more complicated deals. but if they got paid on services upfront then they would be incentivized to make deals more complicated then they need to be.

This way the rep gets comped and is also motivated to get deals closed quickly so services can start.
Gasty
Notable Contributor
2
War Room Community Manager
Hi @Porcorosso, welcome to the War Room!

Great first post! This is Gasty - War Room(WR) Community Manager here.

Before I get to your post, just wanted to highlight a few more things;

WR is an anonymous sales platform with some of the best Sales people out there. Their advice is pure gold. Going anon will help you get the most out of this platform, but I can see you already have it covered. Kudos!

This isn't LinkedIn, you can go as detailed as you want. Just focus on providing value.

We consistently post Fun Friday, Leaderboard, who's hiring, and more.

Lastly, have you checked out the commission store yet? If not, I highly recommend. We got some great goodies and earning those commission points is also very easy, engage more, interact more, provide more value - upvotes get you points.


Now to talk about your post:

Amount transfer, you get paid. Shouldn't it be this simple?


poweredbycaffeine
WR Lieutenant
2
☕️
I would advise to never pay commission on sunk costs. Implementation is banded into COGS, so comping on it would mean your business makes less money on the sale.

Commission should, in my opinion, only be paid on the total value of the software sold less any pro-serv.
Sunbunny31
Politicker
1
Sr Sales Executive 🐰
Besides what others have eloquently said already, here's an example to add to the conversation:
We don't get paid on services here. Con: services are required in order for customers to be set up successfully, so they have to be sold. Pro: I have services managers who will provide support during the sales cycle, so it's not a heavy lift. Second Pro: this also means that using our excellent partner network doesn't cost me anything when it comes to quota attainment.
Honestly, it's not that huge of a deal to not get paid on services. It's one of the reasons to have a decent base; it's part of the job.
Pachacuti
Politicker
1
They call me Daddy, Sales Daddy
So you're talking about paying a commission on non-license revenue. That can be tricky. My question - how much is the sales person involved in the entire process? Especially post-sale process? Is the sales person trying to maximize the entire revenue or just the licensing costs?

If I wasn't compensated for the Implementation or Servicing, I would discount those like crazy, or at least try to. Where's the incentive to maintain those margins if the person selling them isn't comp'd on them? And don't talk about "the good of the company" - you know that most sales people don't care.

A red flag to me is the no commission on follow on deals in the first 12 months. That kills the sales person's opportunity to continue to build the relationship and upsell the customer 3,6,9 months out. And it makes the sales person look opportunistic rather than consultative.


saaskicker
Tycoon
1
Enterprise AE
10% on ARR, 2% on implementation. Implementation does not retire quota attainment. This is a simplified answer but implementation should not be weighted the saed. Based on margins and recurring revenue.
MRK47
Personal Narrative
1
Head of Growth
I’m 50:50 on this….depends on diff variables but tend to lean on comp being calculated based on the level of effort / involvement - given implementation / onboarding is performed by diff teams with little input by the AE, then this would not be a priority for me. The flip to that is understandably, AEs will be more transactionally focused and target simpler conversions (impacting service revenue stream). Also depends if you / your team is in any way held accountable / targeted for service revenues - if so, then you should have upside. .
It’s also about priorities…sounds as though you’re shaking things up already by having them walk back from legacy rules (def see the value in giving comp for expansion opps within the first 12 months)….is this next push (comp on services) going to be a step too far too soon? I’ve also found paying out comms on non-license revenue can create cross-functional friction - CS / Implementation teams don’t always react well to see an AE get comped on activities they do not directly contribute to especially when dealing with really complicated implementations…..not immediately your concern but strained sales > CS/Implementation relations can manifest and impact your ability to execute as a VPS. Other concern, do all AEs sell to the same ICP / persona….do they all have equal opportunity to include similar value of services? If not, then now including services as variable earnings, could create friction within the AE team if some feel others have more opportunity. Possible to structure a pool commission that is shared out between the team once overall service revenue milestones are hit?
Kosta_Konfucius
Politicker
0
ERP Sales
Only got implementation at one place, however, it was the first thing we are told to cut when discounting

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