J.J.McLure

Owner at *redacted*

Valued Contributor

Commission only role (from the other side)

Happy Monday savages!

For those of you that don't know, I have a small SaaS startup that is very young. We are running extremely lean and my wife and I are doing as much of the work as possible, obviously including sales.

An old contact reached out yesterday asking about a commission only role with my company. I know most of you are against commission only, and I wouldn't usually offer it, but he asked, so humor me please.

The product is subscription based, $200-$350/month, the guy has lots of sales experience but nothing in SaaS.

What kind of % would be normal to offer? maybe 2 different numbers based on if he does all the work or only books a meeting. And with a sub based business, how long do the commissions keep coming from a sale?

And let's not talk about equity unless he asks. I know for him this wouldn't be a full time gig, he just wants something on the side to push

thanks for your advice!

🍾 Commission

✍️ Sales advice

7

14 comments

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Justatitle

Big Shot

5

Account Executive

On those subscriptions what’s your typical margin? From there what can you justify paying someone in a commish only role? What is this person looking to make each month on average? Is it viable?

J.J.McLure

Politicker

1

Owner at *redacted*

I just set a meeting with him to see what he's looking for. Our typical margin is around 70%-80%, so I do have some good wiggle room. I just need to make sure the company is making enough to keep the lights on and that I can make enough profit to keep food in the fridge.

TennisandSales

Politicker

1

Head Of Sales

this is key info. since the numbers will drive everything.

With this margin how many months until you make money from 1 customer?

You can have a flat % you pay per deal closed, and thats it.

or a small % up front and a then another % every year the customer renews. (i may advise against this since then you will need a contract that explains what happens if that person stops working for you.

jefe

Arsonist

2

🍁

I think he can get away with avoiding the mess of any comp for subsequent years.

saaskicker

Celebrated Contributor

1

Enterprise AE

+1 to the above, need more info on your unit economics before we can comment on a commission structure.

Filth

Politicker

4

Live Filthy or Die Clean

It can work - my mother in law runs a company with commission only sales people. I wouldn't look at it, but with the right players it can work but you need to understand your margins as @Justatitle points out.

CuriousFox

WR Officer

2

🦊

tupperware?

Filth

Politicker

1

Live Filthy or Die Clean

haha, actually agricultural bacteria manufacturing and distribution. They turn literal shit into money, I wish I was smart enough to do the science b/c they have modern day alchemy.

jefe

Arsonist

3

🍁

Congrats, love to see this! I think any of us can understand why you're looking at commission only.

@Justatitle hit on the nail on the head in terms of how to calculate what you can pay this guy out, but it doesn't look like anyone's addressed the other question about how long the commissions keep coming in.

I'd ask about your termination clause for customers, but I don't think it's as relevant here given that I'm sure you'll pay him out on a cash received basis, so that claw backs aren't a concern.

In my experience, most SaaS organizations will pay for the first year of a subscription, then the revenue is all yours. Caveat - I'm not sure if it's different for commission-only folks though.

886GFl

Praised Answer

2

Account Executive

How many of your users would benefit from talking to a sales person? Do you get requests from your users to speak to a sales person often? (not CS)

886GFl

Praised Answer

1

Account Executive

It’s just a pretty small deal size. I wonder how much of that market needs a sales person in the loop

J.J.McLure

Politicker

1

Owner at *redacted*

Outbound is our main way of generating sales right now until we have more of a user base. Our product doesn't have a "buy now" on the website, our product gets customized to each user and I really want them to feel like we're partnering with them in the success of their small business. So even when the website & ads are drawing people in, they'll all need to speak to someone.

886GFl

Praised Answer

2

Account Executive

Alright that makes more sense. I am literally just throwing out a number but anywhere from 12-15% of total deal size could be reasonable.

3k deal @ 15% is $450. Etc.

Totally separate note:

How price sensitive is your user base? I am just thinking about how hard it’s going to be to customize everything with an ACV of 3-4200k. If you can jump up market to like 7,200-15k or ideally a bit higher it’ll make your life a lot easier.

Pachacuti

Politicker

0

They call me Daddy, Sales Daddy

100% commission gigs can be the most lucrative - potentially. But its very high risk/high reward. And the fact that he has no experience selling SaaS isn't an issue as long as he's smart and hard working.

I guess its a question of what's the margin and if you can afford to give up some of that to him.

You could pay him a 1-time higher level commission or a small percentage as long as the client stays with you - that's up to you.

I'd say if the math works out, go for it.

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