Pay mix in a sales compensation package refers to the percentage of a salesperson’s total compensation that is made up of base salary, commission, and other incentives. The pay mix is important because it determines how much money a salesperson can earn and how much risk they are taking.
To set your pay mixes, follow these best practices:
- Consider the type of sales role. Different types of sales roles require different skill sets and levels of experience. As a result, they should have different pay mixes. For example, a sales representative who is responsible for cold calling and generating leads may have a higher base salary than a sales representative who is responsible for closing deals.
- Consider the company’s sales goals. The company’s sales goals should be a factor in determining the pay mix. For example, if the company has aggressive sales goals, it may want to have a higher commission rate.
- Consider the salesperson’s experience and performance. The salesperson’s experience and performance should also be a factor in determining the pay mix. For example, a salesperson who has been with the company for a long time and has a proven track record of success may be able to negotiate a higher base salary.
- Be competitive. The pay mix should be competitive with other companies in the same industry. This will help the company attract and retain top talent.
Here are some examples of pay mixes:
- 60/40: This is a common pay mix that splits compensation 60% base salary and 40% commission.
- 70/30: This pay mix gives the salesperson a higher base salary and a lower commission rate. This may be a good option for companies that want to attract and retain experienced salespeople.
- 80/20: This pay mix gives the salesperson a higher commission rate and a lower base salary. This may be a good option for companies that want to motivate salespeople to sell more.
It is important to note that there is no one-size-fits-all answer to the question of how to set pay mix percentages. The best approach will vary depending on the specific circumstances of the company and the salesperson.
To experiment with various pay mixes in a customizable compensation plan templates, visit Compensation Hub.