Here are three core options that work well for a SaaS product like yours:
1️⃣ Commission Only
- What it is: Pay a percentage of the subscription revenue from each new client they close.
- Typical rate: 10–20% of the first-year subscription revenue (some companies offer higher rates for first payments to motivate sign-ups).
- Pros: Keeps sales costs tied directly to revenue.
- Cons: Some salespeople may prefer a base salary to reduce risk.
2️⃣ Base Salary + Commission
- What it is: Pay a small base salary (e.g. $1,500–$3,000/month) plus a smaller commission (e.g. 5–10% of the first-year subscription revenue).
- Pros: Attracts higher-quality salespeople who appreciate stability while still incentivizing performance.
- Cons: Slightly higher upfront costs, but helps build a more reliable team.
3️⃣ Recurring Commission
- What it is: Pay a small ongoing commission for each client they bring in, tied to the client’s monthly subscription.
- Typical rate: 5–10% monthly recurring commission (usually for 12–24 months).
- Pros: Incentivizes salespeople to bring in quality clients that stick around, reducing churn.
- Cons: Slightly more complicated to administer, but often worth it.
🚀 Recommended Strategy for Your Business
Since you’re a startup targeting small to mid-sized agencies, I recommend:
✅ Base Salary + Commission (optional for contractors or part-timers)
✅ 10% of the first-year subscription revenue as commission
✅ Offer a higher commission (e.g. 15%) if the salesperson brings in a client that signs an annual contract and pre-pays for the year.
✅ For transaction fees (if the client chooses that pricing model), give the salesperson a one-time bonus per account instead of a recurring cut (to avoid complicating the payment system).
📊 Example
Imagine a client signs up for a plan at $250/month = $3,000/year.
- Commission: 10% of $3,000 = $300 (paid either upfront or quarterly).
- Base salary: $2,000/month plus bonuses for meeting targets.
📝 Sample Sales Compensation Clause
Here’s a simple contract clause you can adapt:
Sales Compensation
(a) The Company shall pay Salesperson a commission equal to 10% of the first-year subscription revenue for each new client account the Salesperson closes.
(b) Commission payments shall be made within fifteen (15) days following the end of each quarter, along with a report showing the calculation.
(c) Salesperson shall only receive commissions on clients who remain active and have paid their invoices in full.
(d) For annual contracts paid upfront, Salesperson shall receive the commission in full within fifteen (15) days of the client’s payment.
(e) The Company may revise commission rates at its discretion with thirty (30) days’ written notice.