I would like to know how commission is structured and paid in a SaaS business with respect to: 1. Type of sales channel Direct, inside sales, indirect channel Do inside sales have a quota, MBO or both How are the three types paid? 2. Commission plan How paid - based on MRR/ARR/New business only or other? Is there claw back on commission paid on churn? How is renewals handled in commissions? Thanks
Commission models in a pure SaaS business
Answers
Anon,
Lots of resources for this. Answer is "it depends highly on the business you are in, and how you operate internally". Answer should also be, pretty much "you pay sales folks the same amount of comp for the same amount of (eventual) revenue" or you will lose your sales team.
Check this thread.
KP
https://www.proformative.com/questions/saas-commission-compensation-model-for-recurring-revenue-sales
I recommend paying them up front and, as Keith says, the same amount they would have received in the non-SaaS model. If the customer churns or does not pay within a fixed amount of time (6-12 months), recover the commission. I do not recommend paying over time as you bill as this is not the way salespeople think and it also creates a disincentive to get new business since they can live off deals already sold. You want them hungry to get the next deal.
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