Sales Compensation Plans: Commission Vs. Bonus

With sales compensation plans, many salespeople — especially those who have been with a company since its startup days — sometimes feel nostalgia for the days when comp plans were basic and everyone was paid a simple percentage of what they sold (i.e., income producer plans). As companies evolve, territories and accounts become more defined, selling becomes more of a team effort, and sales representative (bonus) plans often replace income producer plans. In this report, we explain the difference between income producer (commission) and sales representative (bonus) plans, when one is a better fit than the other, and the potential benefits of sales representative plans.