A performance bonus is a one-time payment to employees upon achieving specific performance targets. Unlike ongoing commission paid per sale, bonuses are typically paid upon reaching quarterly or annual milestones.
For salespeople, performance bonuses are an important supplement to commission and can be tied to quota attainment, team goals, strategic initiatives, or company-wide results.
Paid upon achieving sales quota:
Increased bonus or commission when exceeding quota:
Bonus based on achieving individual goals:
Bonus based on the team's overall performance:
Bonus tied to overall company results:
Structure:
Scenario: Salesperson reaches 125% ($750,000)
Bonus: $20,000 (reached 120% tier)
Structure:
| Attainment | Bonus |
|---|---|
| Under 80% | $0 |
| 80% | $9,600 |
| 100% | $12,000 |
| 120% | $14,400 |
Bonuses can be designed to drive exactly the behavior the company wants.
Quarterly bonuses keep salespeople focused throughout the year.
Bonuses can be adapted to different roles and strategic priorities.
Team bonuses promote collaboration and shared goals.
Too many bonus types can make the compensation plan confusing.
All-or-nothing bonuses can demotivate salespeople who are close but don't reach the target.
Salespeople may hold back deals to hit the next period's bonus.
Companies may have difficulty budgeting for bonus payouts.
Limit the number of bonus goals. Salespeople need to be able to remember and focus on them.
Use graduated bonuses or lower thresholds to avoid all-or-nothing.
A combination promotes both personal performance and collaboration.
Pay bonuses quickly after achievement for maximum motivational effect.
Salespeople should understand exactly what's required to earn the bonus.
| Bonus | Commission |
|---|---|
| One-time payment | Ongoing payment |
| Based on milestones | Based on sales |
| Often quarterly/annual | Often monthly |
| Fixed amount/% of target | % of sales value |
With Prowi, you can design and automate bonus programs that drive the right results. Our platform calculates bonuses based on real-time performance data and ensures accurate, timely payouts.
Book a demo today and see how Prowi can simplify your bonus administration.