Split commission is a compensation model where the total commission from a sale is divided between two or more individuals or departments who contributed to closing the deal. Instead of one salesperson receiving the entire commission, it's distributed based on predetermined rules or percentage allocations.
This model is commonly used in complex sales processes where multiple parties play a role—for example, when an Account Executive closes a deal that a Sales Development Representative (SDR) originally generated as a lead, or when a sale involves both a field sales rep and a technical specialist.
Split commission is crucial for ensuring fair compensation and motivation across the sales organization. When multiple people contribute to a sale but only one gets credit and commission, it can create frustration, conflicts, and ultimately damage collaboration.
A well-designed commission split recognizes each contributor's efforts and creates incentives for cross-functional collaboration. It can be the difference between a sales team working together toward common goals and one where everyone only thinks about their own deals.
The simplest model where commission is divided by fixed percentages. For example:
Different roles receive different shares based on their typical contribution to the sales process:
Commission is distributed based on specific activities or milestones in the sales process:
Let's look at a concrete example with a software company:
Scenario: A company closes an enterprise deal worth $50,000 annually. The commission rate is 10% of first-year contract value, meaning $5,000 in total commission.
Parties involved:
Distribution (60/25/15 split):
Alternatively, companies can use a double-credit model where both parties get full credit toward their quota, but the commission is still split. This is popular because it motivates collaboration without penalizing individual performance.
When all involved parties get a piece of the pie, there's greater incentive to help each other. SDRs work harder to deliver qualified leads when they know they'll share in the commission if the deal closes.
Complex B2B sales often require specialists, technical support, and multiple touchpoints. Split commission ensures that all contributors are recognized and compensated for their efforts.
Clear rules for commission splits minimize discussions about who "owns" a sale. When the distribution is defined upfront, you avoid conflicts when the deal closes.
When salespeople collaborate rather than compete internally, the customer gets a more cohesive experience throughout the entire sales process.
The more parties sharing in the commission, the more complex the calculation becomes. Without automated systems, it can become an administrative burden.
Even with clear rules, edge cases can arise. What if an SDR delivered the lead 6 months ago? What if another AE took over mid-process?
Some salespeople prefer working alone and receiving full commission. Split commission can feel like a "tax" on their efforts.
In poorly designed models, some may exploit the system and receive commission for minimal effort.
Write detailed guidelines for when and how commission is split. Include examples of typical scenarios.
Be clear about what each role contributes and what triggers their share of the commission.
How long does an SDR "own" a lead? 30, 60, or 90 days? Define clear rules for when credit expires.
Use a commission management system like Prowi to handle complex splits automatically. It reduces errors and saves time.
Evaluate your commission splits quarterly. Are they driving desired behaviors? Are they fair? Adjust as needed.
Split commission is ideal when:
Split commission is less relevant when:
Very common due to complex sales. Typical split between SDR (20-30%), AE (50-60%), and SE (10-20%).
Traditional industry with splits between listing agent and buyer's agent, often 50/50.
Complex splits between advisors, specialists, and referral partners.
Splits between inside sales, field sales, and channel partners.
Split commission can quickly become complex to manage manually. With Prowi, you can automate calculations, define clear rules, and give all involved parties real-time insight into their commission.
Prowi handles even the most complex split scenarios and ensures everyone receives correct compensation on time. Book a demo today and see how we can simplify your commission administration.