Sales commission is the part of the salary that depends on proven results. The right model directs behavior toward company goals, makes incentives clear, and ensures fairness across the team. Below you will find seven concrete models, each with strengths, weaknesses and calculation examples, as well as practical advice for implementation and optimization. We have tried to eliminate as many industry terms as possible and thus only create value for managers who want to achieve new models.
A well-functioning model combines a simple unit of measurement, a clear rate and a transparent payout rule. Typical building blocks are percent of sales, fixed amount per unit, steps with accelerator effect, bonus at milestones, and quality signals such as margin or retention. Select few items and measure only what moves the business.
The seller is remunerated exclusively by commission. The rate is typically high, as the company does not pay fixed wages.
Strengths: Maximum sales drive and low fixed cost.
Weaknesses: High income risk for the employee can increase churn and make recruitment difficult.
Example calculation
Assume rate 20 percent of billed revenue.
Seller closes 300,000 DKK per month.
Commission: 300,000 x 0.20 = DKK 60,000 paid out.
When to choose
Transactional selling with many small trades and short cycle. Use robust qualification rules to avoid failure rates.
2. Basic salary plus commission
Fixed salary combined with variable part. A common pay mix is 60 percent fixed and 40 percent variable, but adjust according to cycle and risk.
Strengths: Stability without losing performance focus.
Weaknesses: Too heavy fixed share may dampen the hunt for extra sales.
Example calculation
Annual OTE 600.000 DKK with pay mix 60 40.
Fixed salary: 360,000 DKK per year. Variable pool at 100 percent target: DKK 240,000.
Monthly revenue against target: 90 percent. Payable variable: 240,000 x 0.90 ÷ 12 = 18,000 DKK per month.
Total monthly salary: 30.000 fixed + 18,000 variable = 48,000 DKK.
When to choose
Moderate cycle B2B where recruitment and retention require baseline stability.
The rate increases at certain levels and rewards the handover of budget.
Strengths: Creates momentum and lifts top line in top performers.
Weaknesses: Requires clear dashboards and communication.
Example calculation
Step: 3 percent up to and including 100,000 DKK, 5 percent from 100,001 to 250,000 DKK, 7 percent above 250,000 DKK.
Monthly sales 320.000 DKK.
Commission:
100,000 x 0.03 = 3,000 DKK
150,000 x 0.05 = 7,500 DKK
70,000 x 0.07 = 4.900 DKK
Total: 15.400 DKK.
When to choose
When the goal is to squeeze extra volume at the end of the period and reward outperformance without raising base rates.
Payout follows the customer's payments over time. Often a combination of starting bonus and ongoing percentage of MRR for a period of time.
Strengths: Rewards healthy customers and long-term relationships.
Weaknesses: Income is distributed over time, requires patience in ramp up.
Example calculation
Starting bonus 10 percent of first invoice. Ongoing 5 percent of MRR for 12 months.
New customer: start-up 20.000 DKK and MRR 8.000 DKK.
Month 1:20,000 x 0.10 = 2,000 DKK
Months 1 to 12:8,000 x 0.05 = 400 DKK per month
Total over 12 months: 2,000 + 12 x 400 = 6,800 DKK.
When to choose
SaaS, service and subscription solutions where retention and quality are highly valued.
Payout is calculated on gross margin rather than revenue. Protects margin and counteracts discount race.
Strengths: Teaches salespeople price discipline and product mix.
Weaknesses: Requires precise cost data and clear rules for what counts as direct cost.
Example calculation
Rate 15 percent of gross margin.
Trade A: Turnover 150.000 DKK, cost 105.000 DKK, profit 45.000 DKK, commission 45,000 x 0,15 = 6,750 DKK.
Trade B: Turnover 150.000 DKK, cost 120,000 DKK, profit 30.000 DKK, commission 30.000 x 0,15 = 4.500 DKK.
Same revenue, different salary because margin varies.
When to choose
Hardware, project sales, resellers or solutions with large cost variations.
Guaranteed advances are paid on an ongoing basis and offset against earned commissions. Suitable for start-up periods.
Strengths: Safe ramp up without relaxing performance requirements.
Weaknesses: Requires clear rules if advances are not earned.
Example calculation
Monthly advance 25,000 DKK. The seller earns a commission of 32,000 DKK per month.
Payout: 32,000 minus 25,000 = 7,000 DKK in addition to the advance.
If earned commission is DKK 18,000, DKK 7,000 is booked as an unhedged advance according to agreed rules.
When to choose
New markets, long cycles or new employees building pipelines.
A total pool based on the team's result is allocated according to simple keys. Can be combined with smaller individual element to avoid passenger behavior.
Strengths: Supports collaboration, knowledge sharing and common pipeline hygiene.
Weaknesses: Too low an individual ratio can impair personal accountability.
Example calculation
Team targets 2.0 million DKK per quarter. Pool 4 percent of quarterly sales.
Actual sales 2.4 million DKK. Pool: 2,400,000 x 0,04 = 96,000 DKK.
Distribution: 50 percent by share of revenue, 50 percent equally distributed.
Three sellers with stakes of 50, 30, 20 percent.
Revenue: DKK 48,000 is distributed 24.000, 14,400, 9,600.
Equality portion: 48,000 ÷ 3 = 16,000 DKK for each.
Withdrawals: 40,000, 30,400, 25,600 DKK.
When to choose
Complex sales with overlapping roles, or where multi touch and common pipeline is the norm.
Keep it simple in the first version
Choose one primary unit of measurement, one rate, and get exceptions. Know your data and defer advanced rules to version two.
Create a unique definition package
When is an order closed, what products count, how are credits handled, when does a payout occur. Use concrete examples, as above.
Deploy with visual transparency
Give sellers access to real-time status, earned commissions, and what's missing for the next step. Without transparency, the model loses power.
Steady Governance
Establish approval flow, track changes to agreements, and issue periodic statements. Turn off manual excel sheets by centralizing the calculations.
Pilot and power measurement
Run 1 to 2 periods as a pilot. Measure effect on revenue, margin, win rate and sales behavior. Adjust rates, steps and definitions based on data, not gut sensations.
A well-thought-out commission model creates direction, speed and fairness. Choose a model that fits your data and goals, make it simple to explain, and follow it up with real-time transparency. This will give you both a more motivated team and a stronger business.