According to Harvard Business Review research, optimally designed sales territories can increase revenue by 7% without any other changes. But 64% of organizations cite data quality as their biggest challenge in territory planning. The choice between territory and individual commission is one of the most fundamental decisions in compensation design, and the wrong choice can cost both revenue and talent.
This guide covers everything about territory vs. individual commission: from definitions and models to advantages, disadvantages, and when each approach works best. We also look at the special considerations for Danish and Scandinavian companies, where team culture and collaboration are core values.
The two fundamental approaches to commission represent different philosophies about how salespeople should be compensated:
With territory commission, salespeople earn commission based on the total sales volume within a specific geographic, industry, or customer area they manage. Commission is pooled and distributed among the salespeople working in that territory, promoting collaboration over competition.
With individual commission, each salesperson earns commission solely based on their personal sales performance. This creates clear ownership and direct reward for individual effort.
Territory commission follows the "influence principle": If a salesperson's individually measurable contribution accounts for less than 80% of the total value creation due to team involvement, multiple touchpoints, or complex cycles, territory or team-based models become more appropriate.
There are several variations between the two extremes:
100% of commission is tied to personal sales. This model works best for transactional sales with clear ownership, where performance is individually measurable.
Commission is pooled by region or territory and shared equally. This model works for geographic expansion and complex sales cycles where many touchpoints are involved.
Combines base salary with individual commission and team bonus. This is the most common model in B2B organizations and balances individual motivation with team collaboration.
Commission is based on the team's overall performance. This model suits collaborative sales environments where deals require input from multiple people.
Ongoing commission from customer accounts over time. This model is often used in SaaS and subscription models where Account Managers focus on retention and upselling.
Territory commission works best under the following circumstances:
When sales involve multiple touchpoints and contacts, it's difficult to attribute success to one salesperson. Territory commission acknowledges that many contribute to the result.
With sales cycles of 6-24 months, salespeople may change positions or leave the company along the way. Territory commission ensures the territory and customer relationships remain covered regardless of personnel changes.
When the focus is on building long-term relationships and retaining customers, territory commission rewards the ongoing effort of nurturing existing customers.
When entering new markets where there's a need to build presence from scratch, territory commission shares the risk and reward among the team.
Modern B2B sales often involve SDRs, AEs, SEs, and CSMs. Territory commission can be designed to reward all contributors appropriately.
Individual commission works best under the following circumstances:
With short sales cycles and high volume, it's easy to attribute each deal to one salesperson. Individual commission creates a direct incentive to close more deals.
When one salesperson is the primary contact throughout the entire sales process, individual commission makes sense as performance is clearly measurable.
In cultures where ranking and competition drive motivation, individual commission can create the desired dynamic.
With high volumes of similar deals, individual commission is easier to administer and more transparent for salespeople.
Here's a detailed comparison of the two approaches:
Territory: Pooled by area and shared among salespeople. Individual: Direct percentage of personal sales.
Territory: Strongly encouraged as everyone wins together. Individual: Often discouraged as salespeople compete for the same customers.
Territory: Shared and sometimes unclear. Individual: Clear individual ownership.
Territory: Difficult to measure individual contributions. Individual: Easy to measure exactly who contributes what.
Territory: Higher due to overlapping areas. Individual: Lower with clear boundaries.
Territory: High match with Scandinavian equality values. Individual: More competition-oriented than Nordic culture.
Territory: Lower as top performers may feel undervalued. Individual: Higher with direct reward for effort.
Territory: Higher as underperformers can "hide" in the team. Individual: None as only personal effort counts.
Nordic work culture has special characteristics that affect the choice of commission model:
Scandinavian culture values equality, low power distance, and consensus building. This creates natural alignment with team-based commission structures. The "everyone's opinion counts" culture fits well with territorial models.
Nordic employees would often rather work for a company with values that match their own than take an offer with higher pay elsewhere. Passion and company values often outweigh pure salary maximization.
Open office culture extends to compensation. Be transparent about how commission is calculated and ensure the structure feels fair to everyone.
European employees value job security. Maintain higher base salary proportions (60-70% base) compared to American models.
For Danish companies, a hybrid model is often recommended that balances the different considerations:
60-70% base salary ensures stability and security. 15-20% individual commission rewards personal performance. 10-15% team or territory bonus promotes collaboration. 5-10% company bonus creates shared focus on overall goals.
For long sales cycles common in Nordic B2B, add milestone payments throughout the sales process to maintain motivation.
Include account retention components for Account Managers to reward the relationship-building work that's so important in Scandinavian business culture.
If you choose territory commission, territory design is crucial:
Use TAM (Total Addressable Market), SAM (Serviceable Addressable Market), and SOM (Serviceable Obtainable Market) metrics to assess the potential in each territory.
Territories should be fair, not necessarily equal. A territory in the capital region may have higher potential than one in the provinces, but also higher competition.
Don't divide only by postal codes. Consider revenue potential, customer concentration, and market density.
Match salespeople's competencies and experience with territory requirements. An experienced enterprise salesperson fits better in a complex territory.
Review and adjust quarterly or semi-annually. Markets change, and static territories become unbalanced over time.
Disputes about territories can destroy team dynamics. Here are strategies for prevention and resolution:
Establish clear, documented split commission rules. Agree on commission distributions BEFORE work begins, not after the deal is closed.
Be explicit about who owns which customer relationships. Use CRM data to document ownership based on activity history.
Create written procedures for dispute resolution. Give management authority to decide distributions when parties can't agree.
Make collaboration a measured and rewarded behavior. When salespeople know their collaboration skills affect their compensation, conflicts decrease.
When deals involve multiple salespeople, split commission is necessary:
Total commission distributions should never exceed 100%. Document all agreements in writing. Have impartial administrators to implement policies.
Define standard distribution ratios for common scenarios in advance. Example: SDR who generates lead gets 20%, AE who closes the deal gets 80%.
Include smaller accounts in the split model if cost-effective. Exclusion can create perverse incentives to ignore small customers.
The choice of commission model fundamentally affects team dynamics:
Research shows that teams on team incentive plans perform better than those on individual plans, with increases in both sales AND customer engagement. But poorly designed team compensation can lead to "free rider" problems, power struggles over credit and blame, and anger from top performers.
Territory commission encourages knowledge sharing because everyone in the territory wins when one salesperson develops an effective technique. Individual commission often discourages knowledge sharing as information is a competitive advantage.
With territory commission, customer handover during personnel changes is smoother because the team already knows the account. With individual commission, handovers can be problematic.
If you're considering switching models, it requires careful planning:
Successful companies allow 12+ months for development and implementation of new compensation structures.
Use phased rollouts with transition arrangements. Don't let salespeople lose income from day one.
Train leaders 3 months before the sales team. They need to be able to answer questions and defend the new structure.
Give salespeople the opportunity to model their expected earnings under the new plan. This reduces fear and resistance to change.
Assemble an implementation team with representatives from Sales, HR, Finance, and Data.
Nordic employees expect to understand the business rationale. Explain why the change is necessary and how it benefits both the company and salespeople.
Here are key data points to inform your decision:
According to Harvard Business Review, 7% revenue increase from optimally aligned territories without any other changes. Sales Management Association research shows 30% higher quota attainment with automated territory mapping. $174,000 extra annual revenue per salesperson from balanced territories.
71% of companies use pay-for-performance models in 2025. According to Mercer research, the average turnover rate in B2B sales is 35%, nearly three times the 13% average across industries. 70% of companies still use spreadsheets for commission plan design.
B2B Sales Consultant average salary in Denmark is approximately DKK 518,421 annually. Sales Representative average is approximately DKK 486,873 annually. Remote B2B SaaS roles typically range from EUR 42,000-60,000 plus commission.
Here are the most common mistakes in territory and commission design:
Don't divide only by postal codes without considering revenue potential. Market density and customer concentration vary dramatically.
Don't let where employees live dictate territory design. Design for market opportunities, then assign salespeople.
Past performance doesn't necessarily indicate future opportunity. Balance historical data with market growth potential.
Don't let outdated assumptions block new opportunities. Regularly assess white space and competitor gaps.
Static territories become unbalanced over time. Review quarterly and adjust at least semi-annually.
Unbalanced territories lead to some salespeople being overworked while others struggle. Gallup research shows 43% of departing salespeople cite lack of bonuses as a primary reason.
Modern tools can help with territory administration:
Salesforce Maps, Geopointe, and eSpatial help visualize and plan territories based on data.
Badger Maps and Map My Customers optimize salespeople's routes within their territories.
Modern ICM platforms automate commission calculations, including complex split scenarios.
Specialized territory planning tools help balance territories based on potential and capacity.
The choice between territory and individual commission isn't an either-or decision. Most successful Danish companies use hybrid models that combine elements from both approaches.
Start by analyzing your sales process: How long is the sales cycle? How many people are involved in typical deals? How easy is it to attribute success to individual contributions? The answers will point toward the right model.
Book a demo with Prowi and experience how automated commission management can help you design, implement, and administer both territorial and individual commission structures. We help companies create compensation plans that fit their sales model and culture.