What’s the best way to compensate your sales employee?

David Sacks (CEO at Zenefits)
New Sales Models – David Sacks, Founder and CEO of Yammer – YouTube

Just keep the balance of their base and variable pay set. So if they want an increase in their base, they also need an increase in their quota that they need to hit. Do they really want that added stress?

Andy Swan (Three time financial tech entreprenuer)
Commission plans — how to get them right | A Founder’s Notebook

Embrace the idea of salespeople making more than you do.

Fred Wilson (Co-Founder and Partner at Union Square Ventures)
Commission plans — how to get them right | A Founder’s Notebook

The key is to sit down with finance, product and marketing with the budget in hand and ask the questions; what do we need to sell by the end of the year? Once the incentives have been nailed and properly aligned, make the plan dead, stupid, simple. A plan is simple stupid if a sales person knows exactly what they will be paid on a deal without looking it up. In addition, all plans must have accelerators. Accelerators are when more commission is p… (read more)

Geoffrey James (a contributing editor for Inc.com, is an author of the award-winning blog Sales Source)
5 Ways to reduce cost of sales

Many companies still use gross revenue to measure sales performance. Focusing solely on revenue, however, can easily put a company in a position where you’re losing money on each sale and trying to make up the difference by selling in volume. Since profit, not revenue, is the point of selling in the first place, it only makes sense to measure sales accordingly. A big advantage of this approach is that it reduces the temptation to discount (a hidd… (read more)

David Sacks (CEO at Zenefits)
New Sales Models – David Sacks, Founder and CEO of Yammer – YouTube

10% until they hit their quota and then 15% once they’ve met it

David Sacks (CEO at Zenefits)
New Sales Models – David Sacks, Founder and CEO of Yammer – YouTube

50% base and 50% variable, assuming they hit their quota. Set their comission to 10% until their quota is met and then 15% once they’ve met it. Therefore their quota should be 10x their base salary (assuming the 10% comission rate).