Min/Max

In the world of sales, compensation is often divided between a flat salary of a certain amount, and then a bonus or commission that’s variable based on sales numbers and performance. Some other professions work this way too, but sales is the most well-known.

In fact, it’s one of the draws of sales. A variable bonus or commission means you can earn more in an immediate way. But it’s also something that some people avoid, because it comes with uncertainty.

That’s why many sales roles have a mix. Sure, there are sales roles that are “straight commission” (no salary at all), and others that are normal salaried or hourly roles with only a nominal or even non-existent commission structure. But a hybrid is the standard.

Now imagine that you’re in sales, and you’re given some control over your compensation package. You can increase the commission percentage at the expense of decreasing the base salary, and vice versa. You have some knowledge of your own abilities, of course, but you can’t predict the future so you can’t guarantee your sales numbers. How would you configure your compensation?

I’ve been in that position, and here’s what I did: I minimized my salary to the level where it exactly covered my essential bills. No extra, no fun money, just keeping the lights on. And then everything else went into maximizing the commission.

This is a pretty viable strategy for a lot of things in life. Make sure your minimum costs are covered, then go high-risk/high-reward with the rest.

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