Complexities of Sales Staff Compensation in Subscription Billing

Complexities of Sales Staff Compensation in Subscription Billing

When you sell a one-time product, commissions are easy to calculate, track and pay out. Add in the extra dimension of subscription billing and the process becomes more complicated. Not only do salespeople receive installments instead of one-time payouts, but customers can cancel, upgrade, downgrade, etc. at any time. This makes choosing the right billing platform even more critical.

You need to ensure the platform you use can handle different commission use cases including:

  • Sales staff that needs to be compensated based on their compensation plan
  • Affiliates that drive revenue via the Internet
  • Independent Sales Organizations in the payment industry that are compensated for add-on products that cannot be handled by their traditional payment processor
  • Resellers and value-added resellers (VAR)

Equally as important is that your provider be able to handle different models within each of these use cases:


Agent-Based Model
Typical examples would be senior and junior level salespeople that have different rates.

Product-Based Model
This model is often used by enterprises that sell a mix of high-profit and low-profit offerings, with the low margin products often used to entice customers to move up to the high-margin products. The sales staff are incentivized to go after the higher commissions associated with the high-margin products.

Group-Based Model
This is the classic VAR (value-added reseller) model, where there are multiple tiers of VARs. Gold partners derive higher commissions over silver partners, and this model typically has elements of the Product Based Model as well. The challenge here is to deal with thousands of external sales agents in an efficient manner.

Role-Based Model
This type of structure is often used when multiple sales staff will be commissioned on the same order, with the sales team comprising of sales managers, account executives, technical pre-sales experts, etc.

The key to choosing the right SaaS billing partners is finding one that can help you to create a more intricate and efficient compensation model behind-the-scenes, while keeping the front-end implementation clean, simple and easy for your team to manage and execute each day.