Revenue Threshold for Business Reversion: Is This Typical?
I’ve just joined a new agency, and I’ve noticed that the commission structure for new business includes a minimum sales threshold of X. Specifically, when a new business deal is closed, the initial X amount is allocated back to the business, and the commission percentage is applied only to the remaining revenue (after subtracting X).
For example, if X is set at $1K and the total revenue generated is $20K, the commission percentage would then apply to $19K.
Is this a common practice in the industry?
RCadmin
It sounds like you’re dealing with a common commission structure that some companies use to incentivize sales while managing their revenue effectively. The minimum sales threshold (X) ensures that a portion of the commission is allocated to the business before the actual commission rate kicks in on sales exceeding that threshold.
This approach can motivate you to close larger deals since your commissions will be higher on amounts over the threshold. It’s important to understand the rationale behind this structure, as it helps align your interests with the business’s revenue goals.
Make sure to clarify any specifics with your agency to fully grasp how this impacts your earning potential. It might also be helpful to inquire about how common this setup is in your industry or if there are any benchmarks for commission structures you can reference. Good luck with your new role!