Chapter 6
Formula Construction
Sales compensation formula construction is all about mathematics. Fortunately, it’s not very complex and is easily mastered. First, we will examine the fundamentals of constructing sales compensation formulas. Then, we will examine the economics of sales compensation for income producers. Finally, we will examine how to build target incentive commission and bonus formulas for sales representatives.
FUNDAMENTALS OF SALES COMPENSATION FORMULAS
The payout rate is calculated by dividing the compensation amount by the performance amount.
Using our payout graph (see Figure 6-1), we see the target compensation is $100,000 ...
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