Average Sales Commission Rates by Industry
Contents
Outdated commission structures can cost you your best salespeople, leaving them open to offers from your competitors.
You see, today’s sales professionals are smart. They want to know that their hard work will lead to real rewards and unlimited earning potential.
Don’t worry, though. Before your competitors steal your best talent, we’re here to help you stay ahead of the curve.
We looked at the latest Glassdoor salary data to find out industry benchmarks. This will help you create commission packages that are attractive.
Let’s ensure that your team is positioned for success and motivated to do great work!
Advertising Sales
$97,860
| Industry | Performance-based Rates | Base Pay | Additional Pay* | Median Salary |
|---|---|---|---|---|
| Advertising Sales | 32% | $61,460 | $31,373 | $93,333 |
| Architecture Sales | 37% | $76,744 | $36,581 | $113,325 |
| Auto Sales | 30% | $80,980 | $35,524 | $116,503 |
| Financial Sales | 32% | $72,921 | $35,485 | $108,406 |
| Insurance Sales | 33% | $68,637 | $33,252 | $101,889 |
| Real Estate | 28% | $97,303 | $38,784 | $136,086 |
| Retail Sales | 36% | $44,949 | $25,166 | $70,116 |
| Pharmaceuticals Sales | 35% | $78,688 | $41,475 | $120,163 |
| Software as a Service (Saas) | 32% | $79,356 | $37,702 | $117,058 |
| Telecommunications Sales | 35% | $55,236 | $29,519 | $84,756 |
| Travel Agents | 35% | $39,029 | $21,233 | $60,262 |
| Wholesale Sales | 34% | $66,863 | $34,490 | $101,353 |
What Are Commission Rates?
Commission rates are a set percentage or dollar amount of a gross sale that is rewarded to a salesperson as part of their compensation.
Entry-level salespeople may enjoy a 5% commission rate of the cost of every item sold on top of their base salary. More experienced salespeople or those in high-end industries may earn 100% commission for sales without any supplemental base pay.
Ultimately, commission rate and total annual salary vary based on commission structure and the salesperson’s experience.
Average Sales Commission
Because there are so many variables, there’s no true average sales commission rate. However, many agree that 20%-30% is a typical range for sales representatives. Most companies pay a base rate (either by the hour or as an annual salary) in addition to the salesperson’s earned commission.
Commission rates go as low as 5%, though these companies typically offer significant base rates. Sales commission may also vary considering these factors:
- Total sales volume: Surpassing quota expectations could earn higher commission rates for additional sales.
- Seniority and experience: Entry-level professionals may earn a lower rate with a larger base pay than experienced salespeople who can better meet sales goals.
- Difficulty and length of sale: Difficult industries or products take more time and relationship-building to convert, meaning fewer sales elsewhere, and should earn higher wages accordingly.
If you’re not sure how fair your commission structure is, commit to industry research and compare employee costs to their value. Reviewing employee satisfaction and exit interviews can also clue you in to your employees’ feelings and how you can better meet their needs to retain a quality team.
How Much Do Sales Reps Make?
Sales representative salaries aren’t so straightforward. A salesperson’s total potential earnings may be represented as on-target earnings (OTE), which is the sum of an individual’s base pay and entire commission earnings if they always hit sales quotas. Since commission earnings are based on performance, actual pay can vary.
Both commission and base rates depend on a number of variables, and managers should consider these factors when setting their rates:
- Industry
- Product or service
- Experience
- Commission structure
For example, travel agents earn around $47,251 a year, and about 36% of that income comes from performance bonuses, like commissions or tips. This means a significant portion of their pay depends on how well they perform.
In contrast, real estate agents can make about $119,296 a year, but only 30% of that is based on performance. This means a smaller part of their income relies on commissions, with more of their earnings coming from a fixed base salary.
Real estate agents earn a fair base pay to accommodate the time between sales and earn a much larger commission from the value of a home.
Experience and seniority in the industry also play a strong role in determining pay. Experienced employees likely don’t need as much training to begin selling productively. Because of their knowledge and independence, you can hire them with confidence that training won’t exhaust your management team.
Additionally, they’re usually more confident salespeople. They can earn more sales more quickly, supplementing their own pay with a higher commission rate than an entry-level employee that will need training to work up to the sales floor and will likely be compensated with a higher base rate.
Sales Commission Trends and Predictions
As we look towards 2030, sales commission rates in both the SaaS and retail industries are set to change significantly based on rigorous analysis and projections. Here’s what we anticipate based on the latest data:
2030 SaaS Commission Rate Forecast
- Base commission rate: In 2020-2025, the benchmark for SaaS was around 10% (with a range of 5-15%). By 2030, this is expected to stabilize at 10-12% due to market pressures on profit margins.
- Accelerated rates: These could jump to 15-25% for sales exceeding quotas, thanks to a growing reliance on tiered incentives.
- On-target earnings: These are expected to rise from 130k-165k to 150k-200k, driven by larger deal sizes and global market growth in the SaaS sector.
2030 Retail Sales Commission Rate Forecast
- Commission rate: From a 1-5% range in 2020-2025, this is expected to adjust to 1-4% due to ongoing margin pressures and the rise of e-commerce.
- Commission structure: A continuation of base salary plus commission, but with a greater focus on profit-based and tiered structures to promote profitability and employee retention.
- On-target earnings: These are expected to rise slightly from 54k-75k to 50k-75k, with increased incentives for top-performing individuals.
Important factors influencing retail trends include:
- More online sales and low margins
- Shift to profit-based commissions instead of sales volume
- Technology and automation
- Higher commission rates for luxury goods (3-5%)
Beyond SaaS and retail, industries like financial services, manufacturing, and consulting are leaning toward performance-based, margin-sensitive, and recurring revenue models.
By 2030, commissions will reflect deeper alignment with long-term business value to reward customer retention, deal quality, and profitability over raw sales volume.
What Are Sales Commission Structures?
There are 10 basic sales commission structures that identify the balance between base pay and performance-based compensation.
- 100% commission: Your entire salary relies on sales success without a base rate.
- Base salary + commission: Employees earn an hourly or salary pay as well as a set commission rate for sales.
- Tiered commission: Commission rates increase once a specified quota is reached.
- Revenue commission: Commission is based on product cost.
- Gross margin commission: Commission is based on a percentage of the sale’s profit.
- Commission draw: Employees earn an “advanced” guaranteed pay that can be increased once they earn at least that amount through commissions.
- Residual commission: Commission is earned through existing accounts generating revenue.
- Territory volume: Commission is split among a team within a shared region based on sales volume and revenue in the territory.
- Multiplier commission: Additional commission rates are multiplied by a set modifier once initial quotas are met.
Most salespeople want to earn commission to support their financial goals, while base rates provide a safety net for slow months or economic turmoil. Finding the right balance for your team is integral to attracting and retaining great employees.
Sales Commission FAQs
Sales commissions can be based on dollar amounts or profit percentages, and are paid out with a salary or offer modifiers for smashing sales goals. There are many factors that can make identifying the best sales rate for your team overwhelming.
Below are some additional insights to help you pay your salespeople every penny they’re worth.
Is 15% Commission a Lot?
A 15% commission rate is above average for many industries. For instance, SaaS and software sales typically offer 5-15%, retail averages 1-5%, and real estate usually pays 5-6%. While some niche or high-margin sales roles may offer 20% or more, these are exceptions, not the norm.
What Is a Reasonable Commission Rate?
A reasonable commission rate depends on the base salary offered, the value of the sale, and the time required to close a deal. A range of 20%-30% is most often cited as a reasonable commission rate. The average salary-to-commission ratio in the U.S. sits at 60:40.
Industries that require significant client education and relationship-building, like architectural sales, should earn higher rates than industries that have high quotas with relatively quick turnarounds, like insurance.
How Do You Determine a Fair Commission Rate?
Determining the right commission rate for your team is a balancing act that requires a little bit of research upfront. First, determine:
- What competitors are paying
- The average time it takes to close a sale
- How much relationship-building and hands-on effort is required to close a sale
- How pay should vary by the product/service’s cost
- How geography factors into compensation
In addition, you should consider your company’s current pay range and employee satisfaction. If entry-level and experienced salespeople are working within a similar pay range, you’ll want to boost rewards for top performers.
If you’re struggling to find new talent, you may increase your base rate to recruit better. If your team is struggling to meet sales goals, consider additional incentives with different sales commission structures.
A mix of external and internal research can show you where you’re over- or under-compensating employees so that you can keep a strong team without sacrificing sales goals or your business’s growth.
At the end of the day, your team comes to work to make a living and you pay them for their efforts that contribute to your business’s growth. To ensure you’re attracting new hires that want to help you thrive and providing them the compensation they deserve, it’s vital to stay up to date on sales commission rates by industry and cost of living expectations as they evolve.
Are you preparing for a hiring push? Help new hires succeed with our outreach masterclass, covering everything from attention-grabbing subject lines to email analytics.
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