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Commission payments are important as they motivate sales reps to achieve their targets, which directly impacts revenue. But calculating commissions is a complex task and can be error-prone and time-consuming.
Sales commission software can simplify the process by automating commission calculations as per sales targets, commission plans, applicable tax rates, etc. The tool also ensures accuracy in commission calculations.
In this buyers guide, we will learn more about this solution and its key features. Here is what we will cover:
Sales commission software is a tool that automates the calculation of commission to ensure timely and accurate commission payments to sales reps. It calculates commissions based on the preferred commission plan (flat rate, tiered, or split) and other criteria such as the sales quota and frequency of payment.
There are two deployment options for sales commission software. Understanding these options helps select the right deployment for your business.
Cloud-based deployment (SaaS): Vendors host cloud-based sales commission tools on their own or third-party servers. They also cater to the maintenance and support required for these tools. Users can access the tool via the internet for a subscription fee, typically charged monthly or annually.
On-premise deployment: Businesses that opt for on-premise sales commission tools host them on their own network and, therefore, only the devices connected to the network can access the tool. Such businesses have to look after the support and maintenance of the tool themselves. On-premise tools are usually available for a one-time license fee.
Key question to ask a vendor before you buy: What security measures does the tool offer to protect sensitive business information it will hold?
Knowing the common features of sales commission software will help understand the fundamental capabilities to look for while selecting a tool.
Commission calculation: Calculate commission based on commission plans such as tiered, split, and flat rate. Define criteria involved in calculating commissions such as targets, timelines, and quotas.
Commission tracking: Generate reports to track commissions, incentives, bonuses, and overrides. Track commissions across territories, product lines, financial years, and teams.
Commission scheduling: Set schedules and reminders for commission payments. Set the frequency for these as per business requirements—weekly, bi-monthly, monthly, etc.
Incentives: Define the criteria for incentive calculations and payment, such as the percentage amount or rate of incentive and the event under which the incentive will be provided. Schedule the frequency of incentive payment, such as monthly, quarterly, or yearly.
Key questions to ask a vendor before you buy: Will the users require technical training to use the features of the tool? Is there any additional cost for such training?
Note: The applications selected in this article are examples to show a feature in context, and are not intended as endorsements or recommendations, obtained from sources believed to be reliable at the time of publication.