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Payment template excel for Sales

hey there it's Erin with time saving templates and today I'm going to be going over the first video that we're doing in a series for sales compensation so we have a template at timesavingtemplates.com that is specifically for quota attainment type sales commission plans and I'm going to be using that as the example but in this first video I'm just going to be going over some of the basics of sales commission in in determining what a commission percentage can be and what pay mix means so I'm breaking it out into a few different videos because there can be a lot of variations with how commission is calculated let me open up the example template so most of the commission examples I see are just a flat straight commission examples and that's just saying they will get 2 or 3 percent or whatever percentage is determined of sales and just taking the sales volume times commission and a few things we're going to cover um that's also included in the template is whether you want to include a threshold so a minimum sales volume before that commission starts calculating and whether you want to add leverage so you want to pay a higher commission rate once they get to a certain over Target goal and as I mentioned the the template we have is not straight commission it's based on quota attainment so I've kind of broken out just some examples here of how quota attainment is calculated this would look at the Target sales volume versus the salesperson's actual sales volume and then quota attainment is just take seeing what percentage of their sale of their actual divided by Target so On Target quota attainment is always going to be a hundred percent quota attainment if they met their target or you know it could be below or above their quota attainment okay so for this example you'll see here this is part of the template where you would fill out the green cells and then the blue and the gray um are calculating based on the information entered so I wanted to first start with the very basic idea of pay mix which is a great place to start if you're not sure what to pay for a sales job as far as commission the pay mix is typically expressed as a ratio assuming that you're starting with a total Target compensation amount that's an annualized number so for this example I have a hundred thousand that is assuming that's their annualized total Target compensation and also it's sometimes called OTE On Target earnings it's basically their base pay and and their commission payout that they would get if they achieved the Target that you've set for their sales Target so On Target sales and so payments looks at first starting with that total Target compensation number and payments will break it out and say okay the first number here is their base pay and the second number is the portion of that TTC that is incentive or Commission when they're on target so 100 0 is going to be 100 base pay and they're not eligible for an incentive 90 10 90 is base pay ten percent is incentive so this example has a 90 10 so that would mean 90 000 of the hundred thousand is base 10 000 is how much incentive they would earn when they hit their targets there's also um I've added some guidelines here with different payments examples but the main thing to note here if you're looking into deciding on what a pay mix should be is looking at the obviously the job description and how much that sales person influences the ultimate sale if they're having a really long sales cycle then you would lean towards less portion of their pay being incentive um because it's it loses its incentivizing value if it's a really long time to wait or if it's a service job where it's more of customer support and things like that they're not um they're not the person that gets the customer to actually purchase necessarily um and of course as you go up the scale of having the second number be a higher portion of their pay is incentive or variable the they should have a much higher influence over sales until you get to zero 100 which would mean they get no base pay in a hundred percent of their pay is based on their commission and their sales typically you want to pay some type of Base um base pay or you may have a hard time recruiting so that is how paymix works and how you would look at what you want to pay overall and then breaking out well which part is base and which part is incentive so I hope that helps explain how paymix works and kind of the difference between quota attainment versus a flat commission and like I said this is uh a lot to go over with this template so stay tuned for the next video where I'm going to dive into how we're coming up with the different sales volume targets and how that translates to the actual payout in Quota attainment calculations as well as what that would mean for the commission percentage payout so be sure to watch out for that next video coming out and if you wanted to go ahead and grab this template you can I'll link to it in the comments and you can also find it by going to time savingtemplates.com shop and then Human Resources will have all the HR and compensation related templates and also don't forget we do have some free resources that you can find here at timesavingtemplates.com free resources and with the um there's a few different resources we have but you may be interested in the compensation metrics cheat sheet and as well as a free video guide to get started with Excel um so you can find that there and thanks again for watching and don't forget I'm here to help you streamline and save time when it comes to using Excel spreadsheets for your small business your HR and compensation and as well as some rental property management too I will see you next time thanks for watching