Hacker News Board Hacker News, browsed like a classic message board
Live data from Hacker News

Why Must You Pay Sales People Commissions?

a16z.com

Post reply on HN
Print view View original

101–110 of 327 posts

Re: Why Must You Pay Sales People Commissions?

#101

Post by tensor »

I suspect that developers are not so much upset at salespeople getting commission, but rather why they get paid so much compared to developers.

Personally I don't buy that sales skills are so much more difficult to find or are in higher demand than software development skills. Some of the difference in equity certainly has to do with the higher risk of getting fired for poor performance in sales.

But beyond that it's probably that sales and business people are motivated mostly or only by money and thus have spent decades as a collective optimizing getting more money for themselves. In contrast, developers and designers are motivated by accomplishing and creating good things before money and end up not focussing on optimizing money making.

If developers were compensated like lawyers, I doubt they'd be so worked up over salespeople getting commissions.

Re: Why Must You Pay Sales People Commissions?

#102

Post by 0xbear »

alexasmyths wrote: post #12

Their contribution to revenue is so direct that this kind of bonus can be incentivized in a very valid way. Engineers at Google get 'bonuses' as well, all of them, so you could very well ask 'why are they paid bonuses'. If Engineers could be incentivized so directly, I'd imagine they would be.

Google actually had to dial down the bonuses circa 2011. For one thing, to keep the comp looking competitive, it makes sense to have a larger component, because until this rebalancing bases were unimpressive there. For another too large a bonus creates more competition than one would like in the engineering discipline, where the overall success depends on people working well together. So they just cut the bonus in half and added it to the base.

Re: Why Must You Pay Sales People Commissions?

#103

Post by puranjay »

ugh123 wrote: post #87
phkahler wrote: post #3

Why do sales people get commissions and engineers don't? Because the sales person knows exactly how much money they bring in and can claim "if I didn't make the sale, that money would not be coming in" even though it's not always true it's a good story. An engineers actions are so far removed from revenue that they can't make a claim so directly. Also, if they did want to claim a portion of product revenue they could…

>An engineers actions are so far removed from revenue that they can't make a claim so directly. Really? I see it the other way around. How did the salesperson contribute to building the product? A well built technology solution can sell it self in many scenarios. If we didn't have sales people, we could still build a product and push it into the market. Of course all of this depends on the type of product, but still.…

You're not going to sell to large businesses without salespeople. A $10/month product? Sure. But when you're selling a $10,000/month product, you need salespeople.

Re: Why Must You Pay Sales People Commissions?

#104

Post by erikb »

phkahler wrote: post #3

Why do sales people get commissions and engineers don't? Because the sales person knows exactly how much money they bring in and can claim "if I didn't make the sale, that money would not be coming in" even though it's not always true it's a good story. An engineers actions are so far removed from revenue that they can't make a claim so directly. Also, if they did want to claim a portion of product revenue they could…

If you work as an engineer in a big company you often face decisions that will influence big time results. And you can make a big impact, by deciding which competitor for your time (manager, co-department, company's partner A or partner B) will get you to build the result they desire. I can guarantee you that even ina 600 ppl team there will only be a few engineeers who can really plan, push others, understand the technical problems, and communicate to all parties, so that a result can be achieved. These people will either work their 40 hours, tell everybody maybe, and then work on their side business the other 30 hours, or they spend 50-70 hours on your project and get the result you need to even start calling customers. It is also very accountable, because no technical results means no deals.

Thus, the same logic as with sales people also applies for engineers. It's just that they are cheaper, because fewer of them know, and fewer people actually are smart enough to make them offers accordingly.

In the end it's always how to make the biggest impact with the limited amount of money you have. And there's no natural reason that would stop engineers from being in key positions to your success.

Re: Why Must You Pay Sales People Commissions?

#105

Post by KGIII »

phkahler wrote: post #3

Why do sales people get commissions and engineers don't? Because the sales person knows exactly how much money they bring in and can claim "if I didn't make the sale, that money would not be coming in" even though it's not always true it's a good story. An engineers actions are so far removed from revenue that they can't make a claim so directly. Also, if they did want to claim a portion of product revenue they could…

We gave bonuses and profit sharing. The now-parent company stopped that practice, I am told. I still own shares in the parent company, I should sell them.

Re: Why Must You Pay Sales People Commissions?

#106

Post by megiddo »

What an enormous echo chamber. I moved from senior dev to sales.

My contract is 100% commission, because it aligns performance with business requirements. Good sales is every bit as difficult as good dev, maybe harder.

The only people who think devs are not well compensated are devs who can't negotiate or are marginal.

If you've never told an interviewer to go fuck themselves over stupid questions or whiteboarding in an interview, you're probably not making an effort.

Re: Why Must You Pay Sales People Commissions?

#107

Post by dsacco »

ugh123 wrote: post #87
phkahler wrote: post #3

Why do sales people get commissions and engineers don't? Because the sales person knows exactly how much money they bring in and can claim "if I didn't make the sale, that money would not be coming in" even though it's not always true it's a good story. An engineers actions are so far removed from revenue that they can't make a claim so directly. Also, if they did want to claim a portion of product revenue they could…

>An engineers actions are so far removed from revenue that they can't make a claim so directly. Really? I see it the other way around. How did the salesperson contribute to building the product? A well built technology solution can sell it self in many scenarios. If we didn't have sales people, we could still build a product and push it into the market. Of course all of this depends on the type of product, but still.…

I think you're getting hung up on the difference between product work and product revenue. Think of this like the terms front office and back office. The back office (engineers, product managers) build the core software and the front office (traders, salespeople) use or sell that software to bring in revenue for the company.

The terminology doesn't refer to which parties did more work to release the product, it refers to which parties are closest to the revenue, and thereby have more quantifiable metrics to be judged upon.

Unsurprisingly, software engineers can make just as much or more than salespeople if they work in roles that happen to be very quantifiably attached to revenue generation, this just isn't the norm.

Re: Why Must You Pay Sales People Commissions?

#109

Post by [deleted] »

phkahler wrote: post #3

Why do sales people get commissions and engineers don't? Because the sales person knows exactly how much money they bring in and can claim "if I didn't make the sale, that money would not be coming in" even though it's not always true it's a good story. An engineers actions are so far removed from revenue that they can't make a claim so directly. Also, if they did want to claim a portion of product revenue they could…

[deleted]

Re: Why Must You Pay Sales People Commissions?

#110

Post by toocool »

tayo42 wrote: post #94
JamesBarney wrote: post #16

CEOs tell everyone if you want great CEOs you gotta pay them. If you wanna great salespeople you gotta pay them. You want great devs. You should put in a ping pong table and give out free soda. The myth that great developers aren't interested in compensation is terrible for our collective pay.

Dev salaries are pretty high? Are sales people really making what engineers make? I took a quick look at glassdoor for my company and it doesnt seem like it.

I personally know sales folks in large enterprises (say Cisco) who do a lot of travelling and are able to get base salaries of ~250k and commissions of ~400-500k a year, on top of essentially life time personal unlimited travelling due to millions of miles points accumulated. So yea, pretty high.
Post reply on HN