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Why Must You Pay Sales People Commissions?

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Re: Why Must You Pay Sales People Commissions?

#281

Post by gaadd33 »

kurtisc wrote: post #206
jasonkester wrote: post #185

Earlier quoted context omitted.

As an engineer, the way you get paid for the value you create is by starting a company. In fact, that's the way you do it in pretty much every profession. The only difference between the guy who owns a successful Veterinary practice and the guy working as an underpaid veterinarian is that one of them went out and leased some office space.

The difference between an underpaid processor designer and Intel is a billion dollar fabrication process.

That didn't seem to stop Xilinx, Cirrus Logic or Broadcom?

Re: Why Must You Pay Sales People Commissions?

#282

Post by seem_2211 »

rayiner wrote: post #241
phkahler wrote: post #229

Earlier quoted context omitted.

I don't think the problem is evaluating individual teachers. If you look at average teacher compensation it isn't that much compared to the value they add. We could let the school and the union work out how to spread the pay among the teachers at a school, I think they're underpaid overall and that has nothing to do with evaluating them individually.

How much value do they add?

This is one of the biggest problems with trying to evaluate individual teacher performance (and reward / punish based on this evaluation), is that you need to watch out for incentives.

Rewarding teachers who have best highest test scores, for example, is a pretty good way of disincentivizing good teachers from helping less gifted children.

Sales people work their comp plan, especially if they're good. They tend to know what they're making and what the market pays.

They tend to leave for one of 3 reasons. 1: Product isn't competitive anymore 2: Comp plan has changed 3: Company is failing / run out of funding / has pivoted and fired their entire sales team.

Source: I recruit salespeople for a living.

Re: Why Must You Pay Sales People Commissions?

#283

Post by scirocco »

jasode wrote: post #258
mavhc wrote: post #240

Earlier quoted context omitted.

An engineer doesn't want to make a bad product, but if a company has a good product they don't even need to hire a salesperson

Both Boeing and Airbus make good airplanes. Nevertheless, they hire expensive salespeople and pay them massive commissions. They don't just tell the airlines to download a pdf brochure of the planes' specifications and call them when they're ready to place an order. People making statements such as "good products sell themselves" are probably thinking about gadgets like iPhones that don't require "greasy used car sal…

As an Account Manager, I research about my customer and reach out to them once I am convinced we can add value. Not just sell them stuff.

Re: Why Must You Pay Sales People Commissions?

#284

Post by Raphmedia »

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.

That's not true for everyone. I worked for an agency that did e-commerce integrations and developments and we had eyes on the client's budget and profits along with our agency's. We were not paid on commission either despite knowing the exact value of our work.

To be honest, being so close to the money was demoralizing. It skews perspectives (or should I say it enlighten you?). Hard to stay motivated working for xx.xx/h salary salary when you know very well that you create yyyyyy.yy$/day in value.

Re: Why Must You Pay Sales People Commissions?

#285

Post by pinot »

daladd wrote: post #262
rbcgerard wrote: post #251

Earlier quoted context omitted.

Not sure where the idea comes from that teachers are poorly compensated. Relative to some other professions yes, but hardly a low Paying job. Annual teacher salary in California is $73k/year [1] divided by .75 is $97k/year with generous pension an medical benefits that probably push that number up $25k-$75k/year... [1] http://www.cde.ca.gov/fg/fr/sa/cefavgsalaries.asp

I'm curious why you would divide by .75 there (?)

9 months a year of employment, which is a gross oversimplification of how many weeks/yr a teacher is working.

Re: Why Must You Pay Sales People Commissions?

#286

Post by TheCoelacanth »

tensor wrote: post #101

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…

It's objectively not true that salespeople in general get paid more than software developers. Maybe the very top salespeople get paid more than the very top software developers, but that is just because of how easily the top salespeople can prove that they are at the top.

Re: Why Must You Pay Sales People Commissions?

#287

Post by TheCoelacanth »

toocool wrote: post #110
tayo42 wrote: post #94

Earlier quoted context omitted.

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.

That's only the very top salespeople, though. There are also salespeople making minimum wage with no commissions.

Re: Why Must You Pay Sales People Commissions?

#288

Post by scarby »

rayiner wrote: post #273
frgtpsswrdlame wrote: post #256

Earlier quoted context omitted.

>And my person view is that all jobs should be compensated at the same hourly rate. What? Care to elaborate?

I think the economy should compensate people based on factors they have control over, not ones they don’t. Someone who was born smart shouldn’t be better off for his luck. Your can choose how much you work. Maybe you can choose to do things like get an education (but not in our system where that is gated by standardized tests).

That doesn't equate to the same hourly rate though. Different jobs have different demands. In different roles I've been both lead engineer and painted fences. If the pay was the same I would probably paint fences and write code in my spare time.

Re: Why Must You Pay Sales People Commissions?

#289

Post by HeyLaughingBoy »

johannes1234321 wrote: post #168
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…

From a company's perspective the nice thing there is that they can push some risk to the sales people. If they build a shotty product nobody wants the sales people earn less, while not being responsible ...

How exactly is that a good thing for anyone in the company?

Re: Why Must You Pay Sales People Commissions?

#290

Post by Waterluvian »

greedy_buffer wrote: post #95
Waterluvian wrote: post #7

Earlier quoted context omitted.

Also personality. Good salespeople are... Good salespeople. They apply their craft when negotiating compensation. What am I going to do, make a single page app about why I should be paid more? ...actually that's not a bad idea.

Depending on who you are pitching, it might turn out something like http://getcoleman.com/

That's incredible.
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