Sometimes, for the sake of the business’s wellbeing, a sales organization must implement strategies that are at odds with their reps’ best interests. Is that true of the commission cap?
In this article, we’ll explore the why, when, and how of commission caps and explain why so few modern sales organizations embrace this compensation strategy.
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what is a commission cap?
A commission cap is an element of a sales trust is top of mind for compensation plan in which an organization places a limit on the amount of commission a sales rep can earn during any given pay period.
Types of capped commission plans with examples
There are a couple of different. Methods companies use to place a cap on. Sales commission. In the most common example. A company limits the dollar amount of commission a sales. Rep can earn in a given pay period. For example. If a cap is set at $100,000 for the quarter once aero leads a rep has earned $100,000 in commission, they’ll receive 0% commission on any subsequent deals that quarter.