by Adam Feber
The title says it all…calculating sales commission shouldn’t be a pain in the SaaS. Yet, after countless conversations with SaaS sales teams, including our own, we concluded that everyone shares the same sentiment—it IS a pain in the SaaS.
But it is just math, right? While the math portion may be simple, tying revenue to reps and accurately tracking revenue performance over time is anything but simple—especially in a fast-paced segment like SaaS where any given rep could be selling different price points, billing frequencies, and even billing models like fixed-price vs. metered-usage.
Add in an ever-changing environment that includes upgrades/downgrades, add-ons, and bundles and you can quickly see how simple, predictable revenue is actually quite complex and unpredictable.
“Expansion revenue is complex to track and report on,” said Kyle Racki, Founder of Proposify.
“For example, if a sales rep upsells a $5K customer on a new $7K/year plan, you shouldn’t pay them a commission on that entire deal, so now you’ve got to break out the expansion revenue differently. It can be a headache to manage. Also, it takes time and focus away from closing new customers.”
Yet the vast majority of businesses are still tracking the chaos via manually updated, migraine-inducing spreadsheets. No wonder 83% of organizations admit to having inaccuracies in their sales commission payouts. There has to be an automated, more scalable way…
Introducing The Sales Commission Calculator
Over the past 10 years, we’ve built one of the most power billing engines on the planet, and since our platform is the source of truth for all revenue impacting events, we’re uniquely positioned to solve the age-old sales commission calculation conundrum.
The underlying foundation for these new capabilities starts with the ability to add/manage reps and associate them to subscriptions that run through Chargify.
Once a rep-to-subscription association is created, you have instant access to a wealth of revenue data for any given rep. The Commission Summary report provides a 10,000-foot view of revenue by rep for the current month and historical months.
Notice that total revenue is broken out by MRR and usage revenue. Differentiating the two enables businesses to structure and calculate compensation models for different revenue streams and milestones. We predict this will become much more prevalent as more and more SaaS businesses find ways to monetize their products by aligning price to consumption.
You can drill down to unearth core subscription lifecycle events such as conversion, payment, and churn dates for every subscription associated with any given rep.
When deep insights are needed, you can export the full Sales Commission Report which provides a line-item view of all underlying subscription activity and revenue data for all subscriptions that are tied to reps, saving hours of time while eliminating costly errors.
Check out our documentation to learn how to configure reps and start generating your own revenue reports today.
Compensating Other Revenue Generators
Revenue management extends well beyond sales-driven acquisition—it’s about optimizing success across the entire funnel. Sales rep compensation is the most common use case, but we’ve witnessed other use cases that highlight the importance of tying revenue to various revenue generators such as:
The concept of ‘Customer Success’ has quickly shifted from a “nice to have” to a must-have. SaaS businesses now rely on CS teams to onboard, engage, and retain customers over time.
While newer in concept, we’re seeing a dramatic rise in CS commission structures that are tied to post-sale onboarding, usage, upsells/expansion, and retention. Our new Sales Commission Calculator enables these businesses to also track and compensate post-sale customer success metrics.
Your sales team may not be the only feet on the ground selling your products. For many, partners drive a substantial amount of revenue, and they are typically compensated for their efforts.
Not only can you use this new functionality to calculate and compensate partner/referral commission, but you can also gain valuable insights into how your partners’ efforts contribute to revenue growth over time.
Beyond Billing: Revenue Management Is The Future
The Sales Commission Calculator is just the beginning of what’s to come. Billing is in our DNA but modern SaaS businesses require a complete end-to-end revenue management platform that streamlines operations and accelerates growth.
In a fast-paced segment like SaaS, there is so much more to revenue management beyond just billing. Chargify has been a trusted partner over the years, helping us navigate the many complexities that surface at scale. We love the product they have built and appreciate that they continue to innovate with time-saving features such as the Sales Commission Calculator.