Negotiating Sales Commission agreement or Rates?

Negotiating Sales Commission agreement or Rates?

July 28, 2022
Negotiating a job offer? A sales commission contract rates or commission fee — can be a deal breaker. Our experience at has shown that sales agents find it difficult to negotiate an attractive deal. Few sales reps are worried that pushing for a high commission fees may cost them the sales contract. Many times … Continued

Negotiating a job offer? A sales commission contract rates or commission fee — can be a deal breaker.

Our experience at has shown that sales agents find it difficult to negotiate an attractive deal. Few sales reps are worried that pushing for a high commission fees may cost them the sales contract. Many times sales representatives lack the necessary negotiation skills or find it simply hard to talk about money.

Either for the above factors or any other hurdle, sales agents should not give up trying to get the best deal. Even if a commission fee is not a major motivator, job offer acceptance should be based on fair market rates. Feeling that you have sold yourself short, will eventually catch up leading to demotivation.

Here are some do’s and don’ts while negotiating sales commission contract or before accepting job offer.

Timing of Negotiating the sales commission fee

In any negotiation timing is of paramount importance. Discussing about commission fee too early may lead to rejection. It is important to build your worth during interview stages, before even breaching the topic of sales commission rate or fee.

This becomes an edge once company start opening about job offer acceptance or when you are sure of selection. It gives a platform to negotiate from higher ground. However, just keep in mind that sales commission fee needs to be realistic and in line with market. A prior intelligence on company’s pay scales or sales target expectations helps in pitching right commission fee.


Professional Attitude

During the initial negotiation phase, it is not uncommon to see offer with lowest possible commission fee.  Which could be significantly below sales reps expectations.  After an exhaustive interview process it could be pretty disappointing.  Nevertheless, keep your professional attitude and demeanor.

Two options are likely in this situation: the first, company is really on tight budget or inflexible. It is just better to make a graceful exit.

The second being it may be a test to check your expectations and market knowledge.  Just maintain a positive attitude and highlight your experience, skills and indicate fair industry commission rate. Mostly this works and shows maturity.

Balancing Sales Commission Fee Vs Time Invested

In a tight job market many sales agents accept whatever comes their way.  It is totally understandable that if a sales agent is not working on any other  contract.

However still be mindful;  it covers basic expenses and time you will invest to promote manufacturer product or service.

As sales pressure mounts it is common to feel resentful. Just evaluate two things first odds of getting a better-paying job if you wait. Second does it balances time spent Vs income generated.

Ignoring other benefits in sales commission contract

Always check finer details of contracts, each minor clause can save you the cost. For example, reimbursement of telephone, internet charges or petrol expense, if applicable. Committed trainings and marketing support; as they tend to ease lot of upfront costs for manufacturer’s reps.

We would suggest not taking anything for granted and clarify all doubts. Organizations have great disparity on salaries, depending upon country’s sales potential and living expense. Be sure to know all aspects of sales commission contract before accepting the job offer.

Is it always good to negotiate the sales contract or commission agreement?

Usually its fine to negotiate a bit at times lightly and other time firmly. However it is better not to negotiate much, if most of the sales contract terms are in line with expectations or market trends. This improves your perceived value and you don’t end up justifying the sales commission fee during low sales period.

Also higher commissions fee for the same work (as other sales agents) or industry average leads to probing by all, in times of management change.

Organisation Change

Remember organizations are dynamic; the structures, managers keep on changing.  New line managers are often not aware of your skills or sales reach. To prove themselves in new role most managers start reviewing expenses, cash flows etc.  A realization that either you are overpaid or replacing you with less senior resource will save 20% of your commission fee may prove costly.

It doesn’t matter even if your outgoing manager gave positive feedback a  cost saving exercise affects everyone. Also market goes through cycles of boom and busts. The cyclical nature or macro- economic business environment directly influence sales. There will always be other sales agents ready to work on lesser commissions or accept new terms in sales commission agreement.

 Renewable Sales Commission agreements

It is quite common to have renewable or retainer agreement for specific time period for independent sales agents. Retainer sales commission agreement is common when a manufacturer rep company hires sales reps to test new territory or a product line.

The manufacturer’s reps agencies go for retainer agreements, when they are building credentials or are desperate. Down the line they simply realize it is not worth. Manufacturer’s rep companies  simply realigns or even fire sales agents in such cases.

Conclusion : Tailored approach

There is no fixed approach or path to negotiate a sales commission fee. It all depends upon companies work culture, HR policies, extent of your needs and your goals.  A low sales agent commission fee  is not a bad thing if companies is stable and offers long term contracts.

Common sense is the best guidance while joining as commission based sales agents.  It is not always that  initially  low sales commission fee are offered. Many HR sites provides tips to push or  to tricks to negotiate. Just remember, a job offer acceptance is just a start, commission fee can always be revised based on sales performance.

Joining as commission only sales agent or  as manufacturer rep is just a beginning of a potentially long-term relationship. It only succeeds when it is sustainable for both sales agents and companies hiring sales agents.