Free Commission Agreements - Value Added Industry : Value Added Reseller Sales Rep
Sample Value Added Reseller Sales Rep Compensation Plan Template
[i]Value Added Reseller Sales Rep Agreement
Revision Date: [ii]____________
This document describes the agreement between [iii]_______________________________ (“Company”) and [iv]____________________________________ (“Sales Rep”) regarding terms related to compensation.
Company and Sales Rep enter into this agreement whereby Sales Rep provides sales services to the Company in return for compensation specified in this agreement.
Duration:
This agreement covers the period starting from [v]_______________ and ends on ________________.
All commissions will be calculated and paid once every month, for the preceeding month. Commissions will be calculated and paid out as part of the next payroll cycle, following the month for which commissions are calculated.
Base Pay:
[vi]Sales Rep's base salary (if any) is specified as part of a separate agreement.
Sales Compensation:
Targeted sales compensation for the full year is[vii]______________. The sales compensation is not capped.
[viii]Other Compensation:
Sales Rep will be paid for all travel and lodging expenses related to sales activities. Auto travel will be reimbursed at the current federal reimbursement rate [ix](Currently $0.56 cents per mile).
Sales Reps will be required to maintain a cell phone as part of conducting sales business. Sales Rep will be provided an allowance of [x]$50 per month for cell phone usage.
Client entertainment expenses will be reimbursed as following:
[xi]Meals: Reimbursable with receipts
Special Events: Must be pre-approved. Reimbursable with receipts.
Expenses will be reimbursed within 30 days of being presented with the receipts and a completed expense reimbursement form.
Product Sales Commission
Quota:
Sales Rep has a quota requirement of [xii]_______________ in Product Sales Revenue for the full year.
Sales Credits:
Sales Commission is paid to the Sales Rep based on the sale of the following products:
[xiii]Product 1
Product 2
Product 3
Sales Rep earns commissions only when an invoice to the customer is completely paid.[xiv]
Sales Revenue minus Tax and Shipping charges are credited to the Sales Rep and compared to the Quota.
Calculation:
Sales credits are accumulated and compared against the annual quota. Based on the percentage of quota achievement, a different sales commission percentage is applied against the current sales revenue and commission amount is calculated.
Commission Tiers
Quota Achievement
Commission Rate
0% to 79.99%
3%
80% to 99.99%
5%
100% to 149.99%
7%
150% and above
10%
Example:
Assuming Sales Rep has a goal of $100,000 and in the first month completes the following sales-
Invoice1 $60,000
Invoice2 $30,000
Commissions will be calculated as following:
Invoice 1 $60,000 at 3% = $1,800( is in the first tier)
Invoice 2 $30,000 (crosses two tiers)
$20,000 at 3% = $600 (this portion is in the first tier)
$10,000 at 5% = $800 (this portion is in the second tier)
Total Commission: $3,200
[xv]Service Gross Profit Commission
Quota:
Sales Rep does not have a quota for this Commission.
Sales Credits:
Sales Commission is paid to the Sales Rep based on the sale of the following services:
Service 1
Service 2
Sales Rep earns commissions only when an invoice to the customer is completely paid.
Gross Profit is calculated by using a standard cost rate of [xvi]$55 per hour for services rendered and subtracting that cost from the service revenue. Gross Profit is credited to the Sales Rep.
Calculation:
Sales credits are accumulated and paid at a standard 10% of Gross Profit.
Example:
Assuming Sales Rep completes the following sales in the first month-
Invoice1 $8,000 100 Hrs
Commissions will be calculated as following:
Invoice 1 $8,000 ($8,000 – ($55 x 100)) = $2,500 (Gross Profit)
$2,500 x 10% = $250 (Commission)
Quarterly New Sales Bonus
Quota:
Sales Rep has a quota requirement of [xvii]_______________ of new sales revenue for the quarter.
Sales Credits:
Sales revenue can be either a product or service sales. Sales has to be made to brand new customers.
Sales Rep earns commissions only when an invoice to the customer is completely paid.
Sales Revenue minus Tax and Shipping charges are credited to the Sales Rep and compared to the Quota.
Calculation:
Sales credits are accumulated and compared against the quarterly quota. If the quota is exceeded, Sales Rep gets a quarterly bonus of $5,000.
Example:
Assuming Sales Rep has a quarterly goal of $50,000
If Sales Rep makes $45,000 in Quarterly New Sales, then Sales Rep does not get any bonus.
If Sales Rep makes $55,000 in Quarterly New Sales, then Sales Rep gets the bonus of $5,000.
President’s Club.
On achievement of 125% of the annual quota for the main sales commission incentive, Sales Rep will join the President’s club. President’s club members will be invited to the annual sales meeting trip held in the first quarter of the next year.
Draw
During the first three months of employment with the company, the Sales Rep is provided a recoverable draw of $2,500 per month. The draw balance will be recovered as soon as possible from future earnings.
Cap
There is no cap on any payouts to the Sales Rep.
Termination of Employment
On voluntary or involuntary termination of Sales Rep employment with the Company, commissions will be paid on transactions, dated prior to the termination date only. Any amounts owed to the Sales Rep will be according to employment regulations after withholding taxes and other dues.
Other Terms
- Sales Rep agrees to follow all Federal and Local laws while engaged in providing services to the Company during the period of this agreement.
- Sales Rep shall not engage in any other employment during the term of this agreement. Company reserves the right to require Sales Rep to terminate any such other employment at Company’s sole discretion.
- Sales Rep shall use the most ethical practices while engaging in any sales activity.
- Sales Rep agrees to protect all confidential material including prospect data, sales data, and client information belonging to the Company and shall take all reasonable care in making sure that such confidential material is not disbursed to anyone outside the company.
- This entire agreement shall be governed by the laws of the State of ___________.
| Company | Payee |
| By _______________________ | By_______________________ |
| Name _______________________ | Name_______________________ |
| Title _______________________ | Title_______________________ |
| Date _______________________ | Date_______________________ |
- Any part of this agreement can be changed or overridden based on your needs
- This date will give us information as to when this agreement was written and distinguish it from similar other agreements.
- Fill out the company name here
- Fill out the payee's full name here
- Enter the start and end date for the sales commission plan effective period. Most companies use the calendar or fiscal year start and end date for these values. Some companies may not have an end date specified.
- Alternatively you can remove this section or rephrase it such as Base salary is specified in a separate employment agreement.
- Targeted sales compensation for the full year
- Maybe completely removed or altered according to the agreement of the parties
- Search for current IRS mileage rate.
- You can put any amount or you may completely remove it based on your needs
- Maybe replaced by any other expenses according to the agreement of the parties
- Enter quota amount here. It could be setup to be a monthly or quarterly quota. It is also possible to not have a quota at all.
- Replace with the company’s line of business or products
- Alternatively commission can be due on invoicing or shipping of goods or other events.
- This incentive discourages discounting, by paying on Gross Profit. It also keeps the focus of the Sales Rep on product sales, where higher commissions are possible.
- Cost can be a standard rate such as this, or can be derived directly from product cost or can be evaluated from purchase orders raised to supplying vendors.
- Enter quota amount here. It could be setup to be a monthly or quarterly quota. It is also possible to not have a quota at all.
