In the following video, we discuss the steps in setting up compensation plans for your sales team.
Here's a version rewritten as a knowledge base learning article that's optimized for both human readers and AI-powered search. It uses clear headings, definitions, and step-by-step instructions so AI can easily identify and surface answers.
How to Create and Manage Compensation Plans
Overview
Compensation Plans define how commissions are calculated and paid to salespeople. You can create commission structures based on sales revenue, profit, gross profit, average cost, and other criteria.
The Compensation Plan wizard guides you through the setup process step by step. If you're creating your first plan, our Support team can also assist with configuration.
Before You Begin
A compensation plan consists of four main components:
Base Commission – The standard commission paid on qualifying sales.
Additional Commission Tiers – Extra commission earned when specific selling criteria are met.
Bonus Commission Tiers – Fixed bonuses or additional rewards for selling designated items.
Commission Exclusions & Rules – Define what should or should not earn commission.
Create a New Compensation Plan
Navigate to Point of Sale Settings > Compensation Plans.
Select + New Compensation Plan.
Enter a Plan Name.
Example: 2025 Compensation Plan
Select a Customer Type.
Choose a specific customer type if the plan only applies to certain customers (such as Residential or Builder).
Select No Customer Type if the plan applies to all customers.
Configure the Base Commission
The base commission determines how every qualifying sale is paid.
Step 1: Select the Calculation Method
Choose whether commissions are calculated as:
Percentage
Flat Amount
Step 2: Select What Commission Is Based On
Available calculation bases include:
Total Sales Revenue
Profit
Gross Profit
Average Cost
Example
Calculation Method: Percentage
Based On: Total Sales Revenue
Commission Rate: 2%
This pays every salesperson 2% of total sales revenue.
Create Additional Commission Tiers
Additional commission tiers pay extra commission in addition to the base commission when specific selling conditions are met.
Example
A salesperson receives:
Base Commission: 2%
Additional Commission: 1% for selling Whirlpool products
Total commission on qualifying Whirlpool sales would be 3%.
To Create an Additional Tier
Select Additional Commission Tier.
Enter a tier name.
Example: Whirlpool Products
Select a classification.
Available classifications include:
Brand
Product
Category
Select the qualifying item.
Example: Whirlpool
Choose what the commission is calculated from.
Select Percentage or Flat Amount.
Enter the commission value.
Select a Priority.
Select Update.
Understanding Commission Priority
Priority determines which commission applies when multiple commission tiers qualify for the same sale.
Example
A washer belongs to:
Appliances (2% commission)
Washers (3% commission)
If:
Washers = High Priority
Appliances = Normal Priority
The salesperson receives the Washer commission.
If both commissions have the same priority, the system applies the first qualifying commission.
Create Bonus Commission Tiers
Bonus commissions reward salespeople for selling specific products or inventory.
Unlike Additional Commissions, bonus commissions are designed as separate incentives rather than percentage increases to the base commission.
Common uses include:
Scratch & Dent inventory
Clearance products
Obsolete inventory
Promotional items
Example
Pay a $500 bonus for every Scratch & Dent item sold.
To Create a Bonus Tier
Select Bonus Commission Tier.
Enter a name.
Example: Scratch & Dent Bonus
Select the appropriate classification.
Example: Serial Status
Select the qualifying status.
Example: Scratch & Dent
Choose what the bonus is calculated from.
Select:
Flat Amount ("Plus"), or
Percentage
Enter the bonus value.
Select Update.
Create Commission Exclusions
Commission exclusions prevent certain items from earning commission.
Common Examples
Accessories
Parts
Installation items
Delivery charges
Example
Do not pay commission on Appliance Accessories and Parts.
To Create an Exclusion
Select Commission Exclusion.
Enter a name.
Example: Accessories
Select the classification.
Example: Category
Select the category.
Set the commission value to 0.
Select Update.
Configure Commission Rules
Commission Rules determine whether commissions should be paid in specific situations.
Common options include:
Pay commission on miscellaneous items
Pay commission on parts
Pay commission on extended service contracts
Pay commission when a sale has an Accounts Receivable (AR) balance
Reduce or reverse commissions on returns or losses
Override Standard Commission Rates
Some rules allow you to override the normal commission structure.
Example
Instead of paying the normal commission on Parts:
Enable commission on Parts
Set a custom commission rate of 3%
Only Parts would use this custom percentage.
Commission Rules and Exclusions
Commission Rules work together with Commission Exclusions.
For example:
You may generally exclude Parts from commission.
Then create a Commission Rule that pays a custom commission percentage specifically for Parts.
This provides greater flexibility over how commissions are calculated.
Save the Compensation Plan
After completing all sections:
Select Save.
The new Compensation Plan will appear in the Compensation Plan list.
Assign Salespeople to a Compensation Plan
After saving the plan:
Select Assign to Salespeople.
Select one or more salespeople.
Select Assign.
The selected salespeople will begin using the assigned Compensation Plan.
Frequently Asked Questions
What is the difference between Base, Additional, and Bonus commissions?
Commission Type | Purpose |
Base Commission | Standard commission earned on qualifying sales. |
Additional Commission | Extra commission added to the base commission when specific selling criteria are met. |
Bonus Commission | Separate fixed or percentage reward for selling designated products or inventory. |
What happens if multiple commission tiers qualify?
The system uses the Priority setting to determine which commission applies. If priorities are equal, the first qualifying commission is used.
Can commissions be excluded for specific products?
Yes. Use Commission Exclusions to prevent specific categories, brands, or products from earning commission.
Can I customize commissions for parts or service contracts?
Yes. Commission Rules allow you to override the standard commission calculation for items such as Parts, Miscellaneous Items, and Extended Service Contracts.
Related Topics
Assigning Compensation Plans to Salespeople
Understanding Commission Priorities
Creating Commission Exclusions
Configuring Commission Rules
Managing Salesperson Settings