Free Commission Agreements - Software: Sales Manager

Sample Software Sales Manager Commission Plan Template
iSoftware Sales Manager Compensation Agreement
Revision Date: ii ____________ 

This document describes the agreement between iii ______________ _
(“Company”) and iv (“Sales Manager”) regarding terms related to compensation.
Company and Sales Manager enter into this agreement whereby Sales Manager provides sales services to the Company in return for compensation specified in this agreement.


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:

viSales Manager is due a base salary of vii , payable every viii_______________.

Sales Compensation:

Targeted sales compensation for the full year is ix ________. The sales compensation is not capped.

Other Compensation:
Sales Manager will be paid for all travel and lodging expenses related to sales activities. Auto travel will be reimbursed at the current federal reimbursement rate (Currently 0.45 cents per mile).
Sales Managers will be required to maintain a cell phone as part of conducting sales business. Sales Manager will be provided an allowance of $50 per month for cell phone usage.
Client entertainment expenses will be reimbursed as following:
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.

xSoftware License Sales Commission 

Sales Manager has a quota requirement of xi_ in Software License Sales Revenue for the full year.

Sales Credits:

Sales Commission is paid to the Sales Manager based on the sale of the following products:

xiiSoftware Product 1

Software Product 2

Software Product 3

Sales Manager earns commissions only when an invoice to the customer is completely paid.xiii
Sales Revenue minus Tax and Shipping charges are credited to the Sales Manager and compared to the Quota.


Sales credits are accumulated and compared against the annual quota. Based on the percentage of quota achievement a different sales commission percent is applied against the current sales revenue and commission amt 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%


Assuming Sales Manager 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
(Crosses two tiers)
$20,000 at 3% = $600 (this portion is in the first tier)
$10,000 at 5% = $500 (this portion is in the second tier)
Total Commission: ($2900)

xivSoftware Sales Override Commission 

Sales Manager does not have a quota for this Commission.

Sales Credits:

Sales Commission is paid to the Sales Manager based on the sales of all Sales Reps reporting to the Sales Manager:
Sales Rep 1
Sales Rep 2
Sales Manager earns override commissions only when an invoice to the customer is completely paid.xv
Override is calculated as a percentage of Software license sales made by each Sales Rep reporting to the Sales Manager. Sales made by the Sales Manager are not eligible for the Override commission.


Sales credits are accumulated and paid at a standard xvi 1% of License Sales revenue.


Assuming Sales Reps reporting to the Sales Manager completes the following sales in the first month – Invoices A and B totaling $13,000 of software license.
Commissions will be calculated as following:
Sales Rep 1 Invoice A $8,000 ($8,000 x 1% = $80 (Commission)
Sales Rep 2 Invoice B $5,000 ($5,000 x 1% = $50 (Commission)
Total Override Commission: $130

President’s Club

On achievement of 125% of the annual quota for the main sales commission incentive, Sales Manager 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.


During the first three months of employment with the company, the Sales Manager is provided a recoverable draw of $2,500 per month. The draw balance will be recovered as soon as possible from future earnings.


There is no cap on any payouts to the Sales Manager. 

Termination of Employment

On voluntary or involuntary termination of Sales Manager employment with the Company, commissions will be paid on transactions dated prior to the termination date only. Any amounts owed to the Sales Manager will be according to employment regulations after withholding taxes and other dues.

Other Terms

1. Sales Manager agrees to follow all Federal and Local laws while engaged in providing services to the Company during the period of this agreement.
2. Sales Manager shall not engage in any other employment during the term of this agreement. Company reserves the right to require Sales Manager to terminate any such other employment at Company’s sole discretion.
3. Sales Manager shall use the most ethical practices while engaging in any sales activity.
4. Sales Manager 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.
5. This entire agreement shall be governed by the laws of the State of .
Company                Sales Manager
__________            __________
By                           By
__________            __________
Name                      Name
__________            __________
Date                       Date

i Any part of this document can be changed or overridden based on your needs.
ii This date will give us information as to when this agreement was written and distinguish it from similar other agreements.
iii Fill out the company name here.
iv Fill out the sales person’s full name here.
v Enter the start and end date for the sales commission plan effective period. Most companies use the calendar or fiscal year start and end dates for these values. Some companies may not have an end date specified.
vi Alternatively you can remove this section or phrase it such as “Base Salary is specified in a separate employment agreement.
vii Amount of base every payable period.
viii Weekly, Bi-weekly, Twice-monthly, Monthly, etc
ix If there is a targeted compensation for the full year, it can be entered here. Alternatively, this whole section can be removed.
x This incentive encourages higher levels of product sales, by paying higher commissions when the quota is exceeded.
xi 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.
xii Replace with appropriate products or product families. Alternatively, replace products with customers or types of business.
xiii Alternatively commission can be due on invoicing or shipping of goods or other events.
xiv This incentive is an override from all Sales Reps reporting to the Sales Manager.
xv Alternatively commission can be due on invoicing or shipping of goods or other events.
xvi Override commission rate can vary based on overall target and expected sales from all Sales Reps.