Defining Margin Compensation
Some companies use profit margin as a basis to calculate sales compensation. In some industries (for example, commodities), it is important for a company to maintain a high profit margin in order to remain competitive. These companies must provide incentives to their salespeople to maintain a high profit margin in order for them to stay in line with this strategy.
To define Margin compensation:
1. Open the Plan Elements window.
2. Name the plan element and provide a description.
3. For Active Periods, enter the start and end dates when this plan element can be assigned.
These dates must be within the dates of the compensation plan(s) the plan element is assigned to.
4. The Interval Type field is not applicable for margin compensation.
5. For Element Type, select Margin.
6. The Apply Txn (Transaction) field is not applicable for margin compensation.
7. In the Payment Type field, select how the payment is calculated from the list of values.
- Applied Transaction Amount Percentage: A percentage of the amount of the transaction(s) is paid for each level of margin percentage achievement specified in the rate table.
- Fixed Amount: A fixed amount is paid for each level of margin percentage achievement specified in the rate table.
- Payment Amount Percentage: A percentage of the payment amount you specify in the Payment field is paid for each level of margin percentage achievement specified in the rate table.
8. In the Rate Table field, select a rate table from the list of values where the From/To rate tier is percentage or amount, which is based on the Payment Type field:
- Applied Transaction Amount Percentage: The commission rate is percentage.
- Fixed Amount: The commission rate is amount.
- Payment Amount Percentage: The commission rate is percentage.
9. Choose the Revenue Classes button to assign one or more revenue classes to this compensation plan element. (See Assigning Revenue Classes.)
See Margin Compensation Examples.
