Plan details

1. Provide a unique name for your commission plan. It can be based on a persona or designation, team names or such.
   Example: Commissions for Presales consultants, Sales function, Field sales, Outbound team, et cetera.
2. Specify the plan code. Many businesses uses alphanumeric codes to represent their commission plans. This cryptic code is displayed in payouts and help businesses systematize, recognize, and refer to the commission plan a particular payout was triggered from.
   
3. Choose the plan type to define when and how commissions are earned. You can choose between Transaction- and Quota attainment-based plans.
   
1. Transaction-based plan: In a transaction-based plan, commissions are calculated for every eligible transaction an agent closes. The payout is typically based on the value of each transaction, making this a value-driven commission model. This plan type works best when:
   
1. Deal values vary significantly
   
2. Sales cycles are longer
   
3. Individual deals require sustained effort and follow-ups
   
2. Quota Attainment plan: In a quota attainment plan, commissions are earned only after an agent meets a predefined target, such as:
   
1. Closing a specific number of transactions
   
2. Achieving a defined revenue threshold
   
    This plan type emphasizes target completion and is commonly used to drive volume or milestone-based performance.
   

   

   Choosing the right plan type 
   

   The plan type you choose directly influences employee behavior, priorities, and sales focus. Before selecting a plan type, consider the following factors:
   

   1. Your business model
      
   2. Your business objectives
      

    
   

   Example Scenarios  
   

   Retail or eCommerce businesses
   

   Businesses with short sales cycles and high transaction frequency typically rely on sales volume for growth. In such cases, a quota attainment plan encourages agents to close more sales within a given period.
   

    
   

   Real estate businesses

   Real estate offerings are limited in volume, while deal values vary significantly. Sales cycles are longer and involve higher stakes, extensive follow-ups, and greater drop-off risks. A transaction-based plan aligns commissions with deal value and rewards sustained effort on individual sales.
   
   Choosing a transaction-based plan also reinforces the incentive that closing high-value deals efficiently leads to faster commission earnings.

   
   
4. After you have chosen your plan type, the next step is to choose how you’d like to issue commissions: Commissions for each line items participating in a sale or commission for the total sale value. This is also a business’s prerogative.
   
1. A line item–based commission plan calculates commissions at the individual product or component level within a deal, rather than on the total deal value.
   This plan type is useful for businesses where a single sale involves multiple components sourced from different vendors—such as configuration, manufacturing, sale, and delivery of a finished product.
   In such models:
1. Each line item may have its own pricing, margin, or discount structure based on vendor agreements.
   
2. Commissions can be configured differently for each line item to reflect these variations.
   By enabling commissions at the line-item level, businesses can:
3. 1. Align payouts with vendor pricing agreements.
      
   2. Encourage sales representatives to recommend components that deliver higher margins or strategic value.
      
   3. Maintain better control over discounting and profitability across complex deals.
      
   4. This approach ensures commissions are fair, transparent, and aligned with both vendor relationships and business profitability.
      

   
   

   A commission based on total amount calculates commissions based on the total amount of a transaction. This model encourages sales representatives to prioritize high-value deals and focus on delivering the most suitable end-to-end solution for the customer, regardless of the participating vendors or components involved.

   Now, imagine a commission plan that is designed as a transaction-based model on the total amount of sale.

   1. This model will give commissions for each sale computed to their overall sale value. The employees’ focus will be around generating high-value deals. Higher the value, greater is the commission.
      
   2. The consumer will get solutions that are truly personalized for them without any bias for any vendors or products they sell.
      
   3. The business’s objectives will be around sustainable revenue growth.
5. Lastly, in plan details, if you choose line item based commission plan, then to source these line items details, you will need to choose the modules these line item information will be available. You can choose the CRM-standard Products module or any custom module with a subform created in Zoho CRM.