In this article, I’ll cover the average sales commission rates for 6 major industries: insurance, real estate, advertising, saas, medical devices, and automobile. I’ll also cover the common sales roles in each of these industries and their median pay. Lastly, I’ll discuss six key factors that affect sales commission rates in general: commission structure, industry, role, experience, rep involvement, and competitor commissions.
Talented salespeople are hard to find and even harder to retain. That’s why companies do everything they can to keep their salesforce happy, which includes offering top-tier commission rates.
This results in varying commission rates across profiles. And more importantly across industries.
Interested in knowing the sales commission rates by industry?
In this article, let’s look at the average sales commission rates across six major industries. We’ll also look at some common sales roles in each of these industries, and factors that affect commission rates in general.
Let’s begin.
Average Sales Commission Rates by Industry
In simple terms, a sales commission rate is the percentage of a deal value that is paid to the sales rep who closed that deal.
Some commission rates are calculated on revenue; others on the profit made from a sale. Some commissions don’t kick in until the rep has reached a certain target (eg: closed 10 deals in a month), or until the entire team has hit a certain milestone (eg: exceeded last quarter’s revenue by 15%).
Below are the average sales commission rates for six major industries:
Now, let’s look at the common types of sales roles in these industries, and what their job profiles and annual wages are like:
Insurance
Insurance sales agents sell one or multiple types of insurance policies to consumers.
Some common types of insurance include
- Property and casualty insurance.
- Life insurance.
- Health and long-term care insurance.
The three types of salespeople you might come across when looking for insurance are:
- Captive agents: Captive agents are insurance sales agents who work exclusively with one firm. They can only sell that firm’s insurance policies to consumers.
- Independent agents: Independent agents are not tied to any one particular firm. They can sell policies from multiple insurance companies.
- Insurance brokers: Insurance brokers act as a link between the consumer and the insurer. They represent the former, not the latter. They cannot legally sell policies and must contact an insurance agent once they help the client choose a policy.
Average Sales Commission Rate in Insurance
- 5–10% of first year’s premium
Median Annual Wages
- Direct health and medical insurance carriers: $70,570
- Direct insurance (except life, health, and medical) carriers: $57,990
- Insurance agencies and brokerages: $48,830
Real Estate
When you’re looking to buy, sell or rent a property, you’re likely to either get in touch with a broker or a real estate sales agent. They both essentially offer the same services, but differ in the way they operate internally.
Let’s see how by exploring them in detail:
- Brokers: Real estate brokers are licensed to run their own broking firms, work independently, and hire agents. They get paid commissions for their deals and also get a cut of the commission for deals done by the agents working for them.
- Sales agents: Real estate sales agents can work independently or choose to work for a broking firm. If they work for a firm, they must split their commission with the ‘office’. Real estate agents are not licensed to run their own firms or hire people.
Average Sales Commission Rate in Real Estate
- 5–6%
Median Annual Wages
Advertising
Sales reps in the advertising industry have just one goal: to sell the advertising services being offered by their firm.
Advertising sales reps achieve this goal by approaching new clients, servicing existing clients, delivering presentations, offering strategic branding advice, and building and maintaining relations.
The three main employers of advertising sales reps are:
- Television broadcasters
- Radio broadcasters
- Newspaper publishers
Average Sales Commission Rate in Advertising
- 15%
Median Annual Wages
- Advertising sales reps (Television): $56,810
- Advertising sales reps (Radio): $47,410
- Advertising sales reps (Newspaper): $37,270
SaaS
The Software-as-a-Service (SaaS) industry has exploded in the last decade or so.
Many tech companies have moved from selling software as an over-the-counter product to a subscription service where customers are charged a fixed amount (usually monthly or annually) to use the software. As a result, the role of salespeople in the tech industry has also changed.
There are several types of sales roles in the SaaS industry. Let’s consider the four most common ones:
- Sales Development Representative (SDR): SDRs are mainly responsible for making outbound calls to prospective customers and qualifying leads before passing them on to account executives.
- Account Executive (AE): AEs act as a direct link between customer and company. They convert leads into customers by paying attention to the client’s pain points and offering appropriate solutions.
- Customer Success Manager: Customer success managers are responsible for ensuring customers are happy with the product and are deriving the most out of its features. In some cases, they also have to upsell and cross-sell targets.
- Sales Engineer: Sales engineers explain the more technical product aspects to potential and existing customers. They also assess equipment needs and determine system requirements.
Average Sales Commission Rate in SaaS
- 10%
Median Annual Wages
- Sales Development Representative (SDR): $48,354
- Account Executive (AE): $61,480
- Customer Success Manager: $73,797
- Sales Engineer: $108,090
Medical Devices
The global medical devices market is expected to touch $718.92 billion in 2029.
Given the massive growth the sector has witnessed, along with the projected growth, medical salespeople will always be in demand. From selling diagnostic procedures to large-scale surgical equipment, medical device reps have a wide range of products to promote.
There are mainly two types of sales roles in the medical device industry:
- Sales Rep: Medical device sales reps sell medical equipment to companies as well as private clinics. They often have a healthcare background and undergo extensive training before they can start selling. They travel a lot, have monthly/quarterly sales quotas, and manage clients in their assigned territories.
- Sales Manager: Medical device sales managers usually oversee a team of sales reps while also handling their own clients. They nurture healthy client relations, manage multiple territories, and ensure safety protocols are followed at all times.
Average Sales Commission Rate in Medical Devices
- 10-30%
Median Annual Wages
Automobile
Car dealerships are as old-school a selling ground as they come.
They generally offer a range of cars made by different manufacturers. Some cars are used, while others are new. Irrespective, sales reps in this sector must be personable, knowledgeable, and know how to read people well.
Most car dealerships follow the same sales structure: a team of sales reps led by a sales manager.
- Sales Rep: Sales reps at car dealerships must build a rapport with customers and sell cars at a price that satisfies both parties — customer and dealer. They report to the sales manager and are usually offered a modest base pay. Reps who can sell, though, make a pretty solid earning through commissions.
- Sales Manager: Sales managers at car dealerships work to keep the entire sales crew operating at peak capacity. They report to the general manager, handle shift timings for reps, and jump in for negotiations when needed. They must also ensure their team is well-versed with all specifications of the models on sale.
Average Sales Commission Rate in Automobile
- 25% (usually calculated on the profit made from a sale)
Median Annual Wages
Factors Affecting Sales Commission Rates
Let’s look at the 6 most common factors that are applicable to almost any sales job:
Commission Structure
What type of commission structure have you chosen for your sales team?
In industries like SaaS, you have multiple commission structures to choose from. Some offer a flat commission rate on every sale, while others have tiers where the more you sell, the higher the commission rate.
Depending on the commission structure you choose, the rates will be affected accordingly.
Industry
This article is a perfect example of how the industry you operate in affects sales commission rates.
As we’ve seen above, the commission rates offered to sales reps vary greatly by industry. In some industries, commission rates can be as low as 5%, while in others they can go as high as 45%.
Why?
This could be due to the nature of the job: either more labor-intensive or technical. Another reason is because of lower base pay. The higher the base pay, the lower the commission rates.
Role
Senior roles like sales managers and sales VPs have a wider range of responsibilities, not all of which can be linked to commissions. As a result, they tend to have lower commission rates and higher base salaries.
On the other hand, roles like sales development reps (SDRs) and sales executives carry out tasks that can be directly linked to new revenue.
Consequently, they usually have higher commission rates and lower base salaries than their senior counterparts.
Experience
How experienced is the sales rep?
Are they relatively new or seasoned veterans?
It’s not uncommon to see very experienced sales reps joining a new team at a higher commission rate than even the senior-most member on that team.
Bottom line: No matter the industry, experience always matters.
Rep involvement
On average, how much effort do your sales reps put in to close a deal?
More often than not, rep involvement and commission rates are directly proportional.
The more relationship-building and hands-on effort needed to close a deal, the higher the commission rate will be for that role.
Competitor commissions
In sales, your best reps are always in danger of being poached by your competitors.
To avoid this, you should be aware of the sort of commission rates your competitors offer their reps. You can then ensure that your commission rates are on par with, if not more than, your competitors.
Commission Rates Aren’t Set in Stone
The rules of selling might not change much. But the way sales reps are compensated is never a fixed thing.
That’s because commission rates are dynamic compensation elements that are influenced by a host of factors —- some of which are in your control, many are not.
Before setting your commission rates, you should always consult the right people and do your research to figure out what the current trends are.
