How much commissions to pay your partners? Learn the math and logic behind it. Read here →

How to Make a Sales Engineer Commission Plan (Plus FAQs)

How to Make a Sales Engineer Commission Plan (Plus FAQs)

How to Make a Sales Engineer Commission Plan (Plus FAQs)

Sales engineers are an asset to companies that market products requiring technical knowledge. These engineers have a double nature: one aspect relates to the actual product, and the other one is linked to sales.

The compensation of sales engineers comprises a base salary plus commissions and other incentives. The individual sales engineer commission is typically tied to the performance of a team as a whole. This ensures that such engineers work along with the rest to achieve enterprise objectives.

Sales engineers are a vital part of any company that creates technologically advanced products. They educate prospects, explain tech specs, and outline how the product features will work.

As with other sales professionals, sales engineers also earn commissions. A common break-up is 80 percent salary and 20 percent commission. This is based on pre-established quotas.

A technical sales engineer's salary depends on many factors like location, experience, expertise, and, of course, size and type of company.

Now, let’s explore in greater detail the expectations of a sales engineer, the salary, and the nature of the sales engineer's commission.

How to Create a Commission Plan for Sales Engineers

A sales engineer is specialized in selling products and services that are technologically advanced. This means that not only should they have sales skills, but they must also be proficient in the details of what is being sold.

Sales engineers often have to put a lot of time and work into understanding the product. They should not only be completely familiar with the specifications and features but clearly explain these in terms of benefits to the prospective customer.

Often, a sales engineer works in partnership with other sales personnel. The others oversee the general sales aspects, while the sales engineer focuses on the technical issues.

Clearly, sales engineers are an integral part of the salesforce.

To attract the best sales engineers, companies should create an environment in which they flourish. They should be able to work in tandem with other teams and be given chances to display expertise to would-be clients.

Naturally, the commission plan matters, too.

Let’s look at the best way to create a compensation package for sales engineers:

1. Offer a lucrative base salary to attract talent

A higher base salary is generally viewed as a smarter way to attract and motivate the best sales engineers. This is because they’re then guaranteed a certain amount that they can plan their expenses against.

This is also because the commission is often based on factors that may not be within the sales engineer’s control.

For example, there could be a seasonal sales cycle, tremendous competitive activity, or even shifts in technology.

2. Choose your measurement methods

Whether it’s a sales engineer or a sales rep, it's crucial to pick the right measurement methods when building a commission plan.

The end goal here is to determine how to measure and track the performance of your sales engineer while incentivizing based on these methods.

To choose the right measurement methods, follow these steps:

  • Set clear goals.
  • Keep in mind your industry and the products/services you’re offering.
  • Identify key performance indicators (KPIs).
  • Choose appropriate measurement methods for each.
  • Review and revise if required.

3. Align variables with team goals

Now that you’ve narrowed down the measurement methods, let’s focus on the variables. You can consider tying your sales KPIs to your variables.

The benefit?

Doing this means that every individual is clear about overall management goals.

It also ensures that individuals function as part of a group and do not pursue separate objectives. This helps in sharing expertise and problem-solving and showcases future managerial potential.

4. Use MBOs to maximize benefits

Management by objective or MBOs aligns the entire company toward a specific goal. You can also use it alongside KPIs to measure sales engineers’ performance.

And while KPIs measure ongoing performance, MBOs show progress toward a pre-defined purpose.

Moreover, each employee can be clear about the specific objective and the part that they have to play in achieving it.

Want to learn more about MBOs?

Check out our 5-step guide for creating MBOs.

5. Ensure that the plan conveys its objective

Base salary? Check ✅

Variable component? Check ✅

The next principle is to ensure that your sales engineer commission package is easy to understand.

Employers should ask themselves questions like:

  • Who is the plan structured for: is it for specific teams, departments, or individual reps?
  • Is it to actively get new customers, attract talent or grow faster?

Likewise, sales engineers should be clear about where the commission plan will be applied. Some factors apply across all sales territories and teams or a part of them.

Additionally, if you make changes to the commission plan, the reasons should be communicated, along with the specific dates.

6. Continuously review, improve, and repeat

To ensure that your sales engineer commission plan survives long term, you need to analyze and improve regularly.

Here are a few steps to help you with that:

  • Use a tracking and reporting system to monitor the sales engineers’ progress and earnings.
  • Spot areas where your team is struggling and adjust your strategy to help them succeed.
  • Revisit the set KPIs and objectives.
  • Periodically review and adjust commission rates to ensure they remain competitive.

What is the Average Sales Engineer Compensation?

The average salary of a sales engineer in the United States is around 76,249 USD annually. It ranges from 67,513 USD to 85,090 USD per year.

(The figures mentioned above only represent an average of the lowest and highest average salaries. The actual range may be different.)

Naturally, this can vary based on factors like location, experience, and more. A pre-sales engineer will earn less, for instance.

Let’s take a closer look at how the average compensation and commission vary across different company sizes.

1. Roles

Here’s the average salary and additional compensation for various roles:

A. Pre-Sales Engineer

The average base pay of a pre-sales engineer is 1,19,604 USD per year and it generally ranges between 78,000 USD to $2,00,000 USD.

Moreover, their additional compensation lies between 7,359 USD and 92,459 USD. This includes cash bonuses, commissions, tips, and other variables.

B. Technical Sales Engineer

For a technical sales engineer, the average base pay is around  90,878 USD per year and it typically ranges between 59,000 USD to $1,00,000 USD.

Additional compensation like cash bonuses varies between 5,606 USD and 66,664 USD, whereas the average is 19,332 USD.

C. Senior Sales Engineer

A senior sales engineer makes between 90,000 USD to $2,00,000 USD and 1,32,450 USD per year on average.

Their additional compensation ranges between 12,987 USD and 1,03,441 USD.

2. Company Size

Now, let’s quickly see how the average salary of a sales engineer differs due to the size of the organization.

The highest average total compensation for SMB sales engineers is 127.3K USD. On the other hand, the compensation for a mid-market sales engineer is 158,761 USD.

Additionally, the total compensation for an enterprise sales engineer was estimated at 195,573 USD.

Among the companies that pay the highest salaries to sales engineers are those that understand their role and importance. These companies nurture sales engineers and create opportunities for them to shine.

For example, Microsoft, Google, and Amazon Web Services are known for a higher senior sales engineer salary.

3 Key FAQs About Sales Engineers

Here are three commonly asked questions about sales engineers:

1. What makes a good sales engineer?

Many factors combine to create sales engineers who are great at their jobs. Some of these are sales skills, and others are related to technical expertise.

Sales engineers should have empathy, the ability to understand other points of view, and the quality of deep listening. They should have patience and be able to get over setbacks. They should inspire loyalty and build relationships.

Sales engineers should also have deep product knowledge. They should be aware of technological changes, and their benefits and be able to answer questions about these aspects. They should be comfortable and confident about presenting this to clients and creating trust.

2. What are the day-to-day activities of a top sales engineer?

A typical day in the life of a sales engineer can vary depending on the nature of the company and seniority.

In general, these are the activities that sales engineers engage in:

  • Fulfill marketing duties: Sales engineers can also be called on to advise marketing efforts. They have to check advertising and promotional copy to ensure that proper claims are made.

  • Perform R&D: Because of their knowledge, sales engineers can help with product development. They could be involved in checking and testing beta models as well as competitive products.

  • Give technical presentations and demos: Sales engineers need to take charge of the technical aspects of sales presentations. Here, they’ll have to explain specific tech issues related to the product.

  • Maintain relationships: Sales engineers also have to build trust with prospective clients. This means chatting with them about the product, answering questions that arise, and creating confidence in their abilities.

Attend special events: At times, sales engineers also have to attend trade fairs and conventions. They’ll be expected to demonstrate products and share relevant information.

3. Do Sales Engineers have quotas?

Generally, yes.

However, the quota structure depends on the company. There can be pool bonuses and traditional commissions, for example.

In a pool bonus, the focus is on the achievements of a specific team or department. A sum of money is kept aside for this purpose and distributed based on team and individual performance.

In a traditional commission, sales engineers are judged on the deals they close. Often, they’re paired with regular sales executives who are also working towards the same deals.

Wrapping Up

It’s no secret that clear and rewarding packages attract top performers.  

And sales engineers are a specialized breed. They add considerable value to the sales efforts of companies that create technical products.

That’s why you need to create an effective sales engineer commission plan.

Sign up for ElevateHQ today and design the right commission structure for your sales engineers with ease!

Make payouts right every time with ElevateHQ

Move from manual to automated and error-free commission calculations with our platform.

schedule demo banner image