The short answer
- There is no single sales commission rate that fits every industry. The right number depends on what the rate is paid on, who pays the selling costs and how much work each sale takes. Commission-only describes the pay arrangement; it does not establish whether someone is an employee or an independent business.[2]
- Independent manufacturers' reps: historical benchmarks average about 6% on sales to OEMs, 7% to distributors and 11% to end users.[1] Use them as a ballpark, not as current rates.
- Salaried sales employees: compare total target pay, quota and how many people actually hit quota, not a commission percentage.
- Never compare a revenue rate with a gross profit rate. The same deal gives very different percentages.
Commission rates by pay model
A sales commission rate is the percentage of an agreed sales amount or gross profit paid to the seller. Commission equals the commissionable amount multiplied by the rate. The independent-rep figures below are historical benchmarks.[1] Employee plans use different pay arrangements and need their own comparison.
Historical benchmarks, not current rates
| Pay model | Benchmark or reference | Calculation basis |
|---|---|---|
| Independent manufacturers' rep selling to OEMs | 5% to 7% (average 6%) | Set by the rep agreement. Confirm it in writing. |
| Independent manufacturers' rep selling to distributors or resellers | 5% to 9% (average 7%) | Set by the rep agreement. Confirm it in writing. |
| Independent manufacturers' rep selling to end users | 7% to 14% (average 11%) | Set by the rep agreement. Confirm it in writing. |
| Salaried employee with commission or bonus | No cross-industry percentage. Compare total target pay for similar roles. | Varies by plan: revenue, contract value, gross profit or quota attainment |
| Other commission-only arrangements (employee or independent) | No cross-industry percentage. Model the seller's earnings against the work and risk. | Defined in the pay plan or agreement; check employment status separately |
Last reviewed Oct 24, 2026
The benchmarks are not an industry standard and do not say what the rate was calculated on, so your agreement has to define the commissionable amount.
For customer-type definitions, the full rep benchmark and an offer modeler that tests a rate against your margin, see sales rep commission rates by customer type.
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Sales commission rates by industry
Industry changes the rate mostly through four things: who the customer is, the product's gross margin, the size and frequency of orders, and how much selling each order takes. Below are the sectors people ask about most, with published numbers where we found reliable ones.
Manufacturing and industrial products
This is home ground for independent manufacturers' reps, and the historical benchmark above is the most useful reference. In that data, sales to OEMs averaged the lowest rate, sales to end users the highest, and distributor sales landed in between.[1] The pattern makes sense once you look at the work behind each order.
An OEM sale often means getting a component designed into the customer's own product. That can take months of engineering meetings, samples and approvals, but once the part is approved, production orders can repeat for years. A modest rate on a long run of reorders can add up to more than a high rate on a single sale. Distributor sales depend on getting the line stocked and then helping the distributor's team sell it. End-user sales usually take the most work per order: site visits, demos, quotes and follow-up, one buyer at a time.
Within manufacturing, commodity products that reorder on autopilot tend to sit at the low end of whatever range applies, while custom or engineered products that need technical selling tend to sit higher. Before agreeing on a number, settle who owns the account after the first order and how reorders are credited. Explore sales rep coverage by industry to see how representation fits your market.
Medical devices and healthcare
Medical device sales tend to involve long evaluations, several people who must sign off on a purchase and, for some products, a rep who supports clinical staff when the product is used. All of that is time the rep spends before and after the order, so it belongs in the rate discussion.
We did not find a current, independent public survey of medical device commission rates, so this guide does not publish a range. When you weigh an offer, break the sale into parts. Is commission paid on the first equipment purchase, on the supplies or disposables that follow, or both? Does contract pricing with hospital systems or buying groups lower the commissionable amount? How much in-person clinical support is expected, and what compliance training does the company provide or require? An offer that pays on recurring supply orders can be worth far more over time than its headline rate suggests.
Software and SaaS
Employee sales roles in software often combine a base salary with variable pay linked to contract value and quota. The manufacturers' rep benchmarks above were not built for this model.
For a sense of scale, one 2026 survey of B2B companies put median account executive on-target earnings at $200,000 and median annual quota at $960,000 ($875,000 in the SaaS subgroup), with 48% of reps reaching their annual quota.[3] On-target earnings are base salary plus target variable pay at plan, not commission alone and not what reps actually earned. Dividing one median by the other does not give a typical commission rate, so don't use the figures that way. If you're comparing employee offers, compare the base and variable split, the size of the quota and how many people on the team actually reach it.
Independent reps or referral partners selling software should ask whether commission covers renewals, multi-year contracts and upgrades, and whether it is clawed back if the customer cancels early. The residual commission example further down shows how much renewal terms matter.
Advertising sales: an out-of-home example
Out-of-home advertising, such as billboards and transit displays, is one sector with recent published data on how sales employees are paid. In a 2025 survey of out-of-home company owners and managers, 80% of companies paid 10% commission or less, 82% paid commission on total revenue instead of only on revenue above a base amount, and most paid salary plus commission.[4] That describes employee sellers at those companies. It does not cover all advertising sales or independent reps, and it does not mean 10% is the average.
The total-revenue point is worth checking in any offer. Take two hypothetical plans: 10% of all monthly sales, or 15% of sales above the first $20,000 a month. On $50,000 of sales, the first pays $5,000 and the second $4,500. At $100,000 the order flips: $10,000 versus $12,000.
Salaried sales jobs in any industry
If you're hiring or applying for an employee sales job, broad employer pay surveys are a better reference than commission percentages. Some report pay separately for outside sales, inside sales, route sales and sales management jobs.[5] They describe pay for employee roles, not the percentage an independent rep should charge, so use them to check total pay for a comparable job and then look at how the variable part is earned.
Other industries at a glance
Illustrative examples, not benchmark rates
| Example industry | Customer type it may involve | What to check before setting a rate |
|---|---|---|
| Building, electrical and plumbing products | Distributors and contractors | Credit when a distributor places the order, split commissions between territories, and stocking programs |
| Capital equipment and lab or facility equipment | End users | Length of evaluations, demos and technical support the rep provides, and service or parts revenue |
| Consumer products sold into retail | Retailers that resell | Retailer deductions, chargebacks and promotional allowances that change the commissionable amount |
Real estate, insurance and securities sales follow their own licensing rules and commission conventions, so they are outside this guide.
Worked example: revenue rate versus gross profit rate
Illustrative arithmetic only. These numbers are made up to show the math. They are not benchmark rates.
Suppose an order sells for $100,000 and the product costs the company $60,000, leaving $40,000 of gross profit (a 40% margin).
| Line item | Order at list price | Same order with a $10,000 discount |
|---|---|---|
| Revenue | $100,000 | $90,000 |
| Product cost | $60,000 | $60,000 |
| Gross profit | $40,000 | $30,000 |
| Commission at 6% of revenue | $6,000 | $5,400 |
| Commission at 15% of gross profit | $6,000 | $4,500 |
- At a 40% margin, 6% of revenue and 15% of gross profit pay the same amount. A "15% rate" is not more generous than a "6% rate" until you know the basis.
- When the price drops, the gross profit plan cuts commission faster. It shares discount risk with the seller and protects the company's margin. The revenue plan is simpler to verify, because the seller can see the invoice but usually not the product cost.
- If you pay on gross profit, the agreement should say how cost is calculated and give the seller a way to check it.
To run your own numbers, including tiers and splits, use the sales commission calculator.
What really shapes a commission rate?
Industry sets the context. These factors decide where a particular offer should land. Companies can use them to explain their number, and reps can use them to judge whether the number matches the job.
Gross margin
This sets the ceiling. Start with the gross profit on a typical order and decide how much of it the company can share. A product that sells for $10,000 with $9,000 of gross profit has plenty of room. A product that sells for $100 with $20 of gross profit does not: at 10% of revenue, half its gross profit goes to commission.
Sales cycle and deal size
A seller who closes small orders every week gets steady feedback and steady pay. A seller working a nine-month evaluation goes most of a year before the first payment. Long cycles need a higher rate, larger deals or some kind of bridge, or the role only works for reps who already earn from other lines.
Who pays selling costs
An independent rep usually pays their own travel, office and staff out of commission. An employee's employer usually pays those costs plus benefits. That alone makes rep and employee percentages hard to compare.
Territory maturity
Taking over accounts that already buy is farming. Opening a territory where nobody knows the brand is hunting, and the rep carries the risk of months with no orders. The rate, or other launch terms, should reflect which job it is.
Leads and support
If marketing hands over qualified leads, the seller is mostly closing. A rep who has to find every lead is doing marketing and sales, and that unpaid prospecting time should show up in the rate or in other support such as samples, training and quoting help.
Reorders, house accounts and splits
Decide up front whether reorders pay the full rate, a lower rate or nothing, which accounts the company keeps as house accounts (no commission) and how orders that cross territories are split. These cause disputes when they are not written down.
Payment timing
Commission paid when the order ships is worth more to the seller than the same commission paid after the customer pays 60 days later.
Hypothetical scenario
Same rate, two very different jobs
The offersCompany A offers 8% and hands the rep a territory with distributors that already reorder every month. Company B offers the same 8% for a region where it has no customers, no sample budget and no leads.
What the rep seesCompany A's line can pay from the first month. Company B's line may pay nothing for two or three quarters. A fair counter to Company B is a higher rate on new accounts for the first year, a sample budget or a bonus for each new stocking distributor. Company A could reasonably pay less on inherited accounts than on new ones.
Common commission structures and when they work
The structure shapes behavior as much as the rate does. A flat rate rewards volume. Tiers reward pushing past a target. Residuals reward keeping customers. Choose the structure for the behavior you want, then set the rate.
Straight commission (commission-only)
The seller earns only commission, with no salary. For the company, commission expense rises and falls with sales, allowing it to add coverage without a fixed salary for that rep. For the seller, every slow quarter is their problem, so a commission-only offer needs a product that sells, a fair rate and clear payment terms.
Independent manufacturers' reps usually work this way across several complementary product lines, so no single line has to cover their whole income. Read more about commission-only sales representation, then run the earnings test in the negotiation section below.
Flat percentage of revenue or gross profit
A flat-rate agreement pays one percentage, and the basis matters as much as the number. The worked example above shows how far apart revenue and gross profit rates land on the same order. Either way, spell out whether freight, taxes, discounts, returns and credits are deducted.
Tiered commission
Tiered plans raise the rate once sales pass set thresholds, which keeps strong sellers pushing after they hit the target. The detail that changes the cost is whether the higher rate applies only to sales above each threshold (marginal tiers) or to every sale once a threshold is reached (retroactive tiers).
Retroactive tiers create a cliff at each threshold, which can tempt sellers to hold, rush or split orders. Marginal tiers cost the company less at the top and remove the cliff. Whatever you choose, check what you would pay if sales came in at twice the plan.
Example: marginal versus retroactive tiers
Hypothetical numbers
Hypothetical plan: 8% on sales up to $50,000, 10% from $50,000 to $100,000 and 12% above $100,000.
| Total sales | Commission with marginal tiers | Commission with retroactive tiers |
|---|---|---|
| $99,000 | $8,900 | $9,900 |
| $101,000 | $9,120 | $12,120 |
| $120,000 | $11,400 | $14,400 |
Under retroactive tiers, the $2,000 of sales between $99,000 and $101,000 adds $2,220 of commission, more than the sales themselves. Under marginal tiers it adds $220.
Residual and renewal commission
Residual commission pays on eligible renewals or repeat orders during the period defined in the agreement, often at a different rate from the first sale. It suits subscriptions, service contracts and consumables, and it rewards sellers for choosing customers who stay.
Example: first-year commission versus residuals
Hypothetical numbers
Hypothetical $40,000 annual contract. Plan A pays 12% of the first year only. Plan B pays 10% of the first year plus 3% of each renewal.
| Customer stays | Plan A: 12% first year only | Plan B: 10% plus 3% on renewals |
|---|---|---|
| 1 year | $4,800 | $4,000 |
| 2 years | $4,800 | $5,200 |
| 5 years | $4,800 | $8,800 |
Plan B pulls ahead the first time the customer renews. Its real value depends on how long residuals last, whether they continue after the agreement ends and whether price increases and add-ons count.
Draw against commission
A draw is an advance against future commission, paid on a regular schedule so the seller has income while long deals close. With a recoverable draw, any shortfall is repaid from later commission. With a non-recoverable draw, the shortfall for that period is not paid back.
Hypothetical plan with quarterly settlement: three monthly advances of $3,000 total $9,000 for the quarter, and the seller earns $0, $1,500 and $6,000 in commission, or $7,500. Under a recoverable draw, the $1,500 gap carries forward against future commission. If this plan makes the quarterly draw non-recoverable, that quarter's shortfall is written off. Some companies offer an independent rep a time-limited draw or retainer during a launch. Put in writing whether any balance is owed if the relationship ends, and check what the law allows where the seller works.
Base salary plus commission
This is the usual employee model. The commission rate matters less than total target pay, how the quota is set and how many people on the team actually reach it. The software section above shows why those three numbers belong together.
Commission structures compared
| Structure | Best fit | Company gets | Seller gets | Watch for |
|---|---|---|---|---|
| Straight commission | Products that sell steadily; reps with complementary lines | Commission expense linked to sales | Earnings linked to sales under the agreed terms | A long ramp with no income and vague earned and paid terms |
| Tiered | Pushing past a target | Extra effort at the top | A higher rate for overperformance | Retroactive cliffs and cost at twice the plan |
| Residual or renewal | Subscriptions, consumables and repeat orders | Sellers who pick customers who stay | Income that builds over time | How long it lasts and whether it survives termination |
| Draw against commission | Long cycles and ramp periods | Easier hiring for hard roles | Steady cash while deals close | Whether the balance is recoverable |
| Base plus commission | Employee teams | Control over activity and territory | Predictable income | Whether the quota is realistic |
How to negotiate a fair commission-only plan
Commission-only negotiations go better when both sides bring numbers instead of opinions. The company should be able to explain how the rate fits its margin. The rep should be able to show how much the line has to sell to be worth their time.
Start with an earnings test, then trade terms, not only percentages. A rate that cannot move often comes with terms that can.
Run a commission-only earnings test
Hypothetical offer. The numbers are made up to show the method.
A rep is offered 15% of revenue on a product with an average order of $20,000 and a three-month sales cycle. Prospecting starts in January, so the first deals close in the second quarter. After that the rep expects to close two deals a quarter, and spends about $4,000 a year on travel and samples for this line.
| Year 1 (first quarter building pipeline) | Year 2 at full pace | To earn $60,000 in commission | |
|---|---|---|---|
| Deals closed | 6 | 8 | 20 |
| Revenue | $120,000 | $160,000 | $400,000 |
| Commission at 15% | $18,000 | $24,000 | $60,000 |
| Travel and samples (estimate) | $4,000 | $4,000 | More, with more deals |
| After travel and samples, before other costs and taxes | $14,000 | $20,000 | Less than $60,000 after costs |
- A 15% rate sounds strong, but at two deals a quarter it pays $24,000 a year before costs. That can make a good secondary line on a rep's line card, not a full income.
- Reaching $60,000 takes 20 deals a year, two and a half times the plan. Ask the company how many customers buy at that pace today.
- The company can run the same test. At a 45% gross margin, $400,000 of sales produces $180,000 of gross profit, and the commission would take a third of it.
Counteroffers that move a stuck negotiation
When the rate itself won't move, other terms can close the gap. Pick the ones that address the real risk in the deal.
| Sticking point | What the rep can ask for | Why the company might agree |
|---|---|---|
| The rate is fixed company-wide | A higher rate on new accounts for the first 12 months, then the standard rate | It pays more only for growth the company didn't already have |
| Long sales cycle with no early income | A bonus for each new stocking account, or a time-limited draw or retainer | The cost is capped and tied to real progress |
| Commission waits until the customer pays | Payment on invoice, with a chargeback only if the invoice goes unpaid | It keeps protection against bad debt while easing the rep's cash flow |
| The company sells direct in the territory | Full or split credit on direct orders from accounts in the territory | The rep keeps working the whole territory, not only the safe accounts |
| No leads, samples or demo units | A sample budget or demo units, plus shared trade show leads | Usually cheaper than a higher rate on every order |
| Nobody knows yet whether the line will sell | A review date after six months with agreed targets for both sides | Both sides get a clear exit and a reason to commit |
Checklist for companies making an offer
Experienced reps compare offers closely, and vague or one-sided terms send the best ones elsewhere. Work through these before you publish a rate or send an agreement.
- Name the relationship: employee, commission-only contractor or independent rep agency. The label you choose does not decide legal status on its own.[2]
- Define the commissionable amount and list what is deducted, such as returns, freight, taxes, discounts, credits and bad debt.
- Work out the highest rate your gross margin can support, then check what the company keeps after commission.
- Test the payout if sales come in at half the plan and at twice the plan, and make sure you would pay either one.
- List house accounts and explain how split orders are credited.
- Say when commission is earned (on order, shipment, invoice or customer payment) and when it is paid, for example "by the 15th of the month after the company receives payment."
- Describe the support you provide, such as samples, training, leads, quoting and technical help.
- Give reps regular statements or a report showing orders and the commission calculated on each.
- Cover repeat orders, renewals and what happens to commission on open orders if the relationship ends.
- Set the territory, any exclusivity and a date to review the arrangement.
- Put it all in a written agreement. The commission agreement builder can help you draft one for review.
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A high headline rate on a product nobody reorders can earn less than a modest rate on a line that sells steadily. Ask these before you sign.
- What exactly is the rate paid on, and will you get statements that show the calculation?
- How long does a typical sale take, from first contact to the customer paying? Ask for real numbers, not a best case.
- Who generates leads, and what will you have to find on your own?
- Can you talk to a rep who carries the line today?
- When are you paid, and does payment wait until the customer pays?
- Which accounts are excluded as house accounts, and how are split orders credited?
- Is the territory exclusive, and can the company sell direct inside it?
- Who pays for samples, travel, trade shows and literature?
- Are there chargebacks or clawbacks for returns, cancellations or unpaid invoices?
- What happens to commission on open orders and repeat business if the agreement ends?
- Does the line fit your current line card without competing with a principal you already represent?
- Are all of these terms in the written agreement, not only in an email or a call?
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Frequently asked questions
What is a typical sales commission rate?
There is no reliable single average across industries and pay models, and figures that claim one usually mix employees, independent reps and different calculation bases. For independent manufacturers' reps, the historical benchmarks in this guide average about 6% on sales to OEMs, 7% to distributors and 11% to end users, which is a ballpark rather than a current standard. For salaried employees, compare total target pay, quota and how many people reach quota rather than a commission percentage.
What is a good commission rate for sales?
A good rate leaves the company an acceptable margin after commission and pays the seller fairly for the work and risk they carry. Test it with real numbers: the expected order size, how often customers reorder, how long a sale takes and what support the company provides. A rate that looks generous can still be a poor offer if the product rarely sells.
Are there reliable sales commission rates by industry?
This guide does not publish one rate per industry, because a single percentage hides the pay model and what the rate is paid on. It explains what drives commission in manufacturing, medical devices, software and advertising, with published figures where reliable ones exist. For independent manufacturers' reps, use the historical benchmarks by customer type as a ballpark.
What commission do manufacturing and industrial sales reps get?
Use the historical manufacturers' rep benchmarks by customer type above as a ballpark. Commodity products with steady reorders tend to pay less than custom or engineered products that need technical selling. Check what the rate is paid on and how reorders are credited before comparing offers.
What is a fair commission rate for a new product?
Consider an introductory rate or extra launch support when a rep must build demand for an unproven product. If the product has little brand recognition or few reference customers, the rep may spend more time getting to the first order. Common approaches are a higher rate on new accounts for a set period, a bonus for each new account, sample support or a time-limited retainer. Set an end or review date so both sides know when launch terms stop.
How often should sales commissions be paid?
Agree a payment schedule, such as monthly after a defined cutoff, subject to applicable payment rules. Also define the trigger: commission can be earned when an order is placed, shipped, invoiced or paid by the customer. Paying after the customer pays protects the company from bad debt but delays the rep's income, which matters most on long sales cycles. Put both the trigger and the payment date in the written agreement.
How does an employee's commission compare with an independent rep's?
The percentages are not directly comparable. An employee usually has a salary and benefits, and the employer pays selling costs. An independent rep usually has no salary and pays their own expenses out of commission. Compare total earnings and costs for each arrangement instead of the headline rate.
Should commission be paid on revenue or gross profit?
Revenue is simpler to calculate and easier for the seller to verify. Gross profit protects the company's margin when prices and costs vary, but the agreement needs to define how cost is calculated. Do not compare a revenue rate with a gross profit rate: at a 40% margin, 6% of revenue pays the same as 15% of gross profit.
Does a 1099 or an independent contractor agreement make someone an independent contractor?
Not by itself. Under the federal Fair Labor Standards Act, employment status depends on the actual working relationship, not on the title, the contract label or the tax form. Employee protections under that law do not apply to genuine independent contractors, and state rules can differ. For a specific situation, review your agreement and the requirements that apply where you work with a qualified advisor.
What happens to commissions when a sales agreement ends?
It depends on the written agreement and the law that applies to the relationship. A clear agreement says how commission is handled on orders placed before the end date, orders that ship afterward and repeat business. If you are in a dispute or planning a change, check your agreement and talk to a qualified advisor about the requirements that apply to you.
Sources
- Manufacturers' Agents National Association (MANA), Create fair and balanced written agreements. Source for the independent manufacturers' rep ranges and averages by customer type. Its published summary cites 402 members and surveys in 1999, 2002 and 2005, with no newer comparable data. These historical figures cover independent reps, not employee pay. Confirm the calculation basis in the agreement; the figures are not an industry standard.
- U.S. Department of Labor, Wage and Hour Division, Fact Sheet 13: Employment Relationship Under the FLSA. Basis for the statements on employee versus independent contractor status. It covers federal classification under the Fair Labor Standards Act only. State wage, tax and classification rules can differ and are not covered here.
- The Bridge Group, AE Models, Motions & Metrics: 2026 Research Report, 10th edition, published June 22, 2026. Online survey of 158 B2B companies conducted in the first half of 2026, answered by sales, revenue operations and finance leaders. Source of the median account executive on-target earnings, quota (overall and SaaS subgroup) and quota attainment figures. On-target earnings are annual base plus target variable pay, not commission alone or actual pay. The public summary does not report a median commission percentage, and this guide does not derive one.
- Kevin Gephart, Billboard Insider, How Out of Home Companies Pay Sales Employees, February 4, 2025. Survey of out-of-home advertising company owners and managers. Source of the findings on commission of 10% or less, commission on total revenue and salary plus commission. The article does not disclose the sample size or when the survey was conducted, and it covers sales employees at out-of-home companies only.
- MRA and Employer Associations of America, 2025 National Sales Compensation Survey and public executive summary. Conducted in July 2025 and published in November 2025, covering 402 employers, 1,098 divisions and 5,964 employees in 23 outside, inside, route and sales management jobs. Cited as an example of employee pay data by job, not commission percentages for independent reps. This guide relies on the public survey page and executive summary only, not the full report.
Payout examples and company scenarios are hypothetical; numbered citations identify the published research.
Sources checked October 24, 2026. This page is general information, not legal, tax or financial advice.