Salary Negotiations: Guaranteed Money or Potential

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HardHitter
Posts: 473
Joined: Wed Jan 08, 2014 11:41 pm

Salary Negotiations: Guaranteed Money or Potential

Post by HardHitter » Wed Oct 10, 2018 8:21 am

My salary structure has been simple historically. Base salary + annual bonus dependent on how the company does. The bonus is always an unknown and out of my control so I primarily focus on base salary and the bonus at the end of the year is just nice extra cash. Typical bonus is nothing large, about $5-$10K.

I will be taking on a new position where the salary structure is base pay + annual bonus + a % of revenue you sell personally (sales role). When discussing with the company, I still focused on base salary and provided a range of what I was looking for, in which they replied they would probably be able to give me that, but it would come at the sacrifice of the commission revenue bonus. They expressed that as long as you "hit it out of the park" I could be making well north of what I'm looking for.

So with that said, do you take the higher "guaranteed" base salary money or take the lower base salary with big bonus upside that could easily exceed the guaranteed base salary?

Option A: $160K base + annual bonus (constant) + high % commission on sales (variable)
Option B: $210K base + annual bonus (constant) + low % commission on sales (variable)

Jack FFR1846
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Joined: Tue Dec 31, 2013 7:05 am

Re: Salary Negotiations: Guaranteed Money or Potential

Post by Jack FFR1846 » Wed Oct 10, 2018 8:27 am

I ALWAYS take the guaranteed higher base. ALWAYS. Why? Bonus plans change with business climate, whims of upper executives and the color of the CEO's new Bentley. Case in point. My company just made a totally stupid move and bought a company without doing proper investigation into the company's business practices. Result? Bonuses cancelled until further notice. Last year, bonuses were calculated as about 67% of my base added to my income. I had no choice in base/bonus, but if I had, I would absolutely choose 10% higher base and forgo the bonuses. I have no control over the stupidity at the top.

I'm not a sales person but have supported sales (technical) forever and see what happens when a sales guy's income gets too high. All of a sudden, your client package changes and your commissions drop because maybe your biggest client gets assigned to one of the principals of the company or simply to another sales person. It's a big game and your input will not be asked for.
Bogle: Smart Beta is stupid

TheOscarGuy
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Location: Where I wanna be.

Re: Salary Negotiations: Guaranteed Money or Potential

Post by TheOscarGuy » Wed Oct 10, 2018 10:12 am

HardHitter wrote:
Wed Oct 10, 2018 8:21 am
My salary structure has been simple historically. Base salary + annual bonus dependent on how the company does. The bonus is always an unknown and out of my control so I primarily focus on base salary and the bonus at the end of the year is just nice extra cash. Typical bonus is nothing large, about $5-$10K.

I will be taking on a new position where the salary structure is base pay + annual bonus + a % of revenue you sell personally (sales role). When discussing with the company, I still focused on base salary and provided a range of what I was looking for, in which they replied they would probably be able to give me that, but it would come at the sacrifice of the commission revenue bonus. They expressed that as long as you "hit it out of the park" I could be making well north of what I'm looking for.

So with that said, do you take the higher "guaranteed" base salary money or take the lower base salary with big bonus upside that could easily exceed the guaranteed base salary?

Option A: $160K base + annual bonus (constant) + high % commission on sales (variable)
Option B: $210K base + annual bonus (constant) + low % commission on sales (variable)
Do you expect significantly different answers than your earlier thread?

viewtopic.php?f=2&t=258654&p=4145155#p4145155

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8foot7
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Joined: Mon Jan 05, 2015 7:29 pm

Re: Salary Negotiations: Guaranteed Money or Potential

Post by 8foot7 » Wed Oct 10, 2018 10:35 am

Jack FFR1846 wrote:
Wed Oct 10, 2018 8:27 am


I'm not a sales person but have supported sales (technical) forever and see what happens when a sales guy's income gets too high. All of a sudden, your client package changes and your commissions drop because maybe your biggest client gets assigned to one of the principals of the company or simply to another sales person. It's a big game and your input will not be asked for.
Right on the money. Very few executives have the stones to write a check to a sales guy for more than they themselves make, even if the sales guy is making it rain.

HardHitter
Posts: 473
Joined: Wed Jan 08, 2014 11:41 pm

Re: Salary Negotiations: Guaranteed Money or Potential

Post by HardHitter » Thu Oct 11, 2018 8:12 am

TheOscarGuy wrote:
Wed Oct 10, 2018 10:12 am
HardHitter wrote:
Wed Oct 10, 2018 8:21 am
My salary structure has been simple historically. Base salary + annual bonus dependent on how the company does. The bonus is always an unknown and out of my control so I primarily focus on base salary and the bonus at the end of the year is just nice extra cash. Typical bonus is nothing large, about $5-$10K.

I will be taking on a new position where the salary structure is base pay + annual bonus + a % of revenue you sell personally (sales role). When discussing with the company, I still focused on base salary and provided a range of what I was looking for, in which they replied they would probably be able to give me that, but it would come at the sacrifice of the commission revenue bonus. They expressed that as long as you "hit it out of the park" I could be making well north of what I'm looking for.

So with that said, do you take the higher "guaranteed" base salary money or take the lower base salary with big bonus upside that could easily exceed the guaranteed base salary?

Option A: $160K base + annual bonus (constant) + high % commission on sales (variable)
Option B: $210K base + annual bonus (constant) + low % commission on sales (variable)
Do you expect significantly different answers than your earlier thread?

viewtopic.php?f=2&t=258654&p=4145155#p4145155
I started a new thread since this would be clear in the question without reading through the entire last thread. Should I not do that?

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flossy21
Posts: 434
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Re: Salary Negotiations: Guaranteed Money or Potential

Post by flossy21 » Thu Oct 11, 2018 8:51 am

In sales you are only as good as the revenue you are bringing into the company. You have to bring in 2x or more than you eat. If you don't do that then it won't matter what you choose because you will get pushed out in favor of someone who can deliver that kind of sales.

If you are confident that you can deliver the sales then Option A is your choice.

If you aren't confident that you can deliver then you shouldn't take the job.

megabad
Posts: 663
Joined: Fri Jun 01, 2018 4:00 pm

Re: Salary Negotiations: Guaranteed Money or Potential

Post by megabad » Thu Oct 11, 2018 11:38 am

HardHitter wrote:
Wed Oct 10, 2018 8:21 am
My salary structure has been simple historically. Base salary + annual bonus dependent on how the company does. The bonus is always an unknown and out of my control so I primarily focus on base salary and the bonus at the end of the year is just nice extra cash. Typical bonus is nothing large, about $5-$10K.

I will be taking on a new position where the salary structure is base pay + annual bonus + a % of revenue you sell personally (sales role). When discussing with the company, I still focused on base salary and provided a range of what I was looking for, in which they replied they would probably be able to give me that, but it would come at the sacrifice of the commission revenue bonus. They expressed that as long as you "hit it out of the park" I could be making well north of what I'm looking for.

So with that said, do you take the higher "guaranteed" base salary money or take the lower base salary with big bonus upside that could easily exceed the guaranteed base salary?

Option A: $160K base + annual bonus (constant) + high % commission on sales (variable)
Option B: $210K base + annual bonus (constant) + low % commission on sales (variable)
Well without knowing what "high % commission on sales" is, I can't really recommend. I suspect you would have the best knowledge of what this dollar amount would be. In general, in my industry, there are both of these pay models. In my experience, Option A pay models lead to higher turnover and a higher performing team. Option B models lead to lower turnover and a lower performing team. The Option A folks in my industry make multiples of executive salaries. There are a good number of front line sales staff that are making near 7 figures which is more than their boss's, boss's, boss's, boss makes. The Option B folks make a tiny fraction of executive salaries. If you are a 100 hour per week, travel all the time, charismatic winner; than I would go Option A all day. If you want to slow down than I would go toward Option B.

Thegame14
Posts: 360
Joined: Mon May 07, 2018 11:53 am

Re: Salary Negotiations: Guaranteed Money or Potential

Post by Thegame14 » Thu Oct 11, 2018 11:41 am

ID take the higher salary. They can always change the threshold for bonuses or give you harder clients to sell to. To me that additional $50K certainty is big, it can be counted on as long as the job is secure. I always look at bonuses as I never count on them at all, if I get them it is exactly what it says a bonus...

MotoTrojan
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Joined: Wed Feb 01, 2017 8:39 pm

Re: Salary Negotiations: Guaranteed Money or Potential

Post by MotoTrojan » Thu Oct 11, 2018 11:44 am

I'd try to get info from people in similar roles at the company to get an idea of expected commission. Then I would consider negotiating more guaranteed salary, but only if the penalty wasn't substantial (expected total salary was still in family). Still want to participate on the upside if you get a big client :).

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