Updated by Lila Carsten
If you want to pay your sales reps a percentage of a sale in commission, then look no further than shopVOX Pro to solve this problem. This feature is included in shopVOX Pro. shopVOX can calculate commission on a user level, or on a product level. It allows you to set two different rates, in house and outsourced (these rates can only be set as percentages). This rate can be a percentage of the Price, Cost, or it can be based off of Profit.
I recommend that you read the entire article carefully before setting up sales commission in shopVOX. If you want to keep sales reps on track to meet sales goals you can do that too, you can learn more by reading here.
Why charge sales commission?
Nothing motivates a sales team like commission. It gives them additional compensation for making sales. Building a sales team is a great way to take the burden off of the owner or manager to generate sales.
How should I charge sales commission?
This is completely up to you. Most companies pay their sales rep a base salary, while paying the commission for making sales. This percentage should fit in with your overall business model. You’ll need to consider overhead, product, materials, labor, machines, profits, price, and anything else you can think of when deciding what this percent should be. Most companies base commission on the price (as opposed to cost or profit)
How does sales commission work?
ShopVOX will either calculate sales rep commission using the user commission rate, or the product commission rate to calculate commission, never both. It uses the rates you entered for the user to calculate commission only if product percentages haven’t been set (product percentages are set to 0% by default... 0% basically means that percentage hasn’t been set).
How do I set up sales commission?
As we explained above, sales commission can be set on a user level or a product level. Product level will always override the user level if the percentage is over 0%
User Based Sales Commission:
The user must be marked as a sales rep, and the sales rep must be assigned to an order, otherwise shopVOX won’t calculate the user percentage. The user base will only be used if the product commission is set to 0%. You can only track commission for paid “Full” users, not "Scheduled" users.
- Account Settings>Users and select/open the user you want to set commission. Click “Edit User Profile” and modify the settings (see image)
- Assign a default sales rep: If you, your order takers, or someone else is forgetful to assign a sales rep to an estimate, order, or invoice, this can waste time needing to re-input products, or creating manual spreadsheets to track these mistakes. A great way to prevent this is to assign a default sales rep
IMPORTANT NOTES ABOUT USER BASED COMMISSION
- If the user isn’t set as a sales rep, than User Based Sales Commission will not calculate.
- Always assign a sales rep before adding products to an estimate/sales order/invoice. If you don’t do this, then commission isn’t being calculated and captured for the User Based Sales Commission
- Tip: You can assign a default sales rep so you don’t forget to assign the estimate/sales order/invoice to a sales rep. If you don’t see the fields to enter the sales commission, make sure you go to account settings>forms>products, and check “in-house” and “outsourced” sales commission.
Setting Product Based Sales Commission
As mentioned earlier, the sales commission rate set in a product will override the set user sales commission rate.
- How to setup or edit the sales commission percentages for one product: Go to POS Settings>Pricing>Products... Select the product you want to set commission for, click edit. Modify the "In-House" and "Outsourced" percentage, then save by clicking "Update Product"
- How to setup or edit the sales commission percentages for multiple products: You can easily bulk export/import your product data to bulk update these percentages on all of your products.
IMPORTANT NOTES ABOUT PRODUCT BASED COMMISSION
- Unlike User Based Sales Commission, if you do not assign a sales rep shopVOX can still track Product Based Sales Commission, as long as you have them set above 0%. When you pull the report, it will show up as blank (unassigned). This is great for tracking sales commission for the whole company or a department instead of a specific user, to pay some sort of bonus, for example. You can accomplish a similar result by having a user represent a department.
- If you assigned a sales rep before you added the products, then the sales commission will be accredited to the sales rep, otherwise, commission gets recorded, but it’s not assigned to a sales rep when a report is pulled.
- Always remember to assign the desired sales rep to the order if that rep should be calculating commission for the added products. Assign the sales rep beforeyou add items.
How commission is calculated?
There are two major categories shopVOX looks at for calculating sales commission percentage, In-house and outsourced, you can set a different commission percentage for each (ie. 15% for in-house and 5% for outsourced) this can be set on the user level, and on the product level.
By default shopVOX is set to calculate sales commission based on price. In more competitive markets, or for other reasons you can also calculate commission based on cost or profit. This setting can only be set within the entire company, NOT within a specific product or user. In other words, this calculation applies to either all "in-house" and/or all "outsourced" products (Example: all "in-house" products can be set to calculate based on price, while "outsourced" products can be set to calculate based on profit.) This setting does not discriminate between a user or a product.
Examples of how sales commission is calculated in each scenario.
- Price: You sell a widget for $100, with a commission of 10%. This would equal $10 commission.
- Cost: You sell widget for $100, it cost you $25, with a commission set to 10%. This would equal $2.50 commission.
- Profit: You sell widget for $100, it cost you $25, leaving you with $75 gross profit. With a commission set to 10%, this would equal $7.50 commission
How to modify this base "commission on" setting?
- By default your commission is set to calculate based on price. To modify this setting go to POS Settings>General, then edit.
- Change "In House" to either Price, Cost, or Profit
- Change "Our Sourced to either Price, Cost, or Profit
- Commission is ALWAYS calculated per line item, and never per invoice total.
- This setting applies to the percentage that is being used, if the product percentage isn't set (or is set to 0%), then it applies to the percentages set in the user, otherwise, it applies to the product, company wide. Therefore the Price, Cost, and Profit settings apply all across the board, to percentage used (user based and product based percentage)
- If you don't see the In-house or Outsource % then you need to: go to Account settings>Forms>Products
Check the "Sales Commission boxes"
When is commission calculated?
As early as an estimate, you can see a preview of what the commission will probably be, if you made any changes to the sales rep before the estimate or sales order is converted to an invoice, these changes will show when converted to an invoice (in most cases). When you pull a report however it only looks at invoices, because this is where sales commission really counts. The report does not look at sales orders or estimates because you most likely aren’t paying commission until the order is completed, and it’s been converted to an invoice, that's our logic at least.
Sales Commission Report
This is the best place to get all the sales commission data once it’s been invoiced, for any given date range, like a month or a quarter. There are three ways you can pull this report. To modify these views, they can only be changed within the General POS Settings, not from within the report itself. Two of these three report views, give you additional filters.
1. Sales Commission by: Payment: This allows you to view the sales order by the transaction ID from shopVOX.
2. Sales Commission by: Closed & Open Invoice: This report allows you to view the Sales Commission by invoice number. It shows both open and closed invoices
- This report lets you apply date range filters, sales rep filter, and paid vs not paid*
3. Sales Commission by: Closed Invoice: This report allows you to view the Sales Commission by invoice number. It shows only closed invoices.
- This report view lets you apply date range filters, sales rep filter, and paid vs not paid*
*remember a closed invoice doesn’t always mean a paid invoice, “closed” is the status of the invoice, and shopvox will mark an invoice as "closed" automatically when the invoice is paid, or you can manually mark the invoice as paid.
If you select "Mark Pay" on the report level, shopVOX will create a cash payment transaction for the invoice. You can go into the transaction later and change the payment type to what it actually is. (For example change from “Cash” to “Check” and enter a check number)
How to change report view:
Once you decide which view would work best for you, you can go into the POS settings, to change them. Below tells you how for each report view.
1.Sales Commission by Payment: Go to POS Settings>General and modify settings to match the bullet points below:
- Sales commission report for invoices closed = Unchecked (Does not affect this report)
- Set the "Sales Commission By" to “Payment."
2. Sales Commission by Closed & Open Invoice: Go to POS Settings>General and modify settings to match the bullet points below.
- "Sales commission report for invoice closed" = Checked
- Set the "Sales Commission By:" to “Closed Invoice.”
3. Sales Commission by Closed Invoice: Go to POS Settings>General and modify settings to match the bullet points below.
- "Sales commission report for invoices closed" = Unchecked
- Set the "Sales Commission By:" setting to “Closed Invoice”
How can I include/exclude products from sales commission?
- Adding it as a charge, for more information go to this article
- Excluding the product by setting the commission rate to 0%
How can I see the commission that was calculated by shopVOX?
- You can pull a “Sales Commission” report to see invoices
- You can click on the green action button within the Quote, Sales Order, or Invoice, and select “Show Commission”
What happens if I make changes to the invoice?
If you make changes to the invoice like adding a line item, click on the “Update Commission” button from the “Show Commission” to make sure these changes show up on the “Sales Commission” report.
- If the assigned sales rep is wrong on a quote you can reassign it before it is converted to an order or an invoice. shopVOX will recalculate the commission rate once it is converted to an invoice to reflect the new sales rep.
- If you never assigned a sales rep until after the product was added, than you’ll need to update the commission.
Does sales commission sync with quickbooks?
It does not at this time. You can export the data via excel however, and manipulate the data as you see fit.
Does sales commission calculate on the business intelligence dashboards?
If you go to Dashboard, Business intelligence, and scroll down a bit, you’ll notice a section called “Product Mix” which looks at your products performance within a date range. It shows product sales, costs, profit, and margin, these numbers DO NOT consider sales commission. This can be used as a great tool however to get insight into how much commission you feel is appropriate to your sales rep or team, assuming you've entered accurate costs.
Can I calculate commission based on GST Price?
This is not possible at this time.