Typical Sales Commission Rates in 2025: Industry Breakdown & Compensation Models

Not every sales rep in every industry gets the same commission rate. It is subject to conditions. 

Factors like market competition, demand, sales cycle length, its complexity, the revenue potential, and the nature of your sales role- all influence the industry standards and its norms.  

So as we move through a new year, here is a breakdown of the typical sales commission rates in 2025. 

In this article we will explain sales commission rates, why it matters in 2025 and the typical sales commission rates by industry. We will also discuss the popular sales commission structures and how to determine the right commission rate for your company. 

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So let's get started. 

What are Sales Commission Rates?

Sales commission rates are the percentage a company pays its sales reps for each sale they make. 

This rate is influenced by several factors, including the nature of the sales role, the length and complexity of the sales cycle, market competition, and prevailing industry norms, to name a few.

Though there are typical sales commission rates set in each industry, most companies take an individual take on how to go about with their sales commission rates. 

Why Typical Commission Rates Matter in 2025

Typical commission rates refer to the standard commission percentage offered to sales reps within a specific industry. It shows the common compensation model used by companies in that sector. 

And why does it matter? 

Having this benchmark helps companies understand the level of incentives required to maintain a motivated sales team capable of facing market competition and driving growth. 

It helps businesses align their compensation strategies with industry trends to attract top talents and retain their best performers. 

So a typical sales commission rate is a standard you look up to optimize your compensation structures. It is how you stay ahead of the competition and adapt to the changing market demands. 

Typical Sales Commission Rates by Industry (2025 Benchmarks)

Each industry has its own typical sales commission rates. This estimation depends on their profit margin, product type, sales cycle length and its complexity, industry norms, and regulatory environments. 

Analyzing these factors let's look at the typical sales commission rates of each industry: 

These stats show that commission rates depend on many factors. How big the deal is, how easy or hard it is to sell, how competitive the industry is, and how much profit the product or service makes.

Given the unique nature of each industry, companies offer commission plans that keep their sales teams motivated and performing at their best.

Popular Sales Commission Structures in 2025

Just as commission rates are determined by the nature of each industry, commission structures are also tailored to fit industry-specific needs.

So here is a list of commission structures that you need to know to make the best choice that fits your industry:  

• Base rate only commission

Under this commission structure, sales reps have only a base salary in their salary structure. There is no commission tied to their performance.

Such a compensation structure is usually given to entry-level or support sales reps, CSM team, etc.  

• Base salary plus commission

This is the most common incentive structure. A sales rep receives a fixed base salary every month along with incentives based on their performance and milestone achievements. 

The SaaS and Tech industry and the financial services mostly leverage this compensation structure in their industry.

• Straight commission

In a straight commission structure, a sales rep does not receive a fixed income; instead, they receive incentives based on their performance and achievements. 

Independent sales reps, real estate agents, and insurance brokers usually opt for this commission structure. 

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• Tiered commission

Sales reps start earning higher commission rates as they achieve higher milestones. The more you sell, the higher your rate. 

High-performing sales reps in the SaaS and Finance sectors have a tiered commission structure. 

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• Draw against commission

It is an early commission that reps are paid despite low sales. They are expected to cover this expense with their future sales. 

This advance commission is usually given to new hires for motivation or to sales reps in retail industries where sales go through peak and valley during seasonal fluctuations. 

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• Gross margin commission

Sales reps' commissions are calculated as a percentage of the gross margin they make, not the total sales deal. 

Enterprise sales reps in manufacturing or wholesale distribution often claim such a commission. 

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• Revenue commission

The commission is calculated based on the total revenue made. Sales reps in the SaaS or consumer goods industry calculate the commissions based on the total revenue. 

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• Residual commission

Commissions are not always a one-time reward for closing the deal. Sales reps also continue to earn a commission when customers choose to upsell, cross-sell, or renew their contracts. 

This is usually suitable for subscription-based businesses like SaaS, or financial services. 

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Finding the right sales commission structure for your business is more of a trial-and-error approach. 

Sometimes you need to try and fail, explore, and experiment to understand what best suits your operations. 

Before finalizing your sales commission structure, pause. 

Refer to the typical sales commission in your industry. Seek opinions from your salesforce on their needs and expectations. Study the trend to make the best choice for your company. 

But here is a little tip: selecting a sales commission structure is not the end game. It's just the beginning. You must constantly be ready to examine and improve to get the optimal outcome out of it. 

How to Determine the Right Commission Rate?

Setting the right commission rate is crucial for your business. 

It is based on that one criterion on which much depends. That one factor ensures your sales team’s performance, motivation, and profitability. 

So here is a roadmap on how to determine the right commission rate for you: 

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Understand Industry Benchmarks

Each industry has its set of typical sales commission rates. Knowing that industry benchmark will give you a good start.

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Evaluate Profit Margins

You should be well clear about the profit you make. This helps assign a commission rate that is high enough to motivate your sales team but does not exceed your costs.

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Consider Sales Cycle & Role Complexity

Understand the hard work that your sales team is putting in. A sales rep going through a longer and more complex sales cycle must be rewarded with higher rates and better incentives.  

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Assess Sales Goals & Targets

Define your sales expectations. This understanding will help decide what commission rate will bring the expected behavior and motivation in your sales reps. 

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Gather Feedback from Sales Team

Ask your sales reps about their needs. Know about what truly pushes them forward. Seek their opinion about the effectiveness of the incentive plans. These conversations help you gather insights on what works best in practice.    

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Run Financial Modeling

Before finalizing a commission rate, calculate how much it will cost your company if the performance is low, average, or high. This forecasting helps estimate if the rate is profitable no matter how the sales performance is. 

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Test and Iterate

Have a pilot run of your commission rate. Track the performance, gather feedback on its effectiveness, and analyze the results. Insights from this test run will help make adjustments and improvements for better results. 

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From research to testing, setting your commission rate should follow a thorough, step-by-step process. This ensures you get the best return on the money you invest in your sales team and their incentives.

Conclusion

In 2025, determining your typical sales commission rate is not just about paying an amount that is on par with the industry standards. 

It is about creating a strategy that keeps your sales team motivated, drives performance, and supports your business goals. 

This requires understanding your industry standards, the sales process, and your sales team's requirements. 

To make this process easier and more efficient, you need an incentive compensation management tool.

One that models a different commission scenario. One that tracks performance in real-time. One that makes data-driven adjustments. 

In short, you need Kennect. With our automation and insights, we help you build the best compensation structure with the best rates. We ensure you reduce errors, save time, and stay aligned with your business goals.     

To learn more about our product, Book A Demo with Us. 

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Frequently Asked Questions

• What is a good commission rate for sales in 2025?

In 2025, a good commission rate is one that aligns with market standards, balances profitability for the company while ensuring sales rep motivation, performance and behavior. While the actual percentage varies depending on your industry, product type and sales model.  

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• Is 10% commission considered high?

A 10% commission is generally considered a moderate to high rate, depending on the industry you work in. In real estate, the percentage is above average, in SaaS it's at the higher end, in retail and real estate it is a high sum. 

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• Is 2% a low commission rate?

2% might seem like a small number but it need not be a low commission rate across industries. For example, in real estate where the property value can go up to crores, even a 2% commission rate translates to a significant payout. While in SaaS, insurance, and retail where deal sizes are small and commission rates start at 8-10%, the percentage seems nominal.  

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