As originally asked by Mark Driscoll, P.Eng., Ph.D.

Richard Jeffery
Managing Director
As a major distributor for Australia and New Zealand , the way that we would do it is, new product to market , a higher commission so there is a incentive to get this product to market, this is on there base salary. We operate that you have to have and incentive otherwise they will just sell what is easiest. in saying this I have people that love new products, cold call, present and when they get to certain level I let them have the choice of another new product and hand over some of their sales to another team member or they can continue as they love the product. It really is about finding the right person for the product and as some one who has trained sale people and written on the subject that sometimes and this is true about our dealers across the country.

William (Bill) Hulbig
50+ Years; Serial Entrepreneur, Founder, CEO and Former Super Angel Creating Quality Deal Flow
My 2 sense: I have always been a huge proponent of direct advertising and direct sales as opposed to field sales, but proved you can’t beat having a good rep at a former company I owned. A good /great rep that has a variety of stuff related to your product gets more face time and is more heavily relied on than any company man selling just one line. Being self-employed often makes them hungrier too.

Bob Light
Director, Financial Systems at VBrick Systems, Inc.
Hi Mark,

Don’t bring up “commission only” plans either, as that’s going the hornets nest direction with a big bat…:>)

It is challenging to provide a good answer to your question without more details. For instance, what type of sales will it be, inside or outside, what is the estimated or average deal size, same for sales cycle, who will provide leads, the maturity of the product/company in the market, how fast you want to grow, how much cash you have in the bank today etc.

All these variables impact the compensation package, which is typically a combination of base salary plus variable earnings (commissions). The base salary for outside reps typically is higher, as the revenue per sale is also typically higher, but the % commission can be lower. The commission package should be built around a target revenue number, achieved monthly, quarterly or annually depending, with bonuses at specific milestones and over-achievement. Startups can be a bit more aggressive regarding the compensation package, as G Michael and Vernon point out, sales is everything and the general overhead is less so more margin can be funneled to sales. The risk is greater as well obviously.

If you have a bit of time, look at the financial filings for a few publicly traded med device companies, specifically at their ratios of sales costs to revenue or sales costs as a % of total costs. This at least will provide an overall guideline, then you can back into a compensation plan that fits your needs.

Mark Driscoll, P.Eng., Ph.D.
Professor at McGill University: Research, Partnerships & More
Thank you for your comments. I do not intent to put into question worth but rather stimulate a conversation on typical remuneration agreements as I am going through the process hiring sales agents and could benefit from other’s experience.

Vernon Dahl
CEO at MitraGen
Remember an old bumper sticker that said “If you have it, a salesman sold it and a trucker brought it”. Without both of these no one else eats.

G Michael Gerity RN CCDS
Cardiac Device Nurse at The Polyclinic, Seattle
I was hoping for the hornet’s nest, but no fun today. Just remember that you’re sales department is where money comes into the company; you can have the best product in the universe, but if it goes unsold, it’s just more fodder for the landfill.

Mark Driscoll, P.Eng., Ph.D.
Professor at McGill University: Research, Partnerships & More
Dear Joe, indeed I am referring to the compensation aspect. I was hoping to weight in on people’s experience with launching a new medical device (class II or III). Perhaps some guidelines to help orient the discussion include:
1. What is a typical compensation for new sales reps?
2. What percentage of sales is commonly offered as commission?
3. Is this % from net or gross sales?
4. What characteristics should I look for while filtering through candidates?

Joe Hage
🔥 Find me at MedicalDevicesGroup.net 🔥
Mark, either you’re asking how to compensate a rep, or you’re opening a hornet’s nest.