Remuneration of Salesmen: Factors Affecting Remuneration

Remuneration is the reward or payment a salesman receives for his services. Deciding a fair and motivating remuneration plan is one of the most important tasks of sales management, because remuneration directly affects a salesman's willingness to work hard, his loyalty to the firm and the firm's ability to attract and keep good salesmen. A good remuneration plan should be fair to both the firm and the salesman, simple to understand, flexible, and should reward effort and results.

Factors affecting the remuneration of salesmen

The amount and method of remuneration depend on several factors:

• Nature of the product and the selling job. Selling technical or high-value goods that need skill and effort usually commands higher pay than selling simple, fast-moving goods.
• Ability, experience and qualifications of the salesman. More capable, experienced and qualified salesmen expect and are paid more.
• Prevailing rates in the industry and locality. A firm must pay roughly what competing firms pay for similar salesmen, or it will not be able to attract and retain them.
• Firm's financial position and policy. A prosperous firm can pay more; the firm's overall wage and personnel policy also sets limits.
• Cost of living. Remuneration must be enough to give the salesman a reasonable standard of living in his area.
• Type of customers and territory. Difficult territories or demanding customers may justify higher or additional payment.
• Degree of responsibility and duties. A salesman who also collects payments, services accounts or supervises others is paid more than one who only takes orders. …