Software Sales Salary & Commission Structures Explained: Ranges, Averages & How Much Reps Make
You’re a self-confident, communicative, and creative professional surveying various job categories. You want an exciting career that pays well and offers ample growth opportunities. You enjoy interacting with many different people. Well, the software sales industry could be a great fit for you.
You get a competitive starting salary even for an entry level role in a software sales team. In addition, there could be location-based pay components to account for a higher cost of living (if you live in a metropolitan area). And if you find the right employer with a great fit, you can live your ideal lifestyle.
In this article, let’s explore the software sales career in detail, including the earning potential, job requirements, career growth opportunities, and more. After reading, you’ll have a clear idea of the financial aspects of a career in technology sales. Let’s get started!
What is Software Sales?
Software sales is the process of a sales rep selling software products to prospects of all sizes: individuals to large organizations. Depending on the price and product complexity, selling software as a service (SaaS) can involve a long sales cycle with multiple touchpoints from the marketing and sales teams.
As a salesperson, you’ll need to learn how the software you sell works, its benefits and features, and offer advice on integrating your software with your client’s existing tech stack. For some complex solutions, you may need to rope in engineers, product marketers, or technical sales specialists.
If we look back, it was only in 1999 when Salesforce launched a customer relationship management (CRM) platform as a SaaS. While it saw record growth, enterprise businesses initially didn’t fancy subscription-based software.
Since then, SaaS adoption has risen exponentially, with the likes of Microsoft, Apple, Oracle, and SAP entering and dominating the market. As the worldwide public cloud end-user spending grows (expected to touch $500 billion in 2022), sales jobs at software companies continue to mushroom.
Software Sales Representative Job Requirements
Whether starting your career or contemplating switching professions, sales can be one of the most accessible jobs. While most sales reps have a bachelor’s degree, companies like IBM have reported that 10 to 15 percent of their new hires don’t have traditional four-year degrees.
Irrespective of your college degree, a strong desire or passion for building a sales career is important. If you have a track record of taking ownership of projects and getting results, your application makes a stronger case. Sales managers typically evaluate some of the following traits when hiring:
- your people and relationship building skills,
- your ability to collaborate with teams,
- your proficiency in learning new and advanced technology,
- how effectively you communicate,
- and if you’re coachable (or have the right sales mindset).
Depending on your job title, there may be more specific and ambitious requirements. A SaaS startup is generally fast paced and has a challenging environment.
You have to look beyond the resume to demonstrate the above skills. Recruiters could hunt you through your LinkedIn profile, so make sure you maintain a great one.
Your roles and responsibilities in a software sales job could include:
- cold calling,
- answering incoming calls and emails from leads,
- understanding your company’s product lines,
- qualifying prospects, managing your sales pipeline,
- building a rapport with clients,
- and closing deals.
What is the Average Salary in Software Sales?
The national average base salary for software sales professionals is above $51,000. You also get paid additional revenue through commissions, bonuses, or profit sharing. Software sales representative salaries vary depending on years of experience, skills, industry vertical, location, and other factors.
The salary range is pretty drastic: $35k - $115k (as per Payscale).
Entry-level software sales reps may begin at under $40k annually. But progressing in your career path to an account executive (at 5-9 years of experience) could bump your base salary to $60k or higher. As an experienced sales manager at the senior level, you may make close to six figures as your base.
If you’re ambitious and want to cross the 75th percentile, you can get compensated well for your hard work.
2013 data about the top 20% of people who sell the most software—at companies like IBM, Oracle, Microsoft, and SAP—indicates that you can make $250,000 to $350,000 a year. But the stakes are high, and you have to hit ambitious quota numbers or risk losing your job.
For folks who want more flexibility, a remote sales job could be a better fit. You can take client calls and collaborate with your team from the comfort of your home. You have a greater degree of freedom of autonomy, but the flipside of this is that you need to be really good at managing yourself effectively. Not everyone is capable of working with such a degree of independence.
Some remote companies like us even offer the option to take a 4-day work week at 80% of pay for many roles. It allows you to prioritize what matters to you.
Software Sales Commission and Bonuses
Sales jobs have different compensation structures based on the employer’s team organization, goals, and resources. A typical yearly package includes a base pay (your fixed salary), structured commissions for hitting your sales quota, a signing bonus, and stock options (if applicable).
Let’s look at a few specific examples backed by data.
1. An enterprise software sales job in the healthcare industry has a:
- national average base salary of $97,846,
- a bonus of $3,782
- and additional benefits such as 401k, healthcare, and the like.
2. For the job title of a sales development representative (SDR):
- the annual base salary stands at $53,177,
- the commission (at a 100% quota) is $23,640,
- and the signing + stock is $4,763.
So the average total compensation is $81,771.
Your pay rises with years of experience, but it also depends on the size of the accounts you handle.
For an SMB account size, the average annual compensation is $50.3k in base salary, $21.2k in commissions, and $2.4k in signing & stock. Compare that with a key account representative, where the base jumps to $55.2k. The commissions also increase to $25.8k, and the signing & stock bump to $3.7k.
There also are geographic differentials in most pay packages.
3. As per Payscale, a sales development representative (SDR) in San Francisco may earn 19.9% higher than the national average. In New York, they may make 11.2% higher than the average.
The compensation increase accounts for the higher cost of living in metropolitan areas.
As you rise through the ranks in your sales career, your base salary, commissions, and other components also jump significantly.
4. For instance, for a sales manager:
- the annual base salary stands at $117,277,
- the commission (at 100% of quota) is $94,474,
- and the signing + stock is $19,479.
The average total is an impressive $230,479.
Beyond all of the above variables, your employer ultimately decides what your role is worth to them.
At the time of writing this article, Bill.com and NetSuite were hiring for a business development representative role. Both needed a year of work experience. And consider it an SDR sales role for a mid-market account size. But Bill.com offered a total compensation of $82k vis-a-vis NetSuite’s $75k.
So before you take up a job, look carefully at the compensation plan and the benefits you’ll receive. You may even get the option to choose a commission structure for your role, so do your homework before hopping on that final interview call.
Types of Software Jobs Available
The SaaS industry not only offers lucrative software sales jobs at the beginning of your career—you can expect ample growth opportunities to come your way after your joining. All you need to do is learn new skills relevant to the senior roles (like managing a sales team) and be willing to shoulder additional responsibilities.
I have broken the common sales jobs into four types for your understanding. Let’s look at a few titles, their responsibilities, and the annual incomes you can expect to make under each.
Entry Level Sales Jobs
Let’s start with the common positions where you may begin your sales career.
Sales Development Representative (SDR)
You typically don’t need prior experience to start. But the job could be challenging. You may juggle a huge number of calls and emails to identify prospects that are the right fit for your software products. Typically SDRs don’t close deals—they set appointments for senior members and let them handle the rest of the sales cycle.
Average fixed salary: $54,797/yr
Total yearly compensation (including commissions, bonuses, and benefits): $70,983/yr
(Data derived from Glassdoor)
Business Development Representative (BDR)
Most companies use the titles BDR and SDR interchangeably, and their responsibilities are similar. However, business development professionals may work more often on outbound prospecting. Ultimately they also hand over their opportunities to senior team members.
Average fixed salary: $64,244/yr
Total yearly compensation (including commissions, bonuses, and benefits): $74,244/yr (and non-cash benefits like 401k)
(Data derived from Indeed)
Mid Level and Sales Management Jobs
To progress to managerial roles, you may need to hone different skill sets, but the rewards make the effort worth it. Let’s look at a few senior sales jobs.
Account Executive (AE)
The primary role of AEs is to close the deals that SDRs hand off and manage client relationships. Sure some of your day-to-day responsibilities still overlap with SDR (such as making calls), but you’ll work with warmer leads. Typically you become an AE only after an experience of a year or two as an SDR.
Average fixed salary: $68,575/yr
Total yearly compensation (including commissions, bonuses, and benefits): $88,575/yr (and non-cash benefits like 401k)
(Data derived from Indeed)
As an account manager, you’ll be the primary contact for clients once a deal is closed. You’ll provide product support, report bugs to the engineering team, and persuade your clients to renew their contracts. You might also upsell new features and explore opportunities for customers to use your products in more areas of their businesses.
As an account manager, you’ll have a higher fixed base salary than junior roles, besides quotas and commissions for upselling and renewals.
Average fixed salary: $71,268/yr
Total yearly compensation (including commissions, bonuses, and benefits): $88,779/yr
(Data derived from Comparably)
When a company has become big enough to have a sales team, sales managers are roped in to execute the strategy set by higher management (often the VP of sales or chief revenue officer). Here you’ll be held directly responsible for the performance of your team. So you need a different set of skills like the ability to train, motivate, and manage your team members.
Average fixed salary: $98,834/yr
Total yearly compensation (including commissions, bonuses, and benefits): $150,692/yr
(Data derived from BuiltIn)
Specialized Sales Roles
Let’s look at a few specialized sales jobs that require a diverse skill set besides selling and are well paying.
Technical Sales Engineer
Sales engineers are a rare combination of technical skills and business acumen. Their role is to understand the technical needs of their target market and pitch their software products as a solution to customers’ problems. They also provide technical advice and support to clients. (We often advice sales reps to learn how engineers handle prospect inquiries.)
This role requires advanced technical knowledge that can come from a college degree or real-world work experience (as a software engineer or a related job). So the pay is commensurate with these requirements.
Average fixed salary: $82,278/yr
Total yearly compensation: Will also include non-cash benefits. Occasionally may also include commissions.
(Data derived from Indeed)
Sales Operations Manager
Working in sales operations will involve streamlining everyday tasks for your sales teams and removing any obstacles that might turn up in your sales funnel. You’ll also support the team by trying to improve or automate sales processes and creating supporting marketing material.
Average fixed salary: $102,780/yr
Total yearly compensation (including commissions, bonuses, and benefits): $118,057/yr
(Data derived from BuiltIn)
Outside Software Salesperson
An outside sales rep or salesperson is responsible for building relationships and selling to markets outside of your company’s primary ones. You may travel to meet with new buyers and deliver product demos—or sell remotely via email and video conferencing.
Average fixed salary: $80,151/yr
Total yearly compensation (including commissions, bonuses, and benefits): $102,711/yr
(Data derived from Indeed)
Sales Leadership & Executive Jobs
Finally, let’s look at the executive sales team’s job roles, responsibilities, and compensation.
VP of Sales
Congratulations, you’re officially a big shot with this vice president (or head of sales) tag. But this role comes with a high stakes goal: responsibility for growth in sales of the entire company.
You’ll often collaborate with other stakeholders to create or approve a sales strategy. And depending on the size of the company, you’ll hire & fire other salespeople, manage your team, and the like.
Average salary: $261,483/yr
(Data derived from Salary.com)
Chief Revenue Officer (CRO)
Usually, only a role offered in large corporations—as a CRO—you’re responsible for the revenue of the entire organization. This could be deemed as the pinnacle of a career in software sales.
Your responsibilities include collaborating with the VP of sales to set goals & KPIs, developing sales playbooks, etc. As you oversee all other business activities that impact revenue, you’ll ensure alignment with other relevant revenue departments like product, marketing, and customer success.
Average fixed salary: $234,137/yr
Total yearly compensation (including commissions, bonuses, and benefits): $397,625/yr
(Data derived from BuiltIn)
Software Sales Salaries: Are You on Track for Success in Your Career?
SaaS sales is a great way to venture into the tech industry. You can get compensated well even at the entry level—if you manage to hit sales goals and unlock commissions for yourself.
Hopefully, the average salary data in this article will help you make an informed decision on your software sales career. Up next, explore our resources to learn the ins and outs of the industry.
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