Help! My rep won't stop discounting

Published: Wed, 02/26/25

Updated: Tue, 03/04/25

February 26, 2025

TOGETHER WITH

Welcome back. Another February is almost in the books, and by books, we mean that unconscious part of your brain where you store memories of distasteful prospects and empty promises. In this week’s issue, we’ll look at the long history of salespeople earning commission, share a Sales Fail about a missing laptop, and give some advice to a manager who's sick of all the discounting. Let's go.

NUMBER OF THE WEEK

5-11

An average B2B buying group for a complex solution comprises 5 to 11 decision-makers.

Source: Alore.io

SALES ROUNDUP

Here’s what’s happening in the sales world this week:

A bill to regulate the solar industry in Texas would bar companies and sales agents from deceiving customers about the cost and performance of rooftop systems, and those who do so anyway could be fined up to $100,000. The Residential Solar Retailer Regulatory Act, submitted by State Sen. Judith Zaffirini, a Laredo Democrat, is the most comprehensive consumer protection bill ever filed in the state related to the solar industry. You can read more about it here.
How much do car salespeople actually make? A recent article from car-website Jalopnik delved into auto sales pay, and made the case that the numbers you see on sites like Indeed and Glassdoor are inaccurate, and vary wildly from state to state. Instead, the article explains, auto commission structure has lots of nuances, lots of outcomes, and isn’t always in the sales reps’ best interest (shocker). You can read the article here.

FEATURE

The origin of sales commission: why salespeople have always bet on themselves

For as long as sales have existed, so has the question: how should salespeople be paid? From ancient merchants haggling in open-air markets to modern SaaS reps closing six-figure deals over Zoom, one thing has remained consistent—sales professionals thrive on incentives. The sales commission, one of the oldest forms of performance-based compensation, has shaped the sales profession for centuries. But where did it come from, and how did it become the dominant method of paying salespeople?

Early Sales and the Birth of Incentives

The concept of commissions has roots in ancient trade. In ancient Mesopotamia and Rome, merchants and traders often worked on a profit-sharing basis. Independent traders would secure goods from suppliers and sell them at a markup, keeping the difference as their earnings. Since there were no fixed salaries, their income was entirely dependent on how much they could sell—a primitive yet effective commission system.

During the Middle Ages, commission-based sales took on a more structured form. Traveling merchants and brokers, particularly those operating along the Silk Road, acted as intermediaries between suppliers and buyers, earning a cut of every successful transaction. Since these deals often required negotiation, product expertise, and risk-taking, a commission model ensured that those who could sell effectively were properly rewarded.

The Industrial Revolution: When Sales Became a Profession

The modern sales profession began to take shape during the Industrial Revolution. As mass production increased, companies needed dedicated salespeople to move products in large volumes. Unlike small-scale merchants, these salespeople were employees rather than independent traders. To align incentives, businesses began offering commissions on top of base wages, ensuring that salespeople were motivated to sell more.

One of the earliest industries to fully embrace commissions was insurance. In the mid-19th century, insurance agents were almost exclusively paid through commissions, earning a percentage of each policy they sold. This system worked because it ensured that insurers only paid for results—agents had to close deals to make money. The same model was later adopted by real estate, financial services, and wholesale goods industries, reinforcing commissions as the go-to structure for high-performance sales roles.

The Rise of the Commission-Only Salesperson

By the early 20th century, commission-only sales roles became commonplace. Industries like automobiles, door-to-door sales, and high-end retail saw a surge in commission-based compensation. The psychology behind commission-only sales was simple: it weeded out the weak. Those who couldn’t sell didn’t make money, while top performers earned far beyond what they could in a salaried role. The infamous “eat what you kill” mentality was born, creating a culture that rewarded resilience, persuasion, and sheer hustle.

The Evolution of Commission Structures

As businesses grew more sophisticated, so did commission structures. The traditional straight commission model (where salespeople earn a percentage of every sale) evolved into various hybrids, including:

Base salary + commission: Providing stability while still incentivizing performance.
Tiered commissions: Rewarding salespeople with higher percentages as they surpass certain targets.
Residual commissions: Common in SaaS and insurance, where salespeople earn ongoing commissions from long-term clients.
Bonuses and accelerators: Encouraging overperformance with extra payouts for exceeding quotas.

These structures were designed to balance risk and reward, ensuring companies could attract top talent while still driving revenue.

What Sales Commissions Mean Today

In today’s world, sales commissions remain the backbone of most sales compensation plans. While some industries have experimented with flat salaries for sales teams, results have been mixed—many companies found that without commissions, motivation and performance dropped. Commissions provide an undeniable incentive for sales professionals to push harder, close faster, and maximize revenue.

But more than just a pay structure, commissions embody the spirit of sales itself. They reinforce the idea that sales is a meritocracy—those who work the hardest and sell the most get rewarded the most. This system has stood the test of time for one simple reason: it works.

The next time you cash a fat commission check, remember—you’re part of a tradition that goes back thousands of years. And as long as sales exist, so will commissions. Because at the end of the day, true salespeople always bet on themselves.

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MEME OF THE WEEK

Source: Instagram -- Sales Humor

QUIZ

Which company is the world’s largest real estate franchise by agent count?

A. Coldwell Banker
B. RE/MAX
C. Compass
D. Keller Williams

SALES FAILS

Each week, we bring you the most cringe-worthy sales moments from across the web. To submit your sales fail story for consideration, click here. (Don't worry, you'll remain completely anonymous).

I was heading to pitch to this HUGE potential client (we're talking a $2 million contract) when I realized halfway there that I'd left my laptop back at my hotel. There was no time to go back to get it. I seriously considered faking a family emergency or telling them I had food poisoning. Anything to reschedule. But I decided to just wing it.

When I walked into the boardroom with six executives staring at me, I decided to come clean. "Look,” I said. “My laptop is currently enjoying an extended stay at the hotel. But maybe this is a good thing. Instead of me showing you slides about what I THINK you need, why don't you tell me about the challenges you're actually facing?"

The silence that followed was deafening. I tried to recover by asking about their pain points, but the CFO glanced at his watch and said: "We've already discussed our challenges extensively. Today was meant to show us exactly how your solution addresses them. We've got three other vendors presenting this week, we'll let you know." He got up and walked out of the room. I stood there embarrassed and everyone in the room just kind of looked around for a minute. Then my point of contact said, "I guess that's it for today," and walked me out of the building.

Anonymous Location withheld

GRAPH OF THE WEEK

Source: LinkedIn Poll -- February 2025

WORTH A PEEK

Why do people actually become sales managers? The job involves herding salespeople, who are somewhat like cats (if cats drank energy drinks and got divorced), and plenty of headaches. A recent Reddit thread tackled this question, with varying responses. You can read the conversation here.

ASK THE QUOTA

Want to submit a question and be featured in our advice column? Click here. (Don't worry, you'll remain completely anonymous).

Dear Quota Team,

I manage a team of 12 reps, and my highest volume seller has a frustrating habit. He consistently gives massive discounts in order to close deals. Despite this, he still hits his targets through sheer volume. I'm confident he has the skills to sell without slashing prices, and he's leaving significant commission on the table (not to mention hurting our margins). I want to encourage him to maintain his sales momentum while easing off the discounting accelerator. He's selling more volume than any of my other reps, just at much lower prices. How can I approach this conversation without demotivating him or making him feel his current success isn't valued?

Wondering in Nevada

Dear Wondering,

Frame the conversation around his potential rather than what he's doing wrong. Show him the math on how reducing discounts on just a few deals would significantly increase his commission while maintaining his sales volume. You could consider implementing a temporary bonus structure that specifically rewards maintaining margins, giving him immediate financial motivation to avoid heavy discounting. Whatever you do, approach this from a place of genuine support rather than criticism. Good luck!

Quiz Answer: D. Keller Williams is the world’s largest real estate franchise by agent count (you can read the source article here)

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Today's email was written by Ken Kupchik, Erica Furgiuele, Steve Rado, and Emily Hill.

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