

Ask HN: Has any company ever paid developers like they pay sales people? - TheBiv

Howdy!<p>I work in the B2B space and our sales people are paid a commission on the clients&#x2F;projects that they sign up. We have a base platform, but the clients&#x2F;projects that we being in typically require a fair amount of custom integration. So, I am curious if any company has paid developers a commission based off of which projects&#x2F;clients that they develop against?<p>I don&#x27;t know if this is a good idea or how it would work out, which is why I am curious if any company has ever tried this?
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idunno246
This reminds me of this:
[http://www.youtube.com/watch?v=u6XAPnuFjJc](http://www.youtube.com/watch?v=u6XAPnuFjJc)

Basically, theres research showing that for knowledge based work, you just
want to get out of the way and pay enough that they dont think about money.
Increasing pay doesn't increase productivity

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otoburb
Sales is a hit-driven business. If you close >50% of your potential deals
you're on fire and are probably not getting enough quality leads.

Almost every other part of the business (marketing, engineering, professional
services, G&A) is expected to perform or deliver at near perfection (say, >90%
for a sloppy organization).

The only exception to the non-sales role that allows for a "low" success rate
would be R&D.

As others mentioned in the comments, bonuses are typically the way to reward
non-sales staff upon completion of their portion of the work. As well, there
are usually equity pools that staff participate in.

A commissions incentive structure is incredibly stressful for employees who
expect steady, dependable and predictable paychecks with bonuses on top.
Commissions incentive structures often attract and encourage aggressive
personalities and characteristics.

It may work out if your developers were comprised almost entirely of
freelancers, but even freelancers expect to get paid for almost every project
they complete. Maybe if your developers were also authors or blog post writers
in their previous lives then they'd understand and appreciate the commissions
structure a bit more.

Keep in mind, it makes little sense to give developers commission upon deal
closure because, unless they directly assisted sales in closing the deal,
you're essentially giving them money for no reason. Commission, if you're
going to give it, should be handed out to developers _after_ they do their
part of the work successfully, in which case how is this different from a
bonus?

~~~
bruce511
It's also worth pointing out that sales and development have substantially
different work cycles. A sales is a binary event, once it's done, it's done.
Development on the other hand is (mostly) never complete. There's maintainence
to do, features to tweak, bugs to fix and so on.

Let's consider a bug report. Let's assume the client is not paying to get the
bug fixed. Which developer then wants the job? Indeed since programmers are
incentivized the same way as Sales, they need to "complete" lots of jobs
quickly. The faster the better. Which leads to more corners being cut in the
first place. Worse code, no-one interested in maintainence - these are not
recipes for quality products.

One of the bigger problems with commission based salesman is they they'll sell
_anything_ \- limiting them to selling only what is already available takes
strong management, and the occasional waving of a big stick. Our sales people
work inside some tight constraints and are financially penalized when they
oversell. This is a reaction to past sales people overselling, angering their
commission, but for work which was ultimately unprofitable because they mis-
sold the client the wrong product.

Culturally sales people are used to a commission -programmers are not. Sales
people sell a lot of things that are eh to sell, and avoid products that are
worthwhile, but hard to sell. If programmers were the same way we'd end up
with mountains of 99c apps that do nothing as programmed searched for the
killer app that takes no risks, but is easy to sell. Oh wait...

A single developer is ultimatlely paid on commission already - but he's also
motivated by the health of the business as a whole. The employee working on
commission enjoys none of the long-term upside of the business, yet shares in
all the short term downside. He'll naturally want to work only on the "hits"
and will quickly abandon projects if they're not an inmmediate success.

We could also talk about co-operation (sales is notoriously insular, whereas
programmers benefit from being sharing knowledge), the whole concept of "after
sales service", and so on, but I think you've got the point.

It's good to ask this sort of question- but in this case I don't see any
benefit in paying them on commission, and I predict it would optimize
developers in all the wrong sorts of ways, ultimately resulting in very bad
code.

~~~
czbond
This is a great point, especially the fact that sales are binary and
development isn't.

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mathattack
In software consulting, people are generally measured against utilization. It
isn't as purely formulaic as commission based sales, but there's usually a
utilization target of some kind. If your target is 80%, and you find yourself
only 70% utilized, you won't expect a good bonus or raise. If it's 50%, you
start looking over your shoulder.

I think in general it's a good idea to tie compensation to the benefit people
bring to the business. Giving some kind of bonus to people for the
profitability they bring to the firm is great. You just have to be careful
that you're not screwing up teamwork or getting people too focused on the
wrong things. (You don't want to incent short term profitability at the
expense of customer satisfaction)

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curiousquestion
I would say it's probably close to impossible to directly correlate a
developer's input to an amount of money his effort is worth in the form of a
commission.

Also software planning, architecting, developing is such a nuanced process
that it would likely be easy for someone who didn't want to pay someone
substantially for their efforts to "sabotage" them.

Also I think in the big picture business folks likely wouldn't want to see the
reality, which is that developers, in a technology-driven business are likely
worth 90% of revenue while everyone else is likely worth something like 10%.

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waterlesscloud
I spent a number of years working on a similar product, a B2B base platform
that was heavily customized for the larger customers. The packages would
typically sell for high six / low seven figures.

One customer wanted a module that wasn't just custom but wholly new, and the
whole deal depended on it, so a dev was put on it for about 4 weeks and given
a bonus to get it done fast. I never got the exact number, but he told me it
was going to be enough to "add that garage on to the house".

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czbond
I actually like your idea - I think tech work has a low top end, and sales a
much higher end (but for other reasons).

Developers are paid for the block of time. Sales people are paid a very low
salary, and then can control how much they make by hustling. Developers
wouldn't really be in control of how much business they bring in, so I could
see it mainly working as a "bonus basis".

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etler
In the world of sales, for the most part you make a sale or you don't. With
programming, you can tackle the problem in many ways. There's no easy way to
measure quality. If you pay just for getting the job done, you're encouraging
programmers to complete more tasks faster which would lead to poor quality
code, endangering the health of the company as a whole.

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seannaM
I think blunt incentive based systems tend to encourage aggressive tactics.

If someone is going to suffer from the recklessness of a sales tactic, its
someone outside the company.

If someone is going to suffer from the recklessness of a tech strategy, its
going to be the company.

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sharemywin
I would think that most developers wouldn't want to be paid that way. I heard
of bonuses if things go successfully, but not straight commission. Most people
want steady pay. If not they go into sales or freelance.

~~~
anthony_franco
I agree with this. Having a large portion of payment being based on commission
seems hard to quantify and therefore hard to depend on consistently. It can
lead to misunderstandings as a seemingly hefty feature might bring a lower-
than-expected commission. Contrast that to sales where its dollar amount of
new business is obvious to both parties.

For us, we've brought on developers with the understanding that as their
contributions help the business grow, we'll raise their salary/give bonuses
accordingly. So far it's been very effective.

