What is a bonus in the context of sales compensation?

A bonus in the context of sales compensation refers to a payment made at the discretion of the employer, usually awarded for reaching or exceeding specific sales goals or performance targets. This type of financial incentive is designed to motivate sales representatives to perform at their best by offering a tangible reward for achieving defined objectives. Bonuses are often variable, meaning they depend on the individual or team's success in meeting predetermined benchmarks.

Options that describe fixed salaries or payments unrelated to performance, such as a fixed salary for all sales employees or incentives based on customer satisfaction, do not capture the essence of a bonus, as these do not involve discretionary awards linked to sales achievements. In contrast, the nature of a bonus inherently involves an element of performance assessment, which makes it a key component of a strategic sales compensation plan.