Commission-only sales: how it works, and what to ask for

Commission-only sales means the agency is paid only when a deal closes. This guide covers the upsides, the trade-offs and the questions a founder should ask.

The idea

In a commission-only arrangement the sales partner takes on the cost and effort of selling and is paid a share of the revenue they bring in. If nothing closes, nothing is owed. For a young company, that turns a fixed hiring risk into a variable cost that only appears when there is revenue.

Why founders like it

The risk to start is close to zero, the incentives are simple, and it is easy to try in a new market. There is no long onboarding and no salary to carry while a team learns the product.

The trade-offs, honestly

A partner who only earns on closed deals will naturally focus on the leads that look most likely to close. That is usually fine, but it means they may not take on slow, strategic accounts unless the commission justifies it.

It also means the commission should be fair. A rate that is too low attracts nobody good. A rate that is too high eats your margin. Most agreements settle on a percentage of first-year revenue, or a lower recurring share for as long as the customer stays.

Terms worth agreeing in writing

The commission rate and what it is calculated on (contract value, first-year revenue, recurring revenue).

How long commission is paid per customer, and what happens if the customer upgrades, downgrades or cancels.

Which accounts count as introduced by the partner, so there is no argument later.

Exclusivity, territory and how either side can end the agreement.

When commission is paid: on signature, on first payment, or monthly as money comes in.

A note on contracts

Use a written agreement even for a pilot, and have a local lawyer review it before real money is involved, especially across borders. A template is a starting point, not legal advice.

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