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Key Points

• Sample gross margin calculations are in the database below
• Profit sharing is paid out quarterly </aside>

Overview

This case study explains how our sales profit sharing works, what “gross margin” means in our context, and how quarterly payouts are calculated.

How profit sharing works

• Eligibility: Sales team members on qualifying deals closed-won within the quarter
• Basis: Share is computed on gross margin, not top-line revenue
• Timing: Payouts are processed each quarter after finance closes the books
• Adjustments: Refunds, credits, and uncollected invoices reduce margin for the period they are recognized

Key definitions

• Revenue: Total client billing on the deal
• Direct costs: External costs directly tied to delivering the deal (freelancers, media buys, platform fees)
• Gross margin: Revenue minus direct costs
• Profit share pool: Percentage of gross margin allocated to the sales team, per policy

Sample calculations

Refer to the database below for worked examples with varying revenue, cost, and share scenarios. Use it to stress-test edge cases like partial payments, discounts, and multi-month retainers.

Payout schedule

• Quarterly close: Within 10 business days after quarter end
• Disbursement: Within 5 business days after finance sign-off
• Minimum threshold: Small balances roll over to the next quarter if below the payout threshold

Guidelines for logging deals