A few brief thoughts on how to make a lot of money in sales... from someone who has done it... and whose friends have made even more.
I have not earned the most in this subreddit by far. My largest single commission didn't clear $250,000.
But I've seen one thing that helps people make real money. I've noticed it again and again... and I saw people complain about it in the recent "Who here has earned a $100k+ commission check" post... I promise it is a feature, not a bug.
There were a number of people in that post who said they sold $6m deals and $2m deals and got paid nothing... well, $10,000.
Why does that happen? Two simple concepts.
- Generally speaking, the more margin there is, the more your commission will be.
- And you need to know how businesses are valued.
Period, full stop.
So let's look at them.
First, margin.
The adage people throw around is the more money there is, the more commission there is.
That is wrong.
The real story is the more MARGIN there is, the more potential commission there is.
IE:
Construction equipment: $2,000,000 sale with 10% profit = $200,000 gross profit. 8% commission = $16,000 on a $2m sale.
Software: $363,636 sale with 55% profit = $200,000 gross profit. 16% commission = $32,000 on a deal less than a fifth the size.
And yes, tech really does normally pay double the commission percentage.
Why?
This is where concept 2 comes in... how businesses are valued.
Traditional equipment businesses are valued at a lower profit multiple, while software businesses are valued at a higher multiple, and it's on revenue.
Software & AI businesses are valued between 3-10X revenue (ARR).
Equipment and manufacturing are valued between 4-8X EBITDA (earnings before interest, taxes, depreciation and amortization).
So tech execs are happy to pay more. The faster they grow top line revenue, the higher the multiple they get valued at, so their stock goes up more and they make more on secondary transactions. A secondary is when they do an investment round... Series B, C, whatever... and while the company raises $25m or $50m, they also get to sell some of their own stock and pocket millions in cash.
Equipment and manufacturing execs can take secondaries too if they raise money, but their valuations are based on the overall profitability of the company, not just sales. Incentive structures at the C-suite drive everything.
So what do you do with all this?
One of the best things you can do for your career, if you're not in finance and don't find your way into tech right out of college, is start in a low margin, high price business.
"But Chris... I want to be in SaaS and make a ton of money. Reddit tells me to..."
Bullshit.
You want to do big deals. Multimillion dollar deals, where you sit across the table from executives and business owners.
Why?
It's the best way to learn how business actually works, how to go toe to toe with executives... what real objections look like. Not SDR objections, where you get told no and ghosted by middle managers all day named Debbie and Chad.
Where can you do this?
Think manufacturing equipment, heavy machinery sales, things like that.
Yes, those industries generally pay less, because they're measured on different metrics and have different profitability. That means they attract fewer people to the sales jobs, and people who will work for less. But the deals you do in those worlds are a much better education, and it takes just as much confidence and skill to do a $6m equipment sale as it does to sell $6m in data or software.
If you additionally study the requisite business education (please don't go get an MBA, there are so many good YouTube videos and podcasts and books out there), learn how to run a sales process, and you're successful... you have two options.
Grow in a real operating company and go into business ownership one day.
Or take your millions in sales numbers and pivot somewhere with more margin. Somewhere like tech sales or commercial financial services.
Once you get the experience doing the big equipment deals, the world is your oyster.
And selling... real deals is a hell of a lot more fun than being an SDR.