Last updated: July 2026
Design a building products BDM's pay plan around the outcomes the rep can actually influence and the length of the sales cycle, then set the pay mix, credit rules, ramp and governance to fit those facts. Work out what the business can afford at target and above target first, because the incentive budget, not the commission percentage, is what keeps the plan solvent and the rep motivated.
Most plans I see get this backwards. A structure built for a short, transactional cycle gets dropped on top of a long specification cycle, and everyone wonders why it stops working after year one. The headline on-target earnings figure is often reasonable. What the plan measures, and when it pays, is usually the problem.
I have worked in Australian building products for over eight years and have spoken with thousands of BDMs about how their plans are built and where they fall down. The points below are the design decisions that matter, written for hiring managers, GMs, MDs and the finance leaders who fund the plan.
One scope note. I recruit salespeople and advise clients on package design. I am not giving legal, tax or payroll advice. The statutory points below are current at the checked dates shown near the end, and employment, tax and payroll terms should be confirmed with qualified advisers before a plan goes live.
Start with the incentive budget, not the percentage
Before you choose a commission rate or a threshold, work out what the role can afford to pay.
Model what the business can fund at target and above target, using paid invoices and gross profit rather than headline revenue where you can. That protects the plan against unpaid revenue and the direct costs behind a sale. A plan funded from booked revenue looks generous until a project is cancelled or an invoice goes unpaid, and then the business is carrying commission it never collected the cash to cover.
A high commission payment is not a problem when the rep has generated enough profitable, collected business to justify it. The protection is to model the numbers properly up front, not to cut someone's upside after they have performed. That later change is what damages trust and, as the case law below shows, can be expensive.
Define the job before you write the formula
A plan can only reward outcomes the rep can influence, so the first task is to define which outcomes those are.
Building products BDM is not one job. Four common shapes each need a different plan.
- Specification-led. The rep works upstream with architects, engineers and specifiers to get product designed into projects that may not break ground for a year or more. Controllable outcome: specifications written and converted, not this quarter's shipped revenue.
- Channel-led. The rep drives volume through merchants, wholesalers, contractors and project suppliers. Controllable outcome: order volume and account growth through nominated accounts.
- Account-growth-led. The rep manages and grows an existing account base. Controllable outcome: retention and growth on known accounts.
- Mixed. Most real roles are a blend. The plan has to weight each part deliberately rather than average them into a single revenue number that rewards the same person twice or leaves money on the table.
Decide which of these the role actually is before you set a single number. Everything downstream depends on it.
Why building products cycles and channels complicate the plan
Because the cycle is long, the credit is shared, and the revenue arrives in waves the rep cannot time.
Five things make this category specific.
The specification cycle is long. A BDM wins the design intent, and that tick converts into a tender call-up months later. The product hits site later again. The work happens long before the cash. In my experience these cycles commonly run well over a year on mid to large commercial projects, though it varies by product and channel. Most plans pay quarterly, so the mismatch is structural.
Channel mix splits the credit. A specification BDM works upstream of the purchase, which is then ordered through a wholesaler, contractor or merchant. The spec rep created the demand and the channel rep took the order. The plan has to recognise both or one of them games it.
Inherited revenue is still real work. A new BDM usually walks into a territory with legacy specified product still flowing through the channel, largely regardless of what the rep does in month one. Paying full new-business commission on it rewards someone else's work. Ignoring it pretends that maintaining those accounts is not part of the job.
Margin spread is wide. A manufacturer might run a strong margin on architectural product and a thin one on the commodity lines beside it. A flat percentage on revenue pushes the rep toward whichever line is easiest to sell, often the wrong one for the business.
Product risk sits with the supplier. In waterproofing, building envelope and fire-rated systems, a failure years after install is the manufacturer's problem under the relevant warranty. A rep who writes product into projects it is not suited to creates a long tail of exposure. The extent of that liability depends on the supplier, contract, warranty and product category, so define it rather than assume it. Most plans do not account for it at all.
The four levers
Four levers, each doing a specific job. Over-weight any one and the plan pulls the rep the wrong way.
1. Base salary. What the rep earns regardless of performance. In long-cycle, technical sales the base needs to be high enough that a quiet quarter does not trigger a job hunt, because the measurement is too noisy to bet someone's mortgage on it. Where a role sits on the base-to-variable spectrum should follow the job type from the section above. For guidance on current base and package ranges by sub-sector, use the building products salary guide rather than a single rule of thumb.
2. Variable. What the rep earns for hitting target, tied to outcomes the rep can directly influence. For a spec BDM that is specifications written and converted. For a channel BDM it is volume through nominated accounts. Generic revenue against quota, without that segmentation, is where most plans lose the thread.
3. Accelerators. What the rep earns for outperformance. Above target the rate can step up so strong performance stays worth chasing. My preference is to keep upside open rather than cap it, and to protect the P&L by modelling what a windfall project would pay before the plan goes live, not by rewriting the plan after it lands.
4. Non-cash. Car or car allowance, fuel, phone, and super on eligible earnings. The general Superannuation Guarantee rate is 12% from 1 July 2025 to 30 June 2026. Super is calculated on ordinary time earnings, and how each payment is treated should be confirmed with payroll rather than assumed to apply automatically to every commission or one-off. A fully maintained company car can also add Fringe Benefits Tax exposure. These on-costs are routinely left out of the plan and then land as a surprise.
Choose the measurement and credit model by role type
Decide what you are measuring and who gets credit before you set a number. The right choice changes with the job.
| Design question | Long-cycle spec BDM | Merchant / channel BDM | Mixed role |
|---|---|---|---|
| What to measure | Specifications written and converted | Volume and growth through nominated accounts | Weighted blend of both, set explicitly |
| Credit event | Conversion (purchase order or shipment against a tagged spec) | Invoiced order through the account | Defined separately for each stream |
| Pay-mix lean | More base-weighted, because the cycle is long and noisy | More variable-weighted, because the cycle is short | Set per stream, not averaged |
| Ramp | Longer, tied to the spec-to-order cycle | Shorter | Longer of the two applicable |
| Main risk | Deferred earnings driving turnover | Chasing volume over margin | Blurred credit and double-paying |
These are design principles, not market averages. Model your own numbers in the commission calculator before committing to a rate.
Where two reps genuinely touch the same revenue, choose a crediting model on purpose. A deferred bonus that pays the spec rep on conversion, a spec-credit pool paid against activity through the cycle, or dual credit shared between spec and channel reps up to a defined ceiling are all workable. Each trades cash flow, motivation and admin differently. If you want the broader explainer on how common structures pay out, see what does your commission structure actually pay. Where specification and channel ownership overlap, specification leakage in building products covers how demand created upstream leaks away before it is credited.
Whichever model you choose, the achievability test applies. If a competent rep cannot see a credible route to earning the variable, it will not motivate them and it should not be presented as part of on-target earnings.
Handle inherited revenue and the ramp
Pay a new BDM differently in year one than in a mature year, with a ramp tied to the product's actual sales cycle.
Dropping a new rep straight onto a fully ramped structure creates one of two failure modes. Either they collect a windfall on legacy revenue they did not generate, or the plan strips the legacy out and the rep takes an earnings hit while they build the next wave, and good people leave before that wave bills.
A workable approach has three parts.
Ramped quotas. The quota recognises that a new BDM cannot influence what is already specified. Ramp it up across the first year in line with the spec-to-order cycle for the category, rather than demanding full quota from month one. For how ramp expectations connect to onboarding, see the 90-day cliff in building products onboarding.
Recognise the inherited accounts as work, not free money. Maintaining the existing area is a real job. The relationships can compound, and letting them leak is a genuine cost. Keep an allowance for that work inside the bonus budget without paying full new-business commission on legacy revenue.
A first-six-month guaranteed bonus, where commission cannot pay yet. When the cycle means commission is too distant to motivate early, a guaranteed bonus for the first six months can show the reward is real. Tie it to clear delivery conditions, including proper management of the inherited area, and keep it distinct from guaranteed commission.
This is also where my preference for a blend of bonus and commission does the most work. A capped bonus can reward defined duties and early delivery. Commission then keeps the upside open so performance does not become pointless once the bonus ceiling is reached.
Set the governance before the period starts
The rules should be clear, open, communicated in advance and reasonable. Most plans that fail in year two fail here, not on the maths.
Write down, before the period begins, what the plan measures, what event triggers a payment, how credit is split when two reps touch a deal, when payment is made, how the ramp works, who approves an exception, who owns a dispute and by when, and the date the plan is next reviewed. Define your terms too. A specification, a conversion, a split, a cancelled project, a returned product and a bad debt should each mean one agreed thing before launch, not be argued over after an invoice lands.
Two governance points carry legal exposure, so get advice on them. Changes should be made prospectively, documented and notified. In Subasic v Hewlett-Packard Australia, the ACT Supreme Court found the commission arrangement was an enforceable part of the contract and ordered the underpaid commission paid, with interest. The narrow lesson is that reworking terms after a rep has earned the money is a contractual risk, not a routine fix. Do not read it as a universal rule for every cap or plan change.
Clawbacks, deductions and mid-year changes sit under the Fair Work Act's limits on wage deductions, which are only allowed in limited circumstances, and the answer can change with the applicable award or contract. Have the wording reviewed by an employment lawyer rather than relying on a template.
One I have seen more than once is a plan that pays purely on individual revenue, with no credit for helping a teammate close or handing an account over cleanly. The rep does exactly what the plan rewards. They stop passing leads sideways and they guard accounts that should be shared, and the team's total goes backwards even as the individual hits target. If I were setting it again I would build in a small, clear reward for the team result, so the plan does not quietly punish the behaviour you actually want.
A worked example, reconciled
One transparent scenario, with the assumptions and arithmetic shown. This is an illustrative package, not a market benchmark. Replace the inputs with your own.
Commercial flooring BDM, Sydney, calling on architects, builders and contract suppliers. Mid-senior, three years' industry experience.
Design choices
- Mix: base-weighted, because the cycle is long
- Variable split: most tied to revenue against the rep's area quota, a slice tied to converted specs paid on conversion, and a smaller slice tied to agreed objectives such as design reviews and new specifier relationships
- Accelerator above target, with the windfall case modelled in advance rather than capped after the fact
- Inherited revenue recognised at a reduced rate for year one, with a ramped quota and a first-six-month guaranteed bonus tied to managing the existing area
Cost reconciliation at target
| Component | Amount |
|---|---|
| Base salary | $120,000 |
| Variable at 100% of target | $40,000 |
| On-target earnings (base + variable) | $160,000 |
| Super at 12% on OTE | $19,200 |
| Car allowance | $20,000 |
| Phone, laptop, home office allowance | $4,500 |
| Steady-state employer cost at target | $203,700 |
| First-year guaranteed bonus (one-off, plus on-costs) | $15,000+ |
On-target earnings here means base plus variable, excluding super, vehicle and one-off payments. Those are added separately in the table so nothing is hidden inside a single headline number. The figure excludes payroll tax, workers compensation and any FBT, which vary by state and package, and it excludes super treatment of the one-off bonus, which payroll should confirm.
Pressure-test it before you sign it off. A single large project on an open accelerator should be modelled so you know the payout in advance. A spec that converts late should still pay on the agreed event. A low-margin sale should not pay as if it carried full margin. If any of those breaks the budget, fix the design now, not after the rep has earned it.
Model your numbers and benchmark the package
Once the plan inputs are defined, model them.
[Use the commission calculator →](/resources/commission-calculator)
It is built for this market, free, and no email gate. To benchmark the base and package against current ranges by sub-sector, use the building products salary guide, and to weigh the design against the cost of getting the hire wrong, the cost of a bad hire calculator runs that number.
Frequently asked questions
What should a building products BDM commission plan measure?
The outcomes the rep can actually influence. For a specification BDM that is specifications written and converted, not this quarter's shipped revenue, because the cash arrives long after the work. For a channel BDM it is volume and growth through nominated accounts. Decide the job type first, then choose the measure, and define revenue, gross margin, bookings, invoicing, collection and specification conversion so everyone knows which one triggers a payment.
How should specification and channel reps share credit?
Decide on purpose before the deal, and write it down. Common approaches are a deferred bonus that pays the spec rep on conversion separate from the channel rep's order commission, a spec-credit pool paid against activity through the cycle, or dual credit shared between both reps up to a defined ceiling so the cost does not double. Each trades cash flow, motivation and admin differently. The failure mode is leaving the split unwritten until after the invoice lands.
How should inherited revenue be treated in a new BDM's first year?
As work, not free money, but not as full new business either. Maintaining the existing accounts is a real job and letting them leak is a genuine cost, so keep an allowance for it inside the bonus budget. Recognise legacy revenue at a reduced rate for the first year, ramp the quota in line with the spec-to-order cycle, and where commission cannot pay meaningfully yet, consider a first-six-month guaranteed bonus tied to clear delivery conditions.
What needs to be written down before a commission plan starts?
What the plan measures, the event that triggers a payment, how credit is split, when payment is made, how the ramp works, who approves exceptions, who owns disputes and by when, and the review date. Define a specification, conversion, split, cancelled project, returned product and bad debt before launch. Make changes prospectively, and have clawback and deduction wording checked against the Fair Work Act and the applicable award or contract by an employment lawyer.
When should commission be based on gross margin rather than revenue?
When the product mix has a wide margin spread, so a flat percentage on revenue would push the rep toward the easiest line rather than the most valuable one. Margin-based commission is cleaner there, but it needs reliable job costing or it feels arbitrary to the rep. Revenue-based is simpler when margins are tight and consistent across the range.
Do you have to pay super on sales commissions in Australia?
Super is calculated on ordinary time earnings, and the general Superannuation Guarantee rate is 12% from 1 July 2025 to 30 June 2026. Whether a given commission or one-off payment is ordinary time earnings depends on how it is structured, so confirm the treatment of each payment with payroll rather than assumed to apply automatically to everything.
Where these points come from
- The Superannuation Guarantee rate and the ordinary-time-earnings treatment are from the Australian Taxation Office, checked 12 July 2026. Confirm the current rate again at implementation.
- The deductions and wage-change points are from Fair Work Ombudsman guidance and the applicable award or contract, checked 12 July 2026. They are bounded general statements, not legal advice.
- The case referenced is Subasic v Hewlett-Packard Australia Pty Ltd [2020] ACTSC 2. The summary here is narrow and the plan wording should be reviewed by an employment lawyer.
- The design principles, ramp approach and worked-example inputs are my own observations from recruiting in this market over more than eight years and from thousands of conversations with BDMs. They are illustrative, not market averages. For benchmarked ranges, use the salary guide.
If you are designing a plan for a BDM hire, or pressure-testing one that is misfiring, talk it through before you run the search. I recruit sales talent for the Australian building products industry and advise clients on package design. The hiring managers page has the quickest way to reach me, or book a call.
James