Last updated: April 2026
Updated for FY2026-27
Most salespeople accept commission structures without running the numbers.
The employer says "OTE is $160k" and everyone nods. Nobody asks what that actually means after tax. Nobody asks what happens if you hit 80% instead of 100%. Nobody asks what percentage of the team actually hit target last year.
The gap between what you're promised and what lands in your account is where bad career decisions live.
I built a free calculator to help you figure this out. But first, here's what you need to understand about how commission works in Australian building products sales.
The numbers behind the structures
Most building products sales roles run a base to variable split between 70:30 and 85:15. Pure BDM roles sit closer to 60:40.
| Structure | Typical range |
|---|---|
| Above-threshold commission on revenue | 3% to 8% of revenue |
| Margin-based commission | 5% to 15% of gross profit |
| Specification roles | Flat quarterly KPI bonus, $5,000 to $10,000 per quarter |
Typical OTE for building products sales roles
| Role | On-target earnings |
|---|---|
| Account Manager | $110,000 to $150,000 |
| Business Development Manager | $130,000 to $180,000 |
| Specification Representative | $130,000 to $160,000+ |
Superannuation is payable on commission. Commission forms part of ordinary time earnings under ATO rules, so the 12% superannuation guarantee applies to it, not just to base salary.
You can model your own numbers against these benchmarks in the Commission Calculator.
What are the main commission structures used in Australian building products sales?
There are five common structures: flat percentage of revenue, percentage above a threshold, tiered or accelerator, fixed bonus on target, and percentage of gross profit. Each one rewards different behaviour and each one has its own traps.
1. Flat percentage of revenue
You sell $1 million, you earn X% of it. Simple.
This is the clearest structure going, but it's relatively rare at senior level in building products. You'll see it more with smaller distributors or rep agencies. The upside is transparency. The downside is there's no incentive to push past quota because the rate stays flat.
Watch out for: Whether the percentage is on invoiced sales or collected revenue. If a customer doesn't pay, do you still get paid?
2. Percentage above a threshold
This is the most common structure I see across building products. You earn commission only on sales above a set baseline or budget number.
Example: Your territory has a $2 million budget. Commission kicks in at 5% on everything above $2 million. You bill $2.4 million, your commission is $20,000.
Watch out for: How the baseline is set. If it's based on last year's billing plus 15%, you might be chasing a number that's unrealistic for your territory. Ask what the territory billed last year and what percentage of the previous rep's sales came from existing accounts versus new business.
3. Tiered or accelerator structure
This is the carrot for overperformers. Commission rate increases as you hit higher thresholds.
Example: 3% on the first $500k above budget. 5% on the next $500k. 8% on anything beyond that.
In building products, these are less aggressive than what you'd see in SaaS or tech sales. Don't expect the double-or-triple accelerators you read about online. But even a modest jump from 3% to 5% can add up across a year, especially in territories with large project pipelines.
Watch out for: Whether accelerators reset quarterly or annually. A quarterly reset means you're climbing the ladder four times a year instead of once.
4. Fixed bonus on target
Hit your number, get a set bonus. Miss it by $1, get nothing.
This is predictable but binary. Common in spec and A&D roles where attribution is harder to pin to one rep. You might see it as a flat $20,000-$30,000 annual bonus tied to a team revenue target or project conversion rate.
Watch out for: Whether there's any pro-rata for near-misses. Some companies pay 80% of the bonus if you hit 90% of target. Others pay zero. That matters.
5. Percentage of gross profit
Commission based on margin rather than top-line revenue. Common in distribution, wholesale, and anywhere the company cares more about protecting margin than growing the top line.
Example: You sell $500k at 30% average margin. Your commission is 10% of the $150k gross profit, so $15,000.
Watch out for: Whether you have any control over pricing. If pricing is dictated by head office and you can't negotiate margin, your commission is effectively a percentage of revenue with extra steps. Also check whether freight, rebates, and returns are deducted before your margin is calculated.
Is commission taxed at a higher rate than salary in Australia?
No. There is no special "bonus tax rate" in Australia. Your commission is taxed at the same marginal rates as your base salary.
The 2026-27 rates for residents are:
- $0 to $18,200: 0%
- $18,201 to $45,000: 15%
- $45,001 to $135,000: 30%
- $135,001 to $190,000: 37%
- $190,001 and over: 45%
Plus 2% Medicare levy on top for most people.
Why does my commission look like it was taxed at 47% on my payslip?
Because of how your employer withholds it, not because of the actual tax rate.
The ATO's Schedule 5 tells payroll how to calculate PAYG on lump sum payments like commissions and bonuses. In practice, this often means your payroll system treats the commission as if you earn that inflated amount every pay period. The withholding gets cranked up for that single payslip.
You haven't actually lost that money. Your real tax bill is calculated on your total taxable income for the year, at the standard rates above. Any over-withholding comes back when you lodge your tax return.
But here's the part that is real: your commission pushes your total income into higher marginal brackets. A $110,000 base with $40,000 in commission means you're paying tax on $150,000, not $110,000. That $40,000 is effectively taxed at your marginal rate of 37% plus 2% Medicare, not the lower rates your base salary enjoys.
How does HELP debt affect my commission earnings?
It increases your repayments. Your commission counts toward your repayment income, which can push you into a higher repayment band.
HELP repayments work on a marginal system. The ATO has not yet published the 2026-27 thresholds (as at 30 June 2026), so the FY2025-26 figures below still apply and match the Commission Calculator:
- Under $67,000 repayment income: no compulsory repayment
- $67,001 to $125,000: 15 cents for each dollar over $67,000
- $125,001 to $179,285: $8,700 plus 17 cents for each dollar over $125,000
- $179,286 and over: 10% of total repayment income
A big quarter can push you into a higher repayment band. Under the new marginal rules you only repay on the income above each threshold, which softens the jump compared to how it used to work. But it's still money out of your pocket now, even if it's paying down a debt faster.
Do I get super on commission and bonuses in Australia?
Almost always, yes. Commission is classified as Ordinary Time Earnings in most sales roles, which means your employer owes Superannuation Guarantee at 12% on it.
From 1 July 2025, the Super Guarantee rate is 12%. If you earn $120,000 base and $30,000 in commission, super is calculated on roughly $150,000, not just the base.
That's good for your retirement. It's also money that's not in your pocket today. Factor it in when you're comparing offers.
What questions should I ask before accepting a commission-based sales role?
Eight questions, and most candidates ask none of them. These are the ones I'd want answered before signing anything.
What did the territory bill last year? If they won't tell you, that's a red flag. If they tell you and it's 30% below where they've set your target, that's a different kind of red flag.
What percentage of the team hit target last year? If 20% of reps are hitting 100% OTE, that's not OTE. That's a fantasy number.
Is the target based on existing accounts or new business? Inheriting a mature book of business at $3 million is very different from being handed a territory map and a phone.
What's the average ramp time for new reps? In building products, 12 months to full productivity is realistic for most field roles. If they expect you at 100% in month three, either the territory is a gift or the target is a lie.
Is there a cap on commission? Caps tell your best people their effort has a ceiling. If there's a cap, know the number and factor it in. Top performers notice clawbacks and accelerator caps within a quarter, and start interviewing within two. The retention data behind that pattern - Gallup recognition findings, Robert Half counter-offer numbers - is in why your best salesperson is the most undervalued asset on your headcount. Comp plan transparency and accelerator structure are the top two retention levers in the 8-lever blueprint I published separately: How to Retain Sales Reps in Australian Building Products.
When was the target last revised? Targets that go up 20% annually while the market grows 5% will burn out your best reps.
What happens if targets are raised mid-year? Some companies move the goalposts in July. Ask upfront.
What does the ramp look like? Most decent employers in building products offer some form of commission protection for the first 3-6 months. A guaranteed draw, a pro-rated bonus, or simplified KPIs focused on activity rather than revenue. If there's no ramp protection at all, you're funding the company's growth period out of your own pocket.
How is commission different for spec and A&D sales roles?
Spec roles use more base-heavy pay mixes (typically 70:30 or 75:25 base-to-variable) with bonuses tied to project milestones rather than monthly commission.
Spec selling is about influencing architects, designers, and consultants early in a project, then defending that specification through contractors and merchants. Long cycles, diffuse attribution, and often shared credit with channel reps.
That means more base-heavy pay mixes. Bonuses are typically tied to project conversion rates, pipeline value, or regional revenue rather than per-order commission. Some roles use milestone-based payments, where commission is paid at spec approval, contract award, and project completion.
If you're comparing a spec role at $120,000 base with a 75:25 mix against a territory role at $100,000 base with a 60:40 mix, the territory role might have higher OTE on paper but the spec role could deliver more consistent earnings. Run the numbers at different performance levels, not just at 100%.
Are commission structures in building products changing?
Yes, slowly. Cost-of-living pressure and a tight talent market have pushed more companies toward slightly higher bases and more realistic quotas.
The shift isn't dramatic, but it's real. Companies are trading a bit of upside for more predictable earnings to keep good reps.
Comp gets you into the conversation, but once your offer lands at parity with the next one, the things money can't fix (flexibility, project delivery support, growth path) become the deciding factors. More on why pay alone won't keep your best reps.
You're also seeing more team and territory-based bonuses, particularly where spec reps, estimators, and channel salespeople all influence the same sale. Individual commission on shared wins creates arguments. Team bonuses are simpler, even if they're less exciting.
If you are the one designing the structure rather than being paid under it, how to structure commission for a building products sales team is the employer-side version of this.
Run the numbers for your own offer
I built a free calculator that lets you plug in your commission structure and see what you actually take home at any performance level. Base salary, commission type, tax, HELP debt, super. All in one place.
It won't replace a conversation with your accountant, but it'll give you a much clearer picture than nodding along to "OTE is $160k" in an interview.
Try the Sales Commission Calculator →
Frequently asked questions
How much commission does a BDM in building products earn in Australia?
It depends on the structure and the territory, but most BDMs in building products are on a 60:40 or 70:30 base-to-variable split. On a base of $90,000-$130,000, realistic OTE sits around $130,000-$180,000 at full quota. The key word there is "realistic". Ask what percentage of the current team actually hits that number.
Is my commission taxed more than my salary?
No. There's no special commission tax rate in Australia. It's taxed at the same marginal rates as everything else. The confusion comes from how employers withhold PAYG on lump sum payments. Your payslip might show what looks like 47% tax on a commission payment, but you'll get the difference back at tax time. The part that is real: your commission pushes your total income into higher brackets, so the effective rate on that extra income is your marginal rate.
What does OTE mean in a building products sales job ad?
OTE stands for On-Target Earnings. It's your base salary plus the commission or bonus you'd earn if you hit 100% of your target. The problem is most ads don't tell you what percentage of reps actually hit target, what the target is based on, or how long it takes a new hire to get there. OTE is a best-case scenario, not a guarantee. Treat it as the ceiling, not the floor.
Do I get super on my commission and bonuses in Australia?
Almost always, yes. Commission is classified as Ordinary Time Earnings in most sales roles, which means your employer owes Superannuation Guarantee at 12% on it. That's good for your retirement balance but it's not cash in your pocket today.
What is a fair base-to-commission split for a building products Account Manager in Sydney?
For an Account Manager in building products in Sydney, you'd typically see a 60:40 or 70:30 base-to-variable split. Base salaries for experienced AMs sit around $80,000-$110,000, with OTE in the $110,000-$150,000 range. Spec-focused AM roles tend to be more base-heavy at 70:30 or 75:25 because the sales cycles are longer and attribution is shared.
Why does my bonus look like it was taxed at 47%?
It wasn't. Your employer uses ATO Schedule 5 to calculate PAYG withholding on lump sum payments. One common method adds the bonus to your normal pay for that period and withholds as if you earned that every fortnight. That inflates the withholding on your payslip. Your actual tax is based on your annual income at normal marginal rates. The over-withheld amount comes back when you lodge your tax return.
I'm a specialist recruiter for the building products industry, part of the team at Specified Select Group. James Bowesman works across Melbourne, Sydney, and Brisbane. If you're evaluating a role and want a straight answer on whether the package stacks up, happy to help. No obligation, just straight answers.
Get in touch → | Try the Commission Calculator
Related reading: the commission weight on a BDM rarely fits a Spec Manager seat.
For how OTE, bonus and LTI stack at the sales leadership level - including realised value at plan for National Sales Manager packages - see State Sales Manager vs National Sales Manager: the building products hiring guide.