What Does Base Salary Mean? (2024)

Any professional, across every field and experience level, needs to have a solid understanding of how they're compensated — after all, that's the reason you're working in the first place. Your base salary is one of the key elements you need to account for when getting that picture of your compensation package.

Here, we'll discuss the concept a bit further, go over how it works, and see the average base salaries for some common sales roles.

When you agree to begin employment — whether it’s full-time, part-time, permanent, or temporary — you’ll sign an agreement that includes the terms of your employment, such as expected hours, work duties, compensation, benefits, and more. If you’re being paid a salary, that will also be established in this document.

Base salary — also known as base pay — is the baseline sum an employee can expect to receive in exchange for carrying out the bare minimum functions of their position. For the most part, workers that qualify for a fixed base salary work 40 or more hours per week.

While “base salary” isn’t a common term in some fields (it’s simply referred to as “yearly salary” or “pay”), the term is highly prevalent in sales.

Sales Base Salary

A sales base salary is the amount of pay that you receive before commission. Many sales jobs offer compensation that’s split between base salary, commission, and bonuses. Your base pay is the amount that you’re guaranteed to make regardless of your performance on the sales floor.

In 2020, the average sales representative made a median salary of $62,070. The highest-paid 25% made $89,030 and the lowest-paid made $43,580. That should give you an idea of the base pay you can expect to receive as a salesperson.

Salaried vs. Hourly Employees

Salaried employees receive a predetermined, fixed pay that may come in monthly, biweekly, or weekly installments. Hourly employees are paid solely for each hour that they work, and at a rate that meets federal and state minimum wage requirements.

The biggest difference between the two is the work expectations, not the pay. Those who are paid on a salary are expected to keep up with all their work responsibilities and tasks, even if it means working outside of their normal work hours. Hourly employees, however, are entitled to overtime pay at 1.5 times their usual pay rate if they work outside of their normal hours.

Is Base Salary Before or After Taxes?

Your base salary figure is typically the sum you can expect to receive before taxes and any other deductions.

A base salary is essentially the bare bones of what you are paid for your work. It doesn’t include any bells and whistles. It is your income before any taxes are deducted. Bonuses, benefits, commission, or any other incentives are also not a part of base salary.

As you earn more, remember to track your pay so that all your ducks are in a row when taxes do come into play. This is especially important when you are receiving a base pay plus any commission or bonuses. We recommend using a resource like QuotaPath to manage all of your income.

How Base Salary Works

Your base salary is the minimum amount that you will be paid in exchange for your work. It may be expressed as an hourly rate or as a weekly, monthly, or annual salary. This is calculated before taxes or benefits or other deductions, so the agreed-upon rate may not be exactly what you are paid. Keep that in mind as you are agreeing to a base salary and a commission rate.

Your base salary is typically paid out in biweekly intervals — though that frequency might vary based on your employer's preferences. In many cases, employers that pay a base salary offer performance-based financial incentives (like commission) to supplement that baseline figure.

If your company pays its sales reps a higher base salary, then it typically pays a lower commission rate. If your employer pays a higher commission rate, it will likely pay a lower base salary. The typical commission rate for sales starts at about 5% of the total sales value that is earned each time they close a deal.

Compensation Packages

When you are offered employment, a company is offering more than just payment for your work. Employers also tend to add additional perks — including benefits packages and paid vacation time — on top of the base salaries they pay to attract and retain talent. This is referred to as a compensation package.

A compensation package is the full scope of the benefits they are willing to give you as an employee. A restaurant may provide free meals for every shift, a tech company may give you exclusive products early, or an established business may offer you healthcare benefits. The list below describes some typical parts of a compensation package.

• Base Pay: This is the amount that the employer is agreeing to pay you for your work. It may be expressed as a salary or an hourly pay. The figure is typically shaped by factors like your industry, how your competitors compensate employees in similar positions, the region you operate out of, the number of people qualified to fulfill your responsibilities, and your experience level.
• Time Off: You may be eligible for a certain number of paid sick days or vacation days. This benefit will also include any paid holidays that the business acknowledges.
• Bonuses: Companies may offer bonuses based on your performance or length of time as an employee. Sales reps, for instance, may receive a bonus on top of their commissions for a certain number of deals.
• Insurance: Healthcare benefits can include medical, dental, and/or vision coverage. Insurance benefits may be offered as a job-based health plan or in a health savings account.
• Perks: Incentives like travel vouchers, discounted products or services, or remote work days are special perks a company might offer. Free childcare vouchers, meals, or gym memberships are others that can be offered at the workplace.

Average Sales Base Salaries

The standard sales base salary obviously varies by position and experience level. Here's a look at the average base salary for some common sales roles from ZipRecruiter.

• Business Development Representative — $45,814 per year
• Sales Development Representative — $49,537 per year
• Field Sales Rep — $52,774 per year
• Account Executive — $56,008 per year
• Sales Manager — $69,391 per year
• Territory Manager — $87,751 per year
• Sales Director — $95,225 per year

Base Salary Examples

For a sales position, the terms of your incentives, benefits, and pay will all depend on the employer. But let’s take a look at two examples of what the breakdown could look like.

Salaried Example

Let's say you're starting a role as a field sales rep at a new company. Your base salary might be $55,000, but that doesn't represent your total compensation by default.

You could be offered performance incentives like a commission structure that allows for up to an additional $10,000 per quarter — along with health insurance, dental care, and paid vacation time.

Hourly Example

A sales rep who agrees to a base salary of $20 per hour would have an annual salary of $41,600. In addition, let’s say they get a holiday bonus of $10,000 and a commission of $1,000 per sale. In the case that they make one sale per month, that would be an additional $12,000 per year. The total income they would make in one year before any taxes or other deductions would equal $63,600.

Even so, their base salary is $41,600. Even if this sales rep did not make any sales or earn commission, they would still be paid their base salary.

Base Salary Is Just the Beginning

It’s important to understand all aspects of your pay and how you will be compensated when you agree to work with any employer. Feeling confident about your base pay is a great start to getting the best employment package. Weigh all of your options and try to negotiate any terms that you feel could be improved.

Editor's note: This post was originally published in January 2022 and has been updated for comprehensiveness.