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What’s tricky in the Med Tech industry’s commission calculation?

The medical technology industry is a highly diverse and innovative sector that plays a critical role in the healthcare field. It encompasses a wide range of products and services dedicated to the prevention, diagnosis, and treatment of various diseases and injuries. The advancements and innovations in medical technology have a profound impact on patients, care teams, and health systems worldwide.

The global medical technology industry is projected to reach a market value of approximately US$471.80 billion in 2023, according to Statista. At first glance, this may seem like a lucrative opportunity for sales professionals to earn substantial commissions. However, it is important to recognize that not everything that glitters is gold, and selling medical technology products comes with its challenges and complexities.

In the med tech industry, commission calculation can be a complex and challenging process due to several specific issues. Here are just three of the many key considerations:

  • In the realm of medical devices there is a significant integration of various disciplines, including electronics, mechanics, software, and biology.
    Bundling is a common practice in the med tech industry, where products are often combined with additional services, software, or maintenance packages. These bundled offerings can have diverse pricing structures, making it necessary to allocate commissions appropriately
  • “Calculating commissions for bundled deals requires a meticulous assessment of the value distribution among the different components. Companies must consider the relative value contribution of each component, customer preferences, and market dynamics. Advanced systems and tools are often employed to track sales data, analyze pricing structures, and allocate commissions accurately, streamlining the process and ensuring transparency and fairness in commission calculations for bundled offerings.”– Bart Strożek, SANDS Partners CEO
  • The med tech industry typically involves various sales channels,such as direct sales teams, distributors, and resellers. Each channel may have different commission structures and sales hierarchies, which need to be accurately accounted for in commission calculations. Selling medical technology products involves engaging with multiple stakeholders, such as clinicians, administrators, procurement officers, and regulatory personnel, resulting in long sales cycles. Commission calculations must consider the contributions of these stakeholders throughout the sales process and accurately attribute appropriate commissions, necessitating meticulous tracking and documentation of their involvement and influence.
  • Regulatory Compliance: The med tech industry faces stringent regulations regarding pricing, transparency, and fair competition, creating a significant bottleneck for product development and sales. Commission calculations must adhere to these regulations to ensure legal compliance and uphold ethical business practices.In the United States, which is the largest market for medical devices, regulatory compliance is essential regardless of the device’s country of origin or manufacturing. Medical device manufacturers must adhere to FDA 21 CFR Part 820, which outlines quality system regulations, including requirements for QMS, design control, record-keeping, and statistical techniques.
    Similarly, in the European Union, medical technologies are tightly regulated. Manufacturers must comply with all applicable EU legislation and affix a CE mark to their devices before legally placing them on the market.

To overcome these challenges, med tech companies need to establish comprehensive sales commission policies. A commission management tool, programmed specifically and individually for each company , can help automate commission calculations, track sales activities, allocate commissions based on predefined rules, and generate detailed reports for transparency and accuracy.

“Addressing these specific issues in commission calculation within the med tech industry requires careful planning, and collaboration between sales, finance, and operations teams. It’s also crucial to choose a company that has experience in such complex, advanced software implementation to be able to handle all the complexity and variability inherent in the industry.” – Bart Strożek

SANDS Partners, experienced in working with med tech companies all around the world, is here to help you to choose and implement the proper system automating commission calculation, even in highly complex commission plans.

Reach out to get more info.

Bart Strożek

Leader of the organization, coach, mentor, businessman. He is a strategic planner for large organizations and an operations leader executing strategy. He gained experience with giants such as Procter & Gamble, Luxoft Poland, IT Kontrakt, and SAP, and in 2019 he set up his own company specializing in consulting and implementing ICM and SPM systems.

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