A sales compensation plan is the contract that aligns rep behavior with company strategy. It is the most behaviorally consequential document in revenue: reps optimize, ruthlessly, for whatever you pay them on. The framework has three parts — what you measure (the metric), how you pay (the curve), and what you guarantee (the floor). Get any of the three wrong and you will see exactly the wrong behavior within 90 days.
The three components
Metric
Pay on what you actually want more of:
- AEs: Closed-won ARR, occasionally weighted toward multi-year or new-logo. Avoid paying on pipeline created — it inflates junk.
- SDRs: Qualified meetings or accepted opportunities. Pure meeting count rewards spam; pure ARR closed creates 18-month feedback loops.
- CSMs: Net Retention or Gross Retention plus expansion. Renewal-only creates a passive motion; expansion-only neglects renewal hygiene.
One primary metric, at most one secondary. Three or more metrics water down behavior.
Curve (pay structure)
Design the payout shape deliberately:
| Element | Typical range |
|---|---|
| Base : variable split (AE) | 50:50 or 60:40 |
| Base : variable split (SDR) | 70:30 or 80:20 |
| Base : variable split (CSM) | 75:25 or 80:20 |
| Accelerator threshold | 100% of quota |
| Accelerator rate | 1.5x to 3x base rate |
| Decelerator below 50% attainment | 0.5x or zero |
Accelerators above 100 percent are critical — they prevent sandbagging in Q4 and reward overperformance. A flat plan caps your top reps and trains them to coast.
Floor and ceiling
- Floor: A draw or guarantee for ramp (typically the first 2 quarters at 50 to 75 percent of variable). Reps will not take the job otherwise.
- Ceiling: Almost always a mistake. Capping commission at 200 percent attainment teaches your best reps to stop selling in October.
OTE benchmarks (US, B2B SaaS, 2025)
| Role | OTE range |
|---|---|
| SDR / BDR | $80K to $130K |
| AE (SMB) | $140K to $200K |
| AE (mid-market) | $200K to $280K |
| AE (enterprise) | $280K to $400K |
| Sales engineer | $200K to $320K |
| CSM | $130K to $220K |
Rep OTE × team size × 1.0x to 1.2x is a useful sanity check on your sales budget against bookings target.
Design process
- Start from the company plan. What revenue mix do you need (new logo, expansion, renewal)?
- Pick the metric per role that maps to that mix.
- Set quotas at 80 to 90 percent attainment expected. A team where 50 percent hits quota is healthy; 90 percent hitting means quotas are too low.
- Model the worst rep, modal rep, top rep payouts. If the worst rep makes 70 percent of OTE, retention will suffer. If the top rep can’t make 200 percent, they will leave.
- Lock the plan for 12 months. Mid-year changes destroy trust.
Common pitfalls
- Paying on pipeline. Inflates junk pipeline and corrupts forecasting.
- Too many SPIFFs. Every SPIFF teaches reps the base plan does not really matter. Use sparingly, for genuinely strategic launches.
- Mid-year quota changes. Even if mathematically justified, the trust damage is permanent.
- Identical plans across segments. Enterprise AEs need longer-cycle accelerators than SMB AEs.
- No clawbacks for early churn. Encourages closing bad-fit deals.
Related
- Capacity planning — designed jointly with comp
- Territory design — fair territories are a comp prerequisite