A good commission plan is simple enough that a new rep can calculate their own paycheck, fair enough that top performers want to beat it, and specific enough that leadership can predict payroll a quarter in advance.
A sales commission plan is the written formula that ties a sales rep's pay to their performance against a quota. It defines base salary, variable pay, the quota the rep is measured against, the rate paid per dollar of revenue, and the accelerators or decelerators that reward overperformance or punish shortfalls. Compensation drives behavior, so the plan is a sales leader's most direct lever on what the team actually does every day.
The anatomy of a commission plan, the core terms every rep and manager needs to speak, and the one truth every sales leader learns the hard way: comp drives behavior.
A commission plan is the written agreement that defines how a rep earns variable pay. It names the quota, the rate, the pay mix, the measurement period, the accelerators, and the clawback rules. Every rep signs one each year, and every plan change is a leadership decision the whole team watches.
OTE is on-target earnings, the total pay a rep makes at 100% of quota. Base is the guaranteed salary. Variable is the commission portion. Quota is the number the rep has to hit. Rate is the percentage paid per dollar of revenue or deal. These five numbers define any plan.
Most new business sales roles run on a 50/50 or 60/40 split, meaning half or 60% of OTE is guaranteed base and the rest is at-risk variable. Customer success and renewals typically run 70/30 or 80/20. The riskier the role, the higher the variable share, and the bigger the upside when things go right.
Once a rep clears quota, the per-dollar rate often increases, sometimes doubling. This is the accelerator. It is how a sales plan creates genuine upside and keeps top performers chasing stretch numbers instead of coasting after they hit target in month two of the quarter.
Below quota, the rate may drop (a decelerator), or payout may not start until a threshold is cleared. Some plans use a floor at 50% or 60% attainment, below which the rep earns no commission. Decelerators protect margin on underperforming segments and signal when a role is not working.
A SPIFF is a short-term incentive, usually a flat bonus for a specific behavior: closing a new product, booking a multi-year deal, pulling business into this quarter, winning in a strategic segment. SPIFFs layer on top of the plan and are the sales leader's shortest-cycle lever on behavior.
Almost every plan in use today is a variation of four basic shapes. Each has a different behavior pattern, a different payroll risk profile, and a different fit for the kind of selling the role actually does. Pick the shape before writing the numbers, because the shape determines the behavior you are about to incentivize.
The rep earns the same percentage of every deal regardless of attainment. Simple to administer and easy for reps to model. The tradeoff is that it does not reward overperformance any more than it rewards hitting the target, so top performers can underinvest once their number is in the bag.
Below quota, one rate. At quota, a higher rate. Past some stretch milestone (120%, 150%), an even higher rate. Tiered plans are the industry default for new-business sales because they match the behavior pattern most leaders want: steady effort to quota, aggressive push past it.
Hit a milestone, land a strategic logo, close a multi-year contract, win a particular segment, and the rep earns a flat kicker on top of the rate. Kickers are specific, time-boxed, and easy to communicate. They work well as a short-term lever when a strategic priority needs attention this quarter.
The rep gets a guaranteed monthly draw. When they hit quota, the earned commission pays back the draw. If they do not hit quota, some draws are recoverable (owed back) and some are not. Draws are common for new hires, ramping reps, and seasonal businesses with long sales cycles.
Real plans are rarely one shape. A typical new-business plan combines a tiered rate with accelerators past 100%, a decelerator below 60%, and a SPIFF or two overlaid for strategic priorities. The art is layering without creating a plan a rep cannot explain to a friend over coffee.
Management by objectives: a portion of variable pay (often 10 to 20%) that pays out on qualitative or non-revenue goals like certification completion, pipeline hygiene, forecast accuracy, or new-logo count. MBOs are how a leader rewards the inputs that produce the outputs, not just the outputs themselves.
The oldest truth in sales management is that the comp plan is a behavior spec. If a rep is doing something strange, the plan probably told them to. Before changing a rep, change the plan. Below are the alignment traps every sales leader eventually walks into.
When the plan pays on revenue without a discount guardrail, reps close deals faster by giving up price. Fix it with a margin component, a discount approval ladder, or a pay rate that drops as discount increases. The plan tells the rep what you value, and if you only value closed deals, that is what you will get.
If the plan pays the full commission at signature and the deal churns in month three, the rep still won on the plan while the company lost on the account. Fix it with a clawback window, with a portion of commission paid on retention, or with a renewal credit that ties account longevity to current-year payout.
When the rate is flat across the catalog, reps gravitate to the easiest product to close, not the most strategic one. Fix it with a product-weighted rate or a SPIFF on the strategic SKU. If a product is not selling, check the plan before concluding the market is wrong.
Pay only on the current quarter and reps pull deals in from next quarter, or push deals out when they are already past 100%. Fix it with annual over-attainment accelerators, a true-up on the annual number, or a plan that pays steadily rather than cliff-shaped at quarter-end.
When the SE, the AE, and the CSM are paid on different metrics with no shared number, they argue about which deals to pursue and which customers to invest in. Fix it with a shared team component or a cross-functional MBO. A revenue team is only a team if the plan says so.
When a plan is too complex to understand, reps stop trusting it and start working to the simplest heuristic they can keep in their head. Fix it with the explain-to-a-friend-at-dinner test: if a rep cannot explain the plan in 90 seconds, the plan is too complicated to change behavior.
Commission plans used to live in spreadsheets a sales ops analyst rebuilt every month. Today the CRM is where the quota, the pipeline, the booked revenue, and the deal flags all live together, so the attainment number stops being a monthly surprise and starts being a daily reality.
The CRM reads closed-won revenue against the rep's quota and shows attainment in real time. Reps know where they stand before the manager tells them. Managers know where the team stands before the forecast call. Finance knows what commission liability is building before the payroll run.
Not every closed deal is a commission event. Add-ons, renewals, migrations, and partner deals may count partially or not at all. The CRM holds the eligibility rules on the deal record so the attainment math uses the right revenue every time, instead of a quarterly argument with finance.
The CRM stores the active plan with its quotas, rates, accelerators, and effective dates. When the plan changes, the change is dated so historical attainment still calculates correctly. No more "which version of the plan was I on in Q2?" conversations in the week before year-end.
Every stage change, close date, amount edit, and ownership transfer is logged. When a rep disputes a commission, the resolution is a timeline, not a he-said conversation. Disputes drop from a dozen per quarter to a handful, and the ones that remain resolve in minutes.
When a deal cancels or refunds inside the clawback window, the CRM flags the original commission for reversal and feeds the clawback into the next payroll cycle. No manual accounting, no missed clawbacks, no awkward conversation with the rep three months later.
Weighted pipeline multiplied by expected close probability, multiplied by plan rates (including accelerators for likely over-attainment), gives finance the forward commission accrual. The CFO reads commission liability the same way they read revenue, which is the only way to run a predictable P&L.
Strkr tracks quota, attainment, deal eligibility, and clawback automatically against the same records sales reps already use. Pricing is published. Every rep sees their own number in real time instead of waiting for payroll.
OTE stands for on-target earnings. It is the total compensation a sales rep will make if they hit 100% of their quota in the measurement period. OTE is the sum of base salary and the full variable pay at target. It is a planning number, not a guarantee, since the variable portion is only paid as the rep earns it.
New-business sales roles (account executives, hunters) usually run a 50/50 or 60/40 pay mix, meaning base is half or 60% of OTE and variable is the rest. Customer success and renewal roles usually run 70/30 or 80/20, with more guaranteed base and less at-risk variable. The riskier the role's outcome and the shorter the sales cycle, the higher the variable share.
An accelerator is a higher commission rate paid once a rep crosses a specific attainment threshold, usually 100% of quota. For example, a plan might pay a base rate up to quota and then double the rate on every dollar above quota. Accelerators are how a plan creates genuine upside and keeps top performers chasing stretch numbers instead of coasting after they hit target.
Most teams set quota at a multiple of the rep's OTE, typically 4x to 6x. A rep on a 5x ratio sells five times their on-target earnings in a year. The target is tuned so that about 60% to 70% of reps hit quota in a healthy year. If almost everyone hits, the quota is too low. If almost nobody hits, the plan is broken and the whole team notices.
A draw is a guaranteed advance against future commissions. The rep gets a steady monthly check, and when they earn commission, the earned amount pays back the draw. Draws are common for new hires ramping into a role, for seasonal businesses with long sales cycles, and for territories still being built out. Some draws are recoverable (owed back if the rep leaves early), some are not.
A clawback is the rule that reverses paid commission when a deal cancels, refunds, or churns inside a defined window, usually 90 days to a full year. The reversed commission is deducted from a future paycheck. Clawbacks protect the company from paying on revenue it never collected and align the rep's incentive with customer fit, not just the signature.
The three most common are: putting too many metrics on one plan so reps cannot predict their paycheck, paying commissions on a long lag so the reward is disconnected from the behavior, and having no clawback or retention component so reps are indifferent to churn. Any one of these quietly reshapes team behavior in a direction the plan did not intend.
Most teams reset plans annually at the start of the fiscal year, with mid-year adjustments only if the market materially changes. Plans that change more often than once a year lose their teeth: reps stop trusting the terms and start optimizing for the shortest timeframe they can see. Stability in the plan is itself a feature.
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