I’ve designed commission plans for startups and scale-ups in Europe and the UK, and one lesson keeps coming back: a well-crafted plan does three things at once — it incentivizes the behavior you want (hunting big, high-quality deals), it aligns salesperson effort with company profitability, and it controls payout risk so you don’t overpay on noisy results. Below I walk through a practical approach you can implement this week to boost high-value deals while protecting margins.
Start with clear objectives
Before you touch numbers, define what success looks like. Typical objectives I use as a checklist:
If you can’t state your objective in a sentence — for example, “grow high-margin enterprise deals so CAC payback < 12 months while maintaining sales OTE < 15% of revenue” — pause and refine it. The commission structure should be an instrument to reach that sentence.
Define the deal types and guards
Not all deals are equal. I tag deals into at least three buckets and map distinct rules to each:
For each bucket decide:
Guardrails prevent gaming. Examples: cap commissions on deals with discounts > 20%, or require CE sign-off for deals with heavy customization before commissions vest.
Structure: base vs variable and tiering
I prefer a simple structure salespeople can explain in one sentence. A typical design:
Tiered rates are powerful: they reward overachievement and protect you from overpaying early. Example tiering for enterprise deals:
| Quota range | Commission rate on closed ARR |
| 0–75% of quota | 5% |
| 75–100% | 7% |
| 100–120% | 10% |
| 120%+ | 15% (accelerator) |
Accelerators above quota are essential when you want reps to go after big deals late in the quarter — they change the math and the behavior.
Paying for quality: multipliers and holdbacks
High-value deals are great — until they churn in months. Two mechanisms I use:
Holdbacks reduce the payout risk on deals that initially appear attractive but later fail. They also incentivize reps to coordinate with onboarding and CSM teams to ensure successful go-live.
Deal-based vs. recurring commission
SaaS companies often struggle with whether to pay a one-time commission or a recurring payment (e.g., percentage of each renewal). My practical rule:
Example: 70% of the commission on initial ARR at close, 30% held and released across renewals (10% each year for three years). This aligns rep incentives with long-term account health without creating administrative complexity.
Handling discounts, credits and upsells
Discounts are where plans get gamed. I recommend:
Quota setting and ramping
Quota must be realistic. I model quotas using historical win rates, pipeline conversion metrics, and an expected ramp curve. Steps I follow:
Transparent ramp rules reduce surprises and help hiring velocity.
Reporting, tracking and fairness
Commission disputes destroy morale. Invest in a single source of truth — ideally your CRM (Salesforce, HubSpot) integrated with your commission platform (Xactly, CaptivateIQ, or even a well-built Google Sheet for early stage). My checklist:
Run commission audits quarterly for anomalies and feedback loops to iterate on the plan.
Implementation playbook (what to do this week)
Running a pilot lets you see behavioral changes without risking the whole sales compensation budget. Collect feedback after one quarter and adjust rates, multipliers, or thresholds.
Examples from the field
I've seen two simple variants work well:
Both variants balanced pay and risk differently, but each made intent explicit: go after profitable, enduring revenue.
Key KPIs to watch
Track these monthly. If ACV rises but churn rises faster, revisit holdbacks and quality multipliers.
If you want, I can draft a tailored commission table for your business if you share: average ACV by segment, current quota attainment rates, and your acceptable sales expense ratio. That’s the fastest way to turn these principles into a working plan you can roll out without second-guessing.
