How to write a sales commission plan that actually works

How do you write a sales commission plan?

Short answer: by deciding what behaviour you want repeated, pricing it explicitly into the plan, and stopping there. Bad comp plans try to be clever about every edge case — and end up with reps optimising for whatever loophole pays best. Good comp plans have 3–5 levers, do one thing each, and pay generously when reps hit them.

A working B2B sales comp plan answers four questions in order:

1. What is the rep's total target earnings (OTE)?
2. What split is base vs. variable?
3. What does variable pay for — revenue, gross margin, units, ARR?
4. What accelerators or modifiers apply at the edges?

Everything else is detail.

TL;DR — typical B2B sales comp structures

These are typical ranges for mid-market B2B services and tech. Compensation philosophy varies — the table is a starting point, not gospel.

The four pillars of a working comp plan

Pillar 1 — Base salary

The guaranteed portion. Pays the rep regardless of performance.

What it does:

• Provides financial stability so reps can take a long view on deals.
• Sets the cost floor for the company.
• Signals seniority and experience to the rep.

The trap: setting base too low to "make reps hungry." For B2B services with 60–120 day cycles, low-base / high-commission plans produce churn. Reps need to feel they can pay rent during a slow month. The right base depends on geography, deal cycle, and rep experience — generally £40–70K in the UK / AED 15–25K/month in the UAE for mid-market AEs.

Pillar 2 — Variable (commission)

The performance-based portion. Pays the rep for outcomes.

What it pays on:

• Revenue closed. Simplest, most common. Rep gets X% of closed revenue.
• Gross margin. Better for services businesses where pricing varies. Rep gets X% of GM, not topline revenue.
• New ARR. For SaaS — rep gets X% of new annual contract value.
• Specific deal types. Sometimes weighted differently (new logo vs. expansion vs. renewal).

The trap: paying on the wrong metric. Paying on revenue when margins vary by deal type incentivises reps to sell whatever produces revenue, not whatever is profitable. Paying on bookings when you collect over 12 months creates cash-flow problems. Pay on the metric that aligns with what you actually want.

Pillar 3 — Accelerators

Bonus payouts above quota. The lever that turns good reps into great reps.

Typical accelerator structures:

Why accelerators matter: the top 20% of reps produce 50–70% of revenue. Paying them only the baseline rate above quota means they have no incentive to push past 100%. Aggressive accelerators turn 110% reps into 140% reps.

The trap: setting accelerators that pay out a small bonus on edge cases (101% → 105% gets only a tiny bump). The accelerator should be obviously worth chasing, or it does nothing.

Pillar 4 — Modifiers and gates

The edge-case rules. Where most plans get overengineered.

Common modifiers:

• Ramp. New hires earn at a reduced quota for their first 1–3 months.
• Multi-year discount. Reduce commission slightly on deals where the rep gave a multi-year discount above threshold.
• Annual reset. Commission rates reset at start of fiscal year — accelerators don't carry across years.
• Performance gate. Some plans require minimum activity (calls, meetings) before variable starts paying out.

Common gates:

• Quota floor. Variable doesn't start paying until rep hits 50% (or 60%, or 70%) of quota.
• Margin floor. Deals below a margin threshold don't pay commission.
• Approval requirement. Discounts above 15% require sales leader approval; below that, the rep can negotiate.

The trap: stacking 5+ modifiers. Reps cannot model their own paycheck. The plan loses its motivating power. Limit modifiers to 2–3 that genuinely matter.

The math behind quota and OTE

A sound comp plan is built backward from financials.

Step 1 — Set the rep's target attainment. Typical: rep should hit 100% of quota in a normal year. If the average rep hits 60%, the quota is too high; if the average rep hits 130%, the quota is too low.

Step 2 — Set OTE. Typical: OTE = 5× the cost of customer acquisition the rep is responsible for, or roughly 25% of the revenue they generate. So a rep generating £600K of new revenue at 25% comp ratio = £150K OTE.

Step 3 — Set quota. Quota = OTE × OTE multiplier (typically 4–5). A £150K OTE rep with a 4× multiplier = £600K quota.

Step 4 — Set commission rate. Commission rate = (variable portion of OTE) / quota. So if OTE is 50/50 (£75K variable on £150K OTE) and quota is £600K, commission rate = 12.5%.

Step 5 — Sanity check unit economics. Add up all sales comp costs across team. Does the comp ratio (total sales comp / total revenue generated) come in at 20–30%? If yes, healthy. If much higher, the plan is structurally over-paying.

Three sample plans for typical B2B contexts

Plan A — Mid-market AE, £30K average deal size

Plan B — Enterprise AE, £150K average deal size

Plan C — SDR, mid-market

Common comp plan mistakes founders make

Mistake 1: Quota set too high in year one. Reps miss, get demoralised, leave. A new rep's first-year quota should be ~70% of a fully-ramped rep's quota.

Mistake 2: Variable too small to matter. A 75/25 split for an AE on £100K OTE means £25K of variable. The accelerators above quota produce ~£10–20K upside. Not enough to drive behaviour. Move to 60/40 or 50/50 for AEs.

Mistake 3: Paying on bookings, not collections. Rep closes a deal with payment terms net-90. Rep gets paid commission immediately; company collects 3 months later. If the deal churns, the company has paid out commission on revenue it never collected. Either clawback (covered below) or pay on collections.

Mistake 4: No accelerators. Reps know that 101% pays the same as 99%, so they stop pushing. Accelerators are the single most important behavioural lever in a comp plan.

Mistake 5: Changing the plan mid-year. Reps make career bets on the plan. Changing it mid-year violates trust. If the plan needs adjustment, time it for fiscal year boundaries.

Mistake 6: Too many spiffs. Spiffs (special performance bonuses — "extra £500 for every closed deal in this segment by EOM") are useful in small doses. Many spiffs add complexity and create gaming opportunities. Keep them to 1–2 per year.

Mistake 7: Comp plan secrecy. Reps should know their plan exactly. The plan should be modelled in a spreadsheet they can use to project their own earnings. Surprises in commission cheques destroy morale.

Clawbacks — when and how

A clawback is when the company recovers commission already paid because the deal subsequently broke (churn, cancellation, failed delivery).

Typical structures:

• 6-month churn clawback at 100% — if the customer churns within 6 months, all commission is recovered.
• 12-month churn clawback at 50% — softer version, half of commission recovered.
• Renewal-eligible deals only — commission paid in full only if the customer renews.

Clawbacks protect the company but also reduce the perceived value of the commission to the rep. The trade-off: if churn risk is genuinely material and partly within the rep's control (deal quality), clawbacks make sense. If churn is mostly outside rep control, clawbacks demotivate without changing behaviour.

A modest 6-month at 100% clawback is the most common structure. Anything longer or harsher is usually counterproductive.

Comp plan documentation

What goes in the comp plan document:

Each rep signs their comp plan annually. The plan document is the source of truth.

How comp plans evolve as the company scales

Avoid over-structuring early. A simple plan is easier to communicate, model, and adjust. Add complexity only as the team grows enough that the simple plan breaks down.

For UAE & KSA teams

Regional adjustments to comp plan design.

Currency and inflation. Comp plans in AED or SAR have currency-stability advantages (both pegged to USD). Plans in mixed currencies (rep selling in AED, comp paid in GBP from the UK parent) need explicit FX assumptions, locked at fiscal year start.

Base salary expectations are higher proportionally. UAE and KSA AE candidates expect 55/45 or 60/40 base/variable splits more commonly than the 50/50 Western default. Risk-aversion is higher; comfort with high-variable plans is lower. Adjust accordingly or lose candidates.

Sales cycles are longer. Commission timing matters more in markets with longer cycles. Paying quarterly or annually (rather than monthly) better aligns rep cash flow with deal closure timing. Hybrid plans — monthly base + quarterly variable — are common in GCC teams.

Cultural / Sharia considerations. Some plans avoid pure percentage-of-revenue structures in Sharia-compliant business contexts. This is rare for B2B services and tech, but worth flagging in finance-adjacent industries.

Discounting authority. GCC mid-market deals frequently involve significant negotiation. Reps need clear, documented discount authority — and the comp plan should incorporate margin floors to protect deal economics.

Ramadan adjustments. Adjust quota expectations during Ramadan (typically pro-rated downward by 20–30%). Reps who hit unadjusted quota in a Ramadan quarter were either lucky or sandbagging — neither is a healthy signal.

Saudization-compliant pay structures. When hiring Saudi nationals in KSA, comp packages may include GOSI contributions and end-of-service benefits that change the total cost calculation. Build comp plans with the all-in cost in mind.

What MAVEN does about it

Comp plan design is part of the Fractional VP Retainer and is covered in the leadership-stage milestones of the Sales Process Program. We model the plan, write the document, and run the rep-by-rep walkthrough — ensuring every rep can predict their own earnings.

The Sales OS Blueprint covers how comp fits into the broader operating system.

If your current comp plan has stopped driving the behaviour you want, book a virtual coffee. 30 minutes, no slides — we look at the plan together and tell you which lever to pull first.

Frequently asked

Should I cap commissions?

No. Capping commissions tells your best reps that their hard work above 150% attainment is not valued. It also signals that the company would rather lose deals than pay out big commissions. Both are bad signals.

What about team-based comp?

For most B2B teams under £10M ARR, individual rep comp dominates. Team-based or pool-based comp is more common in pods (AE + SDR working together) or in service-delivery contexts where multiple roles touch the same deal. Use sparingly.

Should the founder draw commission?

Generally no, especially while the founder owns equity. Founder selling is a founder responsibility, not a comp event. Some founders structure a notional commission to model the comp ratio internally — fine, but not paid out.

When should I introduce equity into comp?

For senior sales hires (Head of Sales, VP Sales, CRO), small equity grants (0.25–1%) are normal. For AEs and SDRs at companies under £10M ARR, cash-only comp is more common; equity gets introduced as the company scales.

How often should I refresh the comp plan?

Annually, at fiscal year boundaries. Mid-year changes destroy trust. The exception is genuinely broken plans (e.g., a loophole producing unexpected payouts) — fix those quickly and acknowledge the change explicitly.

What should I pay an SDR?

In the UK: £30–40K base + £10–20K variable = £40–60K OTE. In the UAE: AED 10–18K/month base + AED 3–7K/month variable. Quota: 10–15 SQOs/month.

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Post 18 of our outbound + sales OS series.

Related reading

• When should a startup hire its first sales rep?
• What is a fractional VP of sales?
• What is a sales playbook?
• How to write a sales commission plan
• How to run sales 1:1s
• How to coach a B2B sales team