Guide
Seven structures sales teams actually use, what each one rewards, and a worked example. Every example uses a rep who closed $80,000 of new business this month.
One rate on all sales. Simple to explain and calculate; doesn't reward over-performance.
$80,000 × 10% = $8,000
Rates rise as sales grow, rewarding the reps who push past each threshold. Usually marginal: each band earns its own rate.
$50,000 × 5% + $30,000 × 8% = $2,500 + $2,400 = $4,900
Try the tiered commission calculator →
The most common structure for B2B sales: a fixed base for stability plus a lower commission rate. Often described as a pay mix, such as 60/40 (base / variable at target).
$4,000 base + $80,000 × 4% = $4,000 + $3,200 = $7,200
Sales up to quota earn the base rate; sales above quota earn a multiplied rate. Strongly rewards over-achievers.
Quota $60,000 · 8% · 1.5× above quota
$60,000 × 8% + $20,000 × 12% = $4,800 + $2,400 = $7,200
The rep receives a guaranteed advance (the draw), repaid from commission. Useful for new reps building a pipeline. A recoverable draw carries any shortfall forward; a non-recoverable draw does not.
Draw $3,000 · commission earned $80,000 × 6% = $4,800
Paid this month: $4,800 − $3,000 already advanced = $1,800 extra
Commission on profit instead of revenue, so reps don't win deals by discounting. Requires knowing the cost of each deal.
$80,000 revenue − $50,000 cost = $30,000 margin × 20% = $6,000
Reps earn a smaller rate every month a customer keeps paying — common in subscription and agency businesses. Rewards retention, not just the first sale.
$4,000 monthly recurring revenue × 5% = $200 every month the customer stays
| If you want to… | Use |
|---|---|
| Keep it simple | Flat rate |
| Reward top performers | Tiered or quota + accelerator |
| Retain reps through slow months | Base + commission, or a draw |
| Stop margin-killing discounts | Gross margin |
| Reward customer retention | Residual |
CommissionSheet calculates flat, tiered (marginal or retroactive), quota accelerators, deal splits and clawbacks today. Write your structure down first with the commission plan template.
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