sales-compensation

Sales Compensation

Scope

Covers

• Designing compensation plans for revenue roles (typically SDR/BDR, AE, AM/CSM with expansion)
• Setting OTE, base/variable mix, quota, and ramp
• Defining commission mechanics (crediting rules, accelerators, clawbacks, payout timing)
• Aligning incentives with long-term customer value (retention / NRR), not just bookings
• Producing rep-facing plan docs + admin rules so payouts are actually operable

When to use

• “Design a comp plan for our first AEs/SDRs.”
• “What should our OTE and base/variable split be?”
• “Set quotas and a ramp plan for new reps.”
• “Create accelerators + rules so reps don’t game discounting.”
• “Our reps close bad-fit deals that churn—align comp with retention/NRR.”

When NOT to use

• You need to hire, structure, or onboard an early sales team (use building-sales-team for org design, scorecards, and ramp plans)
• You need to improve pipeline quality, lead scoring, or qualification criteria (use sales-qualification)
• You need to negotiate a specific offer with an individual candidate (use negotiating-offers)
• You need legal/tax/HR advice, employment compliance guidance, or jurisdiction-specific plan language (use qualified professionals)
• You’re designing executive compensation or equity plans (different problem)
• You don’t yet have basic GTM foundations (ICP, pricing, what counts as a closed-won) — do that first, then return
• You want an overly complex “formula soup” plan that can’t be explained in one page or administered reliably

Inputs

Minimum required

• Company stage + GTM motion (inbound/outbound/PLG/enterprise) and primary sales roles
• What you sell + pricing model + typical ACV/ARR and sales cycle length
• Your economic constraints: gross margin, CAC payback target (or runway), budget for sales comp
• Target outcomes for the period (bookings/revenue/NRR) and the time horizon you care about (e.g., 90-day retention, annual renewals)
• Current baseline (if any): pipeline conversion, win rate, ramp time, churn/NRR
• Constraints: simplicity tolerance, payout timing preference, risk tolerance (for the company and for reps)