Sales Compensation Plan Examples: Modern Structures HR & Comp Teams Can Actually Operate

Key Takeaways

Sales compensation planning often becomes messy with quota sandbagging, shadow spreadsheets, and year-end disputes, but structured plan examples can eliminate these administrative headaches for HR and compensation teams.
Every effective sales compensation plan requires specific, defensible numbers including OTE splits, commission rates, quotas, and accelerators that align with current market data rather than outdated survey information.
Modern compensation intelligence platforms like SalaryCube provide real-time salary benchmarking and market insights that enable HR teams to price sales roles accurately and maintain competitive advantage.
Successful plans span multiple role types from SDRs to enterprise sales, with each structure designed to motivate sales reps toward specific business goals like ARR growth, customer retention, and territory expansion.
The most effective approach combines proven plan templates with ongoing market validation, allowing organizations to iterate their compensation strategy based on real-time performance and competitive positioning.

Sales compensation gets messy fast. Quota sandbagging at quarter-end, reps maintaining shadow spreadsheets because they don’t trust official statements, and year-end disputes over crediting rules plague even well-intentioned HR and compensation teams. This article walks through 10 concrete sales compensation plan examples that HR and compensation professionals can adapt immediately for their 2025 planning cycles.

Every example includes specific numbers—60/40 OTE splits, 10-15% accelerators, realistic 2025 quota levels—so you can see how these plans work in practice, not theory. Modern sales compensation plans must be benchmarked against current market pay, not last year’s survey data. Tools like SalaryCube’s real-time salary benchmarking and Bigfoot Live help price OTE ranges with the credibility HR teams need to defend their decisions.

These examples span AE, SDR, sales managers, channel teams, and enterprise roles, showing how to align variable pay with business priorities like ARR growth, retention, and multi-product adoption. By the end, you’ll have a shortlist of plan models to pilot in 2025, plus a framework to iterate using real-time market data.

What Is a Sales Compensation Plan? (Quick Refresher)

A sales compensation plan is the structured mix of base salary, variable pay (commissions, bonuses, SPIFs), metrics, and rules that determines how different sales roles are paid. Unlike generic employee incentive programs, sales compensation must directly tie individual performance to revenue outcomes while supporting broader business goals.

For most U.S. GTM organizations, on target earnings for quota-carrying roles split 50/50 to 70/30 between base and variable pay. Plan periods typically align with calendar quarters and years, allowing sales teams to build predictable income while maintaining performance pressure throughout longer sales cycles.

A formal sales compensation plan document must specify core elements: OTE ranges, base/variable splits, quota methodology, primary metrics (new ARR, renewals, pipeline), commission rates and tiers, accelerators and decelerators, caps if any, clawback provisions, and eligibility rules. The complexity comes from aligning these elements with your revenue model—subscription vs. transactional, average deal size, and sales cycle length all influence optimal plan design.

For a Mid-Market AE in 2025, a typical plan might include $140,000 OTE with a 60/40 base/variable split, $900,000 annual new ARR quota, and tiered commission rates from 7-11% with accelerators above 110% of quota. This structure balances income stability with performance upside while keeping quota multiples in the healthy 5-7x range.

Why Your Sales Compensation Plan Matters to HR & Compensation Teams

Sales compensation planning directly impacts strategic HR priorities: retaining top sales talent, maintaining predictable payroll costs, ensuring equitable pay across territories and demographics, and meeting compliance requirements under pay transparency laws in states like California, Colorado, and New York.

The financial impact compounds quickly. Turnover in sales roles costs 1.5-2x annual salary when factoring recruiting, onboarding, lost revenue, and ramp time. When OTE falls below market rates, your strongest sales reps leave first—exactly the sales professionals you can least afford to lose. Conversely, fuzzy crediting rules and inconsistent quota-setting create disputes that consume HR bandwidth each quarter.

HR and compensation teams own the critical guardrails: ensuring OTE bands align with current market rates, verifying total variable expense fits P&L targets, and maintaining consistent plan language across job families and levels. Many organizations still price sales roles using annual survey PDFs that reflect 12-24 month old data. Contrast this with using real-time compensation intelligence from platforms like SalaryCube’s salary benchmarking product to update plans ahead of 2025 sales kickoffs.

Clear, well-communicated sales compensation plans reduce shadow spreadsheets and manual disputes, freeing HR and comp teams from case-by-case escalations. When sales reps understand exactly how their performance translates to earnings, they spend more time selling and less time calculating commissions in personal Excel files.

Key Sales Compensation Terms HR Teams Must Standardize

Effective sales compensation plan administration requires standardized definitions across all plan documents and communication materials. These terms form the foundation for consistent implementation and dispute resolution.

Sales quota represents the revenue or activity target set for a role over a specific timeframe, such as $600,000 new ARR per AE in FY2025. Organizations must distinguish between bookings quotas (credit at contract signature), billings quotas (aligned with invoiced amounts), and revenue quotas (recognized GAAP revenue) to avoid confusion.

On target earnings (OTE) equals base salary plus variable compensation at 100% quota achievement. For example, an Inside Sales Rep might have $120,000 OTE comprising $72,000 base (60%) and $48,000 variable (40%). OTE serves as the anchor for compensation banding, offer negotiations, and internal equity decisions.

Sales accelerators increase commission rates above specific performance thresholds to reward over-achievement. A typical structure might pay 7% commission up to quota, 10% between 100-130% quota attainment, and 13% beyond 130% to motivate sales reps to exceed sales targets consistently.

Decelerators reduce commission rates below minimum performance levels, such as 3% on revenue below 60% quota versus 6% at 60-100% attainment. While these can protect cost-of-sales ratios, they should be used sparingly and modeled carefully to avoid demotivating mid-level performers.

Sales Performance Incentive Funds (SPIFs) are short-term contests layered on core compensation, like $500 bonuses for closing three 2-year contracts during March 2025. SPIF budgets should be managed separately from base plan economics to maintain cost predictability.

Clawbacks allow recovering commissions when deals cancel or churn within defined windows, typically 90 days for new business or before first renewal for annual contracts. When a $50,000 annual SaaS contract gets refunded, the associated $3,500 commission would be deducted from future payouts.

10 Practical Sales Compensation Plan Examples (With Numbers)

This section provides detailed, role-specific examples that HR and compensation leaders can adapt immediately. Each includes concrete numeric structures based on current U.S. market practices for 2024-2025. While these represent realistic starting points, actual numbers must be validated through current market benchmarking via tools like SalaryCube’s Bigfoot Live for real-time salary data.

Each example follows a consistent format: role profile, sample OTE structure, quota methodology, commission rates, accelerators, and implementation notes. Use these as templates rather than rigid prescriptions—your specific industry, geography, and business model will require customization.

1. Inside Sales / SDR Activity-Based Plan Example

Sales development reps focus on top-of-funnel activities rather than closed revenue, making activity and pipeline-based compensation most appropriate. Current U.S. market data suggests SDR OTE ranges from $65,000-$85,000, varying significantly by metropolitan area and company stage.

Structure: $72,000 OTE with 70/30 base/variable split ($50,400 base, $21,600 variable). Variable compensation ties 60% to qualified meetings scheduled and 40% to accepted opportunities or pipeline dollars created. Quarterly targets include 90 qualified meetings and $450,000 in sourced pipeline value.

Payout mechanics: $150 per accepted opportunity up to quota, with 25% accelerator above 110% quarterly attainment. Pipeline component pays 1% of qualified opportunity value up to target, then 1.25% above target.

This plan works best for organizations emphasizing early-stage pipeline development with shorter sales cycles. HR should ensure SDR compensation bands differentiate from AE levels while remaining competitive for entry-level sales talent. Use SalaryCube’s salary benchmarking tool to validate that SDR OTE reflects regional market realities—Bay Area SDRs may require $85,000+ OTE while similar roles in lower-cost markets perform well at $65,000-$70,000.

2. SMB Account Executive (Salary + Flat Commission) Example

Small and mid-market account executives handle high-volume, transactional deals typically ranging from $5,000-$25,000 ACV with relatively short sales cycles. Simplicity in plan design reduces confusion and administrative overhead while maintaining strong sales performance incentives.

Structure: $100,000 OTE with 60/40 base/variable split ($60,000 base, $40,000 variable). Annual new ARR quota of $500,000 with flat 8% commission on all new revenue up to quota and 10% commission on revenue above 100% attainment.

Worked example: An AE closing $550,000 new ARR earns $40,000 on the first $500,000 (8% × $500,000) plus $5,000 on the excess $50,000 (10% × $50,000), totaling $45,000 variable compensation versus $40,000 target.

This single-metric approach minimizes disputes while keeping sales reps focused on new logo acquisition. The modest accelerator rewards over-performance without creating unsustainable cost-of-sales scenarios. Model total payout curves using free tools like SalaryCube’s calculators at https://www.salarycube.com/tools/ before finalizing commission rates.

3. Mid-Market AE Tiered Commission Example

Mid-market account executives typically manage deals ranging from $25,000-$80,000 ACV with 3-6 month sales cycles, requiring more sophisticated commission structures to reward consistent performance and over-achievement.

Structure: $140,000 OTE with 50/50 base/variable split ($70,000 base, $70,000 variable). Annual new ARR quota of $900,000 with tiered commission: 6% on ARR from 0-80% quota, 8% from 80-100% quota, and 11% above 100% quota.

120% attainment scenario: An AE achieving $1,080,000 new ARR earns:

First 80% of quota ($720,000) at 6% = $43,200
Next 20% to full quota ($180,000) at 8% = $14,400
Above quota ($180,000) at 11% = $19,800
Total variable: $77,400 versus $70,000 target

Many organizations separate new ARR from expansion revenue, either excluding expansion from AE quotas entirely or paying reduced rates (4-5%) to avoid conflicts with customer success teams. Clear territory and account assignment rules prevent end-of-quarter disputes over deal ownership.

Validate mid-market AE compensation using SalaryCube’s Bigfoot Live to confirm that OTE levels and quota-to-OTE ratios (typically 5-7x) remain competitive with current market offerings.

4. Enterprise AE Multi-Metric Plan Example

Enterprise account executives manage a small number of strategic accounts (typically 5-12) with complex, multi-stakeholder sales cycles often exceeding 12 months. Deal sizes frequently exceed $250,000 ACV, requiring compensation plans that balance new revenue with strategic outcomes.

Structure: $220,000 OTE with 50/50 base/variable split ($110,000 base, $110,000 variable). Annual bookings quota of $2.2M with variable compensation weighted: 70% on new ARR achievement, 20% on multi-year or multi-product contract mix, and 10% on strategic milestones like Fortune 100 account penetration.

Multi-year contract example: A $600,000 three-year contract might credit $200,000 annual ARR for the primary metric while triggering a 3% bonus rate for the multi-year component, effectively paying 13% total commission versus 10% base rate.

Enterprise sales compensation requires clear crediting rules for complex deals involving multiple stakeholders, channel partners, and product lines. Limit metrics to 2-3 maximum and provide detailed calculation examples in plan documents so enterprise sales representatives can forecast earnings without maintaining shadow spreadsheets.

Use SalaryCube’s benchmarking platform to differentiate Enterprise AE OTE ranges across major metropolitan areas and validate job levels against consistent market definitions.

5. Sales Manager “Override + Team Performance” Plan Example

First-line sales managers typically oversee 6-10 individual contributors without personal quotas, making team-based compensation most appropriate. Their success depends on coaching, hiring, and enabling team performance rather than individual deal closure.

Structure: $170,000 OTE with 70/30 base/variable split ($119,000 base, $51,000 variable). Team quota aggregates to $5M new ARR across all direct reports. Variable allocation: 80% based on team quota attainment (linear payout from 95-115% of team target) and 20% on qualitative objectives like forecast accuracy and new hire ramp time.

Override component: 3% commission on team new ARR above 100% team quota, providing significant upside when the team overperforms. If the team achieves $5.5M versus $5M quota, the manager earns an additional $15,000 override (3% × $500,000 excess).

Clear team crediting rules prevent disputes when territories change or reps transfer mid-quarter. The qualitative component should include specific, measurable objectives rather than subjective performance ratings.

Sales manager compensation bands should position 10-20% above senior individual contributor OTE ranges in the same organization. Use SalaryCube’s real-time salary data to ensure internal job architecture remains coherent and externally competitive.

6. Channel / Partner Manager Plan Example

Channel and partner managers influence revenue through reseller relationships, value-added resellers, and marketplace partnerships rather than direct customer relationships. Their compensation should reflect this broader but less directly controllable revenue base.

Structure: $145,000 OTE with 60/40 base/variable split ($87,000 base, $58,000 variable). Annual partner-sourced ARR quota of $4M with variable compensation weighted: 60% on sourced revenue attainment, 20% on partner activation metrics (certifications completed, joint marketing events), and 20% on pipeline growth among Tier 1 partners.

Commission rates: 3-4% on partner-sourced ARR given the broader revenue base, with quarterly accelerators to 5% when exceeding 110% quarterly targets. Lower rates reflect reduced direct control compared to field sales roles.

Partner-sourced versus partner-influenced revenue requires explicit definition to prevent double-payment disputes between channel teams and direct sales reps. Documentation should specify exactly when deals count toward channel quotas versus direct AE quotas.

Many traditional salary surveys treat channel roles generically without distinguishing partner management from field sales. SalaryCube’s hybrid-role pricing capabilities help price these blended responsibilities more accurately than generic survey data.

7. Customer Success / Account Manager Renewal & Expansion Plan Example

Customer success managers and account managers in post-sales roles focus on retention and growth within existing customer bases rather than new logo acquisition. Their compensation should emphasize long-term customer health over short-term revenue spikes.

Structure: $130,000 OTE with 75/25 base/variable split ($97,500 base, $32,500 variable). Manages $3M ARR portfolio with variable compensation tied: 60% to gross retention (95% target), 30% to net revenue retention (115% target), and 10% to customer satisfaction scores.

Performance scenario: A CSM achieving 97% gross retention and 120% net revenue retention would earn above-target payouts on both major metrics: 97% vs. 95% target yields 104% payout on the retention component, while 120% vs. 115% NRR target generates 132% payout on the expansion component.

Avoid over-complicating CSM compensation with too many metrics or over-penalizing for churn beyond individual control, such as product sunset decisions or market exits. Limit primary metrics to 2-3 maximum and focus on outcomes the role directly influences.

Customer success roles vary significantly across organizations—some focus purely on retention while others own expansion revenue. Use SalaryCube’s Job Description Studio to align responsibilities with compensation metrics and benchmark against accurately defined market roles.

8. Territory Volume Incentive Plan Example

Territory managers and regional representatives in industrial, medical device, or broad B2B markets often manage hundreds of accounts across defined geographic regions. Individual deal attribution becomes difficult when multiple stakeholders influence outcomes.

Structure: $150,000 OTE with 60/40 base/variable split ($90,000 base, $60,000 variable). Territory revenue target increases from $8M to $9.6M (20% growth) in 2025. Variable design: 90% tied to territory revenue growth achievement and 10% to new product mix or account penetration targets.

Territory focus: This plan type works when sales engineers, channel partners, marketing, and other stakeholders jointly influence deals, making individual deal crediting contentious. Territory-level metrics encourage collaboration and reduce administrative disputes.

Rather than tracking individual transactions, measure total sales volume across the territory plus strategic objectives like achieving 30% revenue from new products or adding 15 new accounts above $50,000 ACV.

Use territory volume incentive plans when sales cycle complexity makes individual attribution problematic. Update territory quotas annually based on market intelligence from Bigfoot Live rather than mechanically rolling forward previous year targets.

Profit-sharing overlays align high-performing sales teams with overall company financial success beyond individual quotas. These work best in mature, profitable organizations seeking to retain top talent through enterprise-level incentives.

Structure: Maintain base compensation plans (such as mid-market AE structure above) and add annual profit-sharing pool equal to 5-7% of operating profit. Eligibility requires minimum performance: sales reps at 100%+ quota and sales managers at 95%+ team attainment.

Pool allocation: $400,000 annual profit-sharing pool distributed 50% equally among 20 eligible employees ($10,000 each) and 50% pro-rata based on individual performance levels. Top performers might receive $25,000-$30,000 total while average performers receive the base $10,000.

Profit-sharing requires close Finance coordination and clear documentation that payments are discretionary based on audited year-end results. Distinguish profit-sharing from guaranteed commission calculations to avoid legal complications.

This overlay particularly appeals to senior sales professionals who value long-term wealth building alongside quarterly performance incentives. Model total compensation including profit-sharing against market benchmarks to ensure competitive positioning.

10. Hybrid Draw-Against-Commission Plan Example

Draw structures provide income stability during territory development, market expansion, or long sales cycles while maintaining performance accountability. Use draws strategically for new hires, geographic expansion, or complex vertical market entry.

Structure: $160,000 OTE with 40/60 base/variable split ($64,000 base, $96,000 variable). Recoverable monthly draw of $6,000 during first two quarters for new hires in territory expansion roles.

Recovery scenario:

Q1: Rep earns $8,000 commissions but receives $18,000 in draws, creating $10,000 deficit carried forward
Q2: Rep earns $35,000 commissions; first $10,000 repays draw deficit, leaving $25,000 net commission payment

Specify draw duration (typically 3-6 months), recovery mechanics, and treatment of unpaid balances at separation. Recoverable draws require careful legal review given varying state wage and hour laws.

Non-recoverable draws guarantee minimum income but reduce performance pressure. Use recoverable draws to balance income stability with accountability while reps establish territory presence or product expertise.

How to Design and Roll Out a Sales Compensation Plan in 7 Steps

This framework provides HR and compensation leaders with an annual process for updating sales compensation plans, typically executed in Q3-Q4 for January implementation. Each step emphasizes practical decisions and real-time data rather than theoretical modeling.

1. Clarify Sales Strategy and 12-18 Month Goals

Begin with concrete business objectives for 2025-2026: increase new ARR 25%, improve net revenue retention from 108% to 115%, or shift contract mix toward 30%+ multi-year terms. Avoid generic growth targets that don’t translate into specific sales behaviors.

Map these objectives to 1-3 primary compensation metrics per role. Account executives focus on new ARR acquisition, customer success managers drive retention and expansion, sales development reps create qualified pipeline. Each metric should be directly controllable by the role rather than dependent on other teams’ performance.

Write these objectives in plain language at the beginning of each plan document so sales representatives and sales managers understand “what we’re paying for” upfront. Many organizations skip this critical step, leaving sales teams unclear about strategic priorities when quota pressure mounts.

2. Benchmark OTE Ranges and Job Levels Using Real-Time Data

Replace outdated survey PDFs with current market intelligence from SalaryCube’s salary benchmarking product. Static 2023-2024 survey data creates significant risk in rapidly changing labor markets, particularly for competitive sales talent.

Segment compensation bands by geography (remote U.S., high-cost metros, mid-tier markets), job level (AE I vs. Senior AE), and role type (new business vs. expansion focus). Create defensible min/mid/max OTE ranges that support both recruiting and retention objectives.

Connect benchmarking directly to job descriptions using SalaryCube’s Job Description Studio so responsibilities and pay remain tightly aligned. This integration prevents scope creep and supports pay equity reviews across demographics and territories.

Document compensation bands with clear base/variable ratios that serve as guardrails for all individual plan designs. This foundational work enables consistent application across sales teams while maintaining market competitiveness.

3. Choose Plan Types by Role Family

Assign each role family to standard templates rather than creating unique plans for every individual. Limit organizational complexity by maintaining 5-7 core plan types: activity-based (SDR), tiered commission (AE), renewal + expansion (CSM), override-based (manager), and territory volume (regional).

Document for each role family: primary metrics and weights, OTE split rationale, quota-setting methodology, and treatment of accelerators, decelerators, SPIFs, and clawbacks. Standardization reduces perceived inequity and simplifies administration.

Avoid the temptation to accommodate every special request through plan customization. Individual adjustments should address levels and quotas within standard templates rather than creating entirely new compensation structures.

4. Model Economics and Scenario-Test the Plans

Finance and compensation teams must model payout curves under multiple performance scenarios: 70% quota (under-performance), 100% quota (target), and 120-150% quota (over-performance). Verify that total compensation cost aligns with revenue and margin targets across all scenarios.

Test accelerator and decelerator impacts using spreadsheet models backed by current market benchmarks. Extreme performance scenarios—whether under or over—shouldn’t create unsustainable economics or demotivate capable performers.

Use free modeling tools like SalaryCube’s compa-ratio calculators at https://www.salarycube.com/tools/ to validate that target, floor, and upside compensation remains market-competitive across different attainment levels.

5. Draft Clear, Legally Sound Plan Documents

Write plan documents in accessible language with defined terms, numeric examples, and simple tables rather than dense legal prose that sales teams ignore. Include practical scenarios showing exactly how 80%, 100%, and 130% performance translates to compensation.

Essential sections include: eligibility criteria, plan term (January 1 - December 31, 2025), compensation components, quota methodology, crediting rules, payment timing, clawback provisions, amendment procedures, and dispute resolution processes.

Involve Legal, HR, Sales Leadership, and Finance early in drafting to complete redlines before year-end implementation pressure builds. Reference SalaryCube’s methodology resources at https://www.salarycube.com/resources/ for governance best practices and defensible documentation standards.

6. Communicate and Train Before the Plan Goes Live

Schedule live training sessions in December or early January where HR and Sales Leadership demonstrate plan mechanics using realistic numeric scenarios. Sales representatives must understand exactly how their daily activities translate to quarterly and annual earnings.

Provide one-page summaries by role plus comprehensive FAQs to reduce confusion during implementation. Train front-line sales managers to explain not just the “how” but the “why” behind metric selection and target-setting.

Transparency builds trust and reduces shadow spreadsheets. Explain benchmarking sources, rationale for OTE changes, and organizational commitment to pay equity across territories and demographics. Clear communication prevents most disputes before they occur.

7. Monitor, Iterate, and Re-Benchmark Mid-Year

Establish quarterly monitoring of key indicators: quota attainment distributions, actual payout versus modeled scenarios, sales talent turnover by performance level, and feedback on plan effectiveness in driving desired behaviors.

Schedule formal mid-year reviews (July 2025) to assess whether macroeconomic changes, competitive dynamics, or shifting business priorities require plan adjustments. Avoid knee-jerk reactions to single quarters, but address systematic misalignments promptly.

Re-benchmark critical sales roles using SalaryCube’s real-time salary data rather than waiting for annual survey cycles. Competitive markets require agile compensation responses, particularly for high-impact roles like enterprise account executives and sales managers.

How SalaryCube Supports Modern Sales Compensation Planning

Many HR and compensation teams still juggle multiple salary survey PDFs, manual spreadsheets, and inconsistent job descriptions when designing sales compensation plans. This fragmented approach creates slow planning cycles, weak defensibility under pay transparency requirements, and misalignment with rapidly changing market conditions.

SalaryCube provides U.S.-focused compensation intelligence built specifically for HR and compensation professionals who need fast, transparent, real-time salary data for sales compensation planning. The platform eliminates dependence on annual survey cycles and vendor consulting bottlenecks.

DataDive Pro enables teams to price SDRs, account executives, customer success managers, and sales leaders in minutes rather than weeks. The platform handles hybrid roles like “AE + AM” or “CSM with quota” that traditional surveys classify poorly or ignore entirely.

Bigfoot Live provides daily-updated salary intelligence so HR teams can monitor how OTE bands for critical sales roles shift by region, industry, and company stage. This real-time visibility prevents the 12-18 month lag that undermines competitive positioning with top sales talent.

SalaryCube’s Job Description Studio generates market-aligned job descriptions integrated directly with benchmarking data, ensuring responsibilities, job levels, and OTE bands remain consistent and defensible. This integration supports pay equity reviews and compliance with state-level pay transparency requirements.

The platform supports unlimited reporting and easy exports (CSV, Excel, PDF), enabling teams to build scenario models for multiple plan examples without vendor consulting dependencies. Free tools include compa-ratio calculators, salary-to-hourly converters, and raise calculators for quick modeling and validation.

If you want real-time, defensible salary data that HR and compensation teams can actually use to build effective sales compensation plans, book a demo with SalaryCube or watch interactive demos to see the platform in action.

FAQ: Sales Compensation Plan Examples for HR & Compensation Teams

How often should we update our sales compensation plans?

Organizations should conduct formal plan reviews annually, typically in Q3-Q4 for next fiscal year implementation, with lighter mid-year check-ins in Q2. Update OTE benchmarks, base/variable splits, and quota multiples using real-time market data whenever hiring difficulties or retention issues signal misalignment. Avoid frequent plan changes that confuse sales teams, but address clear market disconnects promptly rather than waiting for annual cycles.

How many different sales compensation plan templates should one organization maintain?

Limit your organization to 5-7 core plan templates differentiated by role family: SDR (activity-based), SMB AE (simple commission), Mid-Market AE (tiered), Enterprise AE (multi-metric), CSM/AM (retention + expansion), Sales Manager (team override), and Channel Manager (partner-sourced). Use job levels and quota variations within templates rather than creating bespoke plans for individuals. This approach simplifies administration, improves perceived fairness, and makes total cost modeling manageable.

What is a reasonable quota-to-OTE ratio for U.S. SaaS sales roles in 2025?

Most SaaS organizations target 4-7x quota-to-OTE multiples depending on deal size, win rates, and sales cycle length. A Mid-Market AE with $140,000 OTE might carry $700,000-$980,000 in new ARR quota (5-7x multiple). Enterprise roles with longer cycles often operate closer to 4-5x while high-velocity SMB roles may reach 7-9x. Ratios consistently above 10x typically indicate unrealistic management expectations or under-market OTE levels that require correction.

How do we keep sales compensation plans equitable across different territories and segments?

Use standardized plan structures by role with geographic pay differentials based on current market data rather than ad hoc exceptions. Conduct regular pay equity analysis across gender, race, and location using consistent methodologies. Standardize quota-setting processes using territory potential models and external demand intelligence rather than purely historical performance. Document all mid-year adjustments with clear business rationale to prevent bias in territory assignments or quota modifications.

When is it appropriate to cap commissions in a sales compensation plan?

Many growth-oriented organizations avoid hard caps that could disincentivize exceptional performance, preferring thoughtfully designed accelerators and executive approval processes for unusually large deals. When caps are necessary, set them high enough to avoid routine activation (typically 150-200% of target variable) and model scenarios carefully with Finance. If you must cap earnings, clearly disclose the limitations upfront and consider whether your quota-setting or territory design needs improvement instead.