What is the best commission structure for a SaaS company?

Most SaaS companies use tiered commission with accelerators. A common structure: 8% on revenue up to quota, 12-15% on revenue above quota. This rewards quota attainment while giving top performers upside. Add quarterly or annual accelerators for additional motivation.

How do I set commission rates for a new sales team?

Start with your target OTE and work backward. If target OTE is $180K with a $90K base, you need $90K in variable. Divide by expected quota ($900K) to get a 10% base rate. Then decide if you want flat or tiered — tiered plans cost less on average but motivate overperformance.

What is a draw against commission?

A draw is an advance payment to sales reps, deducted from future commissions. Recoverable draws must be repaid if not earned back. Non-recoverable draws are forgiven — essentially a guaranteed minimum. Draws are common during ramp periods or in industries with long sales cycles.

Should I cap commissions?

Generally no. Capping commissions demotivates top performers and can lead to deal sandbagging. If margin protection is a concern, use decelerators (lower rates above a ceiling) rather than hard caps. Only cap if deals have zero margin variability.

How often should commission plans change?

Update plans annually at most. Mid-year changes destroy trust. If you must adjust, grandfather existing deals under the old plan. Announce changes 30+ days before they take effect. Document everything in writing.

Commission Plan Builder

Model flat rate, tiered, and draw-against-commission plans. See how OTE changes at different attainment levels before rolling out to your team.

Enter Your Data

Enter your quota, commission rate, and base salary to generate a flat rate plan

Industry Benchmarks: Plan Builder

Commission rates shown as percentages. Tiered plans typically start at a base rate (below quota) and accelerate 1.5-2x above quota. Draw plans are common in insurance and real estate where ramp periods are long.

Industry	Low	Average	High
SaaS (Flat Rate)	8%	10%	12%
SaaS (Tiered, Base)	6%	7%	8%
SaaS (Tiered, Accelerator)	12%	15%	18%
Insurance (Draw)	10%	15%	20%
Real Estate (Split)	50%	65%	80%
Financial Services	5%	8%	12%
Manufacturing	3%	5%	8%
Staffing / Recruiting	10%	18%	25%

How to Use the Commission Plan Builder

Step-by-Step Instructions

1Select a plan type: Flat Rate, Tiered, or Draw.
2Enter quota, commission rates, base salary, and any plan-specific parameters.
3Click Build Plan to see OTE projections and plan economics.
4Adjust rates and tiers to model different scenarios.

Formulas Used

Flat Rate OTE

OTE = Base + (Quota × Rate ÷ 100)

Total compensation at 100% quota with a single commission rate.

Tiered OTE at Attainment

Commission = Σ (Tier Amount × Tier Rate) at target attainment %

Sum commission across tiers based on how much of quota is achieved.

Draw Surplus/Deficit

Net = Monthly Commission − Monthly Draw

Whether commission earned covers the draw advance. Positive = surplus, negative = deficit to repay (if recoverable).

Frequently Asked Questions: Commission Plan Builder

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