A sales commission structure is the set of rules that turns a rep’s sales into variable pay. Most B2B SaaS teams run base salary plus commission, often with tiers that raise the rate above quota.
In a typical sales commission structure, most types pay the same at quota and differ below and above it. The difference is what a rep keeps in a weak year and what you pay in a strong one. On one rep with $200,000 on-target earnings (OTE), the gap reaches $82,000 at 130% attainment, counting residual as year-one cash.
Below: eight types run through one rep, with a side-by-side table at 70%, 100% and 130% attainment. You also get a decision table by role, rates with their sources and the mechanics that change any plan.
What Is a Sales Commission Structure?
A sales commission structure is the set of rules that decide when a rep earns commission and on what. It also sets the rate and how much of the rep’s pay is variable.
Three things sit under that label, and they are easy to mix up:
- Structure: the rules themselves.
- Plan document: the written agreement the rep signs.
- Payout process: the calculation and timing each period.
Write the first two once, then run the payout process every period. “Sales commission plan” is the everyday word for the written version of the structure.
The structure decides which revenue counts: bookings, gross profit, renewals or a territory’s total, as the eight types below show.
The Parts Every Structure Has
Every structure is built from four parts, shown here on the shared rep that every later section reuses. The rep is rounded from the 2026 AE medians of 158 B2B companies (The Bridge Group, Jun 2026).
On-target earnings (OTE) is base plus variable pay at 100% of quota.
| Part | What it sets | Worked line (shared rep) |
|---|---|---|
| Quota | The bookings a rep must reach in a year | $1,000,000 a year, 5.0x OTE (2026 AE median: $960K at 4.6x) |
| On-target earnings (OTE) | Total pay at 100% of quota | $200,000, the 2026 AE median |
| Base-to-variable mix | The share of OTE guaranteed versus earned | 50/50: $100,000 base and $100,000 variable |
| Commission rate or trigger | What each sale or goal pays | 10% of bookings on top of the base pays the $100,000 variable at quota |
The 70/30 rule means 70% of OTE is guaranteed base and 30% is variable pay. The same $200,000 OTE at 70/30 is $140,000 base and $60,000 variable.
The Bridge Group’s SDR median is $80K OTE at 68:32 ($55K base, $25K variable). For AEs it uses its 2024 benchmark of 170-plus B2B SaaS companies, $190K OTE at 53:47, as the 2026 split is not public. A 70/30 sales pay structure is therefore normal for SDRs and a base-heavy choice for AEs.
The 8 Main Types of Sales Commission
These sales commission structure examples all use the shared rep from the parts table, so the payouts compare. In our view, the order below runs from most to least common in B2B SaaS.
Base Salary Plus Commission
How it works: The rep earns a $100,000 base plus 10% of bookings.
Example: At 70%, 100% and 130% attainment the rep earns $170,000, $200,000 and $230,000.
Best for: most B2B SaaS AE roles, because a base plus commission structure covers a long cycle while the rate still rewards closing.
Watch out for: a flat rate adds no extra pull above quota.
Straight Commission
How it works: Straight commission pays 20% of bookings with no base. Revenue-based commission is the same plan under another name.
Example: The rep earns $140,000, $200,000 and $260,000 at 70%, 100% and 130% attainment.
Best for: experienced reps who need no ramp, and contractors, because the full 20% is earned on every dollar and no base is carried.
Watch out for: a quarter with no closed deals pays nothing, and in California the plan still needs a written method (see the mechanics section).
Tiered Commission
How it works: The rep earns a $100,000 base. In this tiered commission structure, bookings pay 8% up to 50% of quota, 12% from 50% to 100% and 15% above 100%.
Example: Pay is $164,000, $200,000 and $245,000 at 70%, 100% and 130% attainment.
Best for: teams that want over-attainment rewarded, because the rate climbs from 8% to 15% as attainment rises.
Watch out for: the 15% band pays only reps above quota.
Draw Against Commission
How it works: A commission draw advances a fixed amount against future commission. Here a $100,000 recoverable annual draw sits against 20% commission, reconciled at year end.
Example: Year-end pay matches straight commission at 70%, 100% and 130% attainment ($140,000, $200,000 and $260,000). At 30% attainment the rep earns $60,000 against the $100,000 drawn. If the draw is recoverable, $40,000 is carried or owed; if not, the company absorbs it.
Best for: a ramping or seasonal rep, because the $100,000 draw keeps pay flowing while the pipeline builds.
Watch out for: a recoverable draw can leave a rep owing money after a slow year. Decide in advance whether the shortfall is carried or repaid.
Residual Commission
How it works: The rep earns a $100,000 base and 6% of new annual contract value (ACV) at signing. The rep then earns 2% in year 2 and 2% in year 3 while the customer stays.
Example: Residual commission pays $142,000, $160,000 and $178,000 in year one at 70%, 100% and 130% attainment. At 100% a further $40,000 is deferred, for a three-year total of $200,000.
Best for: subscription and renewal roles, because 4 points of the rate ride on the customer staying.
Watch out for: the rep’s year-one cash is lower than under any other type at quota.
Gross Margin Commission
How it works: The rep earns a $100,000 base plus 12.5% of gross profit. At an 80% margin that equals 10% of bookings.
Example: Gross margin commission pays $170,000, $200,000 and $230,000 at 70%, 100% and 130% attainment. At 100% attainment with a 60% margin, pay falls to $175,000.
Best for: discount-prone deals, because a discount cuts the rep’s own pay.
Watch out for: the rep needs gross profit per deal before signing, not after.
Multiplier Commission
How it works: The rep earns a $100,000 base plus 10% of bookings. The 10% is multiplied by 1.2 when a second goal is met, such as multi-year terms or product mix.
Example: With the goal missed at 70% and met at 100% and 130%, multiplier commission pays $170,000, $220,000 and $256,000.
Best for: a plan with a second goal beyond bookings, because the 1.2x pays only when that goal is met.
Watch out for: the second goal must be measurable from CRM data the rep can see.
Territory Volume Commission
How it works: The rep earns a $100,000 base plus 1% of a $10M territory’s revenue.
Example: With the territory at 100% of its target in every case, territory volume commission pays $200,000 whatever the rep’s own attainment.
Best for: team or channel roles, because pay follows the territory’s result, not one rep’s deals.
Watch out for: pay does not move with the rep’s own attainment ($200,000 at 70% and at 130%).
All 8 Types Compared on One Rep
The table shows what the rep is paid at 70%, 100% and 130% attainment, on $700,000, $1,000,000 and $1,300,000 of bookings. Each “Cost” column is that payout as a share of the bookings.
| Structure | Payout at 70% | Cost at 70% | Payout at 100% | Cost at 100% | Payout at 130% | Cost at 130% | Best for |
|---|---|---|---|---|---|---|---|
| Straight commission | $140,000 | 20.0% | $200,000 | 20.0% | $260,000 | 20.0% | Experienced reps, contractors |
| Draw against commission | $140,000 | 20.0% | $200,000 | 20.0% | $260,000 | 20.0% | A ramping or seasonal rep |
| Multiplier | $170,000 | 24.3% | $220,000 | 22.0% | $256,000 | 19.7% | A second goal beyond bookings |
| Tiered | $164,000 | 23.4% | $200,000 | 20.0% | $245,000 | 18.8% | Rewarding over-attainment |
| Base plus commission | $170,000 | 24.3% | $200,000 | 20.0% | $230,000 | 17.7% | Most AE roles |
| Gross margin | $170,000 | 24.3% | $200,000 | 20.0% | $230,000 | 17.7% | Discount-prone deals |
| Territory volume | $200,000 | 28.6% | $200,000 | 20.0% | $200,000 | 15.4% | Team or channel roles |
| Residual (year one) | $142,000 | 20.3% | $160,000 | 16.0% | $178,000 | 13.7% | Subscription and renewal roles |
Residual shows year-one cash only. A further $28,000, $40,000 and $52,000 arrives over years 2 and 3 at 70%, 100% and 130%.
The eight structures pay between $178,000 and $260,000 at 130% attainment, counting residual as year-one cash. Six of the eight pay $200,000 at quota; multiplier pays $220,000 because its second goal is met.
The choice shows below and above quota. At 70% the gap is $60,000, between territory volume and straight or draw. Fixed-cost-heavy plans cost more per booking dollar in a weak year, while commission-only plans cost the same percentage at every level.
The eight structures are run by script, and residual counts year-one cash only.
Takeaway: Decide first what you want to pay a 130% rep and a 70% rep, then pick the structure that lands there.
Plan Mechanics That Change Any Structure
Six mechanics sit on top of any type and change what it costs.
- Accelerator: a higher rate above a threshold. In the tiered example, the 15% rate above quota adds $45,000 at 130% attainment.
- Decelerator: a lower rate past a point, for example on one oversized deal. It protects the budget but tells the rep that extra effort pays less.
- Threshold: no commission below a minimum attainment. It stops weak quarters from paying out, and it leaves a rep who falls behind with nothing to chase.
- Cap: a ceiling on payout. Once a rep hits it, there is no reason to close the next deal in that period.
- Clawback: commission reversed when a deal cancels or does not pay. Vendor guidance describes windows of roughly 90 days to a year.
- SPIFF: a short bonus for one product or behavior, paid on top of the regular plan.
In an opinion letter, California’s labor regulator called backing out commission on cancelled or unpaid orders an advance the employer may recover. It answered one inquiry and is not a statute, so check your own state.
In California, Labor Code 2751 requires a written contract that sets out how commissions are computed and paid, with a signed copy for the rep.
How to Calculate Sales Commission
The sales commission formula is sales multiplied by the rate, then adjusted for tiers and splits. All three cases below use the shared rep.
Flat Rate Commission
- Bookings: $1,000,000 at quota, $1,300,000 at 130%.
- Rate: 10% of bookings.
- Base: $100,000.
Ten percent of $1,000,000 is $100,000, and of $1,300,000 it is $130,000. With the base, the 130% rep earns $230,000.
Tiered Commission Calculation
Marginal tiers: each rate applies only to the bookings inside its band. At $1,300,000 of bookings the rep’s variable pay is built like this:
| Band | Rate | Commission at 130% |
|---|---|---|
| $0 to $500,000 | 8% | $40,000 |
| $500,000 to $1,000,000 | 12% | $60,000 |
| Above $1,000,000 ($300,000 of bookings) | 15% | $45,000 |
Variable pay is $145,000, and $245,000 with the base. Paying 15% on all $1,300,000 instead, a whole-amount rate, would cost $195,000 in variable pay, which is $50,000 more.
Marginal tiers cost less and are easier to defend, because crossing quota never reprices the bookings below it. Whichever you choose, write the rule with a number in the plan so a rep can reproduce the payout.
Split Deals
A split divides one deal’s commission between reps. An $80,000 ACV deal at 10% pays $8,000, and a 60/40 split gives $4,800 and $3,200. Agree the split in writing before the deal closes.
How to Structure Sales Commission for Your Team
To structure sales commission for your team, start from the role and the sales cycle, not from a type. The best sales commission structure for most B2B SaaS AE roles is base plus commission with tiers.
The base covers a long cycle and the tiers reward over-attainment. On the shared rep the tiered plan pays $245,000 at 130%, against $230,000 for a flat rate. In a SaaS sales commission structure, SDRs and renewal roles need something else.
Five questions narrow the choice:
- How long is the sales cycle, and does a monthly or quarterly quota fit it?
- What behavior do you want: new logos, margin or multi-year contracts?
- Which role is the plan for: SDR, AE or renewals?
- What does the plan cost you at 70% and 130% attainment? The comparison table above shows it.
- Can every rep recompute their own payout?
| Role or motion | Structure that fits | Mix | The catch |
|---|---|---|---|
| SDR | Base plus a commission or bonus on meetings or qualified pipeline, not revenue | Near 70/30 (Bridge Group median 68:32 on $80K OTE) | Median quota is 10 meetings a month, and meetings that never become pipeline still pay unless you pay on qualified pipeline |
| AE, SMB or short cycle | Base plus commission, or tiered | 50/50 to 60/40 (Bridge Group SaaS median 53:47; one vendor’s guidance says 60/40 for SMB) | A heavier variable share only works when quota is reachable, so test the 70% payout before raising it |
| AE, mid-market | Base plus commission with tiers | About 50/50 (one vendor’s guidance) | A tier that starts at 100% adds no pull below quota, so start the first step lower |
| AE, enterprise or long cycle | Base-heavier plan or a draw, with a quarterly quota | Our judgment: base-heavier than one vendor’s 50/50, for the reason in the next column | Lumpy deals can leave a rep with nothing in a quarter |
| Account manager or renewals | Base-heavy with residual commission or a renewal rate | Our judgment: base-heavy | 38% of AEs own renewal and expansion alone or blended, so many AEs carry both jobs |
| New team with no history | A guarantee for about six months, then base plus commission | Our judgment: guaranteed variable during ramp, then 50/50 | The average AE ramp is 6.2 months, but the guarantee length is our judgment |
Managers need their own plan. The Bridge Group’s median OTE for an SDR manager is $146K. Our take: pay the manager on the team’s result, not on one rep’s.
Mixes are the Bridge Group medians (2024 AE, 2025 SDR) where cited; the enterprise and renewal rows rest on one vendor’s guidance and our judgment.
Takeaway: Start from the row that matches your largest role and price its 70% and 130% payout before anything else.
Sales Commission Rates in B2B SaaS and What Counts as a Good Rate
B2B SaaS commission usually lands around 10% of ACV, up to about 12.5%. That is the rule of thumb of one widely read SaaS operator (SaaStr, Oct 2025). Rates in other sectors are in our guide to sales commission rates by industry; this section sticks to the B2B SaaS rate and a test.
The benchmarks land inside that 10% to 12.5% range. In The Bridge Group’s 2024 report, variable pay is 47% of the $190K median OTE, or $89,300. Over the $800K median SaaS AE quota, our calculation gives an implied rate of 11.2%.
What is a good commission rate for sales? One that pays the variable share you intended at quota, given the base, the price and the margin. Ten percent of a $50,000 ACV is $5,000 with a base behind it, while 10% of gross profit on a low-margin sale can be small.
By that test, 10% and 12% can both be good rates.
Common Mistakes and How to Fix Them
Six mistakes can break a sales compensation structure, and each has a fix.
- Quota set above what reps reach: 48% of AEs reached quota in 2026, down from 51% in 2024 (The Bridge Group). Set tiers where about half the team lands. One vendor’s 2025 benchmark found 31% of companies had fewer than half their reps at quota.
- An accelerator that starts at 100%: the reps below quota get no extra pull. Start the first step below quota, as the tiered example does at 50%.
- A cap or cliff: set the cap above a top rep’s likely year, or use a decelerator that lowers the rate instead of stopping pay.
- Rules a rep cannot recompute: CaptivateIQ’s 2026 State of ICM Report is a vendor survey of 200 compensation professionals. In it, nearly two-thirds of organizations had at least one payout error in the past year. The fix is a written method for each rule and a payout statement the rep can recompute, which California requires.
- The wrong mix for the role: a base-heavy plan for a role that needs urgency, or the reverse. Match the mix to the role using the decision table.
- No written clawback rule: write the window and the reversal rule before the first deal, and say whether reversed commission is carried or repaid.
Pick One and Test It on a Real Rep
Base plus commission with tiers fits most B2B SaaS AEs, while SDRs belong on meetings and renewals on residual. Take your current plan, run the last two quarters of closed deals through it, and see what it pays a rep at 130% attainment.
Your own numbers can go into the payout calculator, which covers flat and tiered plans with base included. Would you be comfortable paying that number?
Frequently Asked Questions About Sales Commission
How often should sales commission be paid?
Most companies pay commission monthly or quarterly, commission software vendors say. Monthly payment suits transactional deals, while quarterly settlement fits long enterprise contracts, and consistency matters more than speed. Check your state’s wage law too. California’s labor department says commission-paid car dealership staff must be paid monthly, and earned commissions are due when employment ends.
What happens to commission if a customer cancels?
It depends on the written clawback rule, which must say whether commission is reversed in full, pro-rated by months paid or kept. On a $50,000 ACV deal paid 10%, the commission is $5,000. If the customer cancels on day 60 inside a 90-day window, all $5,000 is reversed. If the plan earns it over 12 months and the customer leaves at month 6, $2,500 is reversed.
Should commission be paid on bookings, ARR or cash collected?
The employer decides when commission is earned: on the sale, on customer payment or on delivery, as California’s commission worksheet lists them. Our judgment: earn it at booking and claw it back if the invoice goes unpaid, or earn it on cash and accept slower pay. For the base, we’d use first-year ACV, because multi-year value is better paid through a multiplier or residual. Write the trigger date into the plan.
How do you prevent commission disputes?
Send a payout statement that shows each calculation step, so the rep can recompute the number instead of taking it on trust. Our judgment: set a fixed window in the plan for raising a payout question, and name who answers it. Give every rep a signed copy of the method for each rule. A rep who can rebuild a payout has little left to dispute.
Can you change a commission plan mid-year?
Yes, going forward: give written notice and a signed new version before the change applies, and leave commission already earned untouched. Our judgment: apply new rates only to deals that close after the notice date. Notice rules vary by state, so ask an employment lawyer before changing quotas or rates on deals already in the pipeline.
How do you test a commission plan before you roll it out?
Run your top and bottom rep through the plan, not the average, because a plan breaks at the edges first. Then price the payout at 70% and 130% attainment with the same-rep table’s method and compare each with what you intended. Last, read the statement as a rep would: can they rebuild every line?
What should a sales commission structure template include?
A sales commission structure template includes quota, on-target earnings, the base-to-variable mix and the rate or trigger. It also holds the payout at 130% attainment, clawback terms and the written method of calculation. Give each item a number rather than an adjective, so a rep can check their own statement. The template is a checklist for the plan document, not a replacement for it.
How should commission work for a new sales team with no history?
Guarantee part of the variable pay during the ramp, and set the first quota from the first two quarters of real data. The Bridge Group’s 2026 research puts the average AE ramp at 6.2 months, which is 52% of the first year. Until real deals close, any quota is an estimate.
How much commission does a salesman make on a $50,000 car?
Usually a share of the dealership’s gross profit on the car, not its price. Consumer and payroll sources put it at roughly 20% to 40% of gross profit, about 25% at low volume. These are secondary estimates with no primary source. As an illustration, $3,000 of gross profit at 25% pays $750, against $12,500 if it were paid on the price.
