Guides · sourced · linked to the tools
Sales compensation guides
Short, practical explanations — each one linked to the calculator that applies it.
Concepts
OTE, SPIFFs, quotas and the vocabulary of variable pay.
- What is OTE in sales? Meaning and how it works OTE (on-target earnings) is base salary plus variable pay at 100% of quota. How it is calculated, how pay mix works, and what OTE does not tell you. Read →
- What is a SPIFF in sales? A SPIFF is a short-term sales incentive paid on top of the regular plan. How it differs from commission and bonus, how to design one and how to measure its ROI. Read →
- What is a sales quota? A sales quota is the target a rep or team must reach in a period. Quota types, top-down and bottom-up setting, over-assignment, ramped quotas and attainment. Read →
- What is incentive compensation management (ICM)? Incentive compensation management (ICM) is the process and software that design, calculate, pay and report variable pay. What it does, ICM vs SPM, and when to adopt it. Read →
Plan design
Structures, tiers and how to build a compensation plan.
- Sales commission structures, explained with examples Flat rates, marginal and retroactive tiers, accelerators, caps, margin-based pay, splits, draws, SPIFFs and more: how each structure works, with a worked example. Read →
- How to design a sales compensation plan A practical method to build a sales compensation plan: roles, pay mix, OTE, quota, measures, mechanics, governance, the plan document, testing and review. Read →
Plans by role
Example compensation plans for each sales role.
- Sales compensation plan examples by role Illustrative compensation plans for account executives, SDRs and sales managers, with measures, mechanics and worked payouts, plus notes on AM and CSM roles. Read →
- Account executive compensation plan example An illustrative AE compensation plan: measures, pay mix, quota, accelerators and clawback, with payouts at 50%, 100% and 150% of quota calculated step by step. Read →
- SDR and BDR compensation plan example An illustrative SDR/BDR compensation plan paid on meetings held and sourced pipeline, with monthly payouts at 50% to 200% of target and the pitfalls to avoid. Read →
- Sales manager compensation plan example An illustrative first-line sales manager plan: team quota roll-up, an override on team revenue versus a team-attainment bonus, with payouts worked by hand. Read →
Policies & accounting
Clawbacks, draws, mid-year changes and ASC 606.
- How to write a commission clawback policy How a sales commission clawback works: full, prorated and protection-period methods, the clauses a written policy should define, and how to communicate it to reps. Read →
- Draw against commission: how it works A draw against commission advances pay before commission is earned. Recoverable vs non-recoverable draws, how the deficit works, ramp use and legal risks. Read →
- ASC 606 and sales commissions: capitalization and amortization How ASC 340-40 treats sales commissions: which costs are incremental, capitalization, amortization, the one-year practical expedient and commensurate renewals. Read →
Buying software
When and how to choose commission software.