This example account executive plan pays a 10% base rate on new-business contract value up to quota, 15% between 100% and 150% of quota, and 20% beyond, with no cap and a clawback on early cancellations. It is a complete, internally consistent design you can adapt. To run it on your own figures, enter the same rates and tiers in the sales commission calculator.
All figures are illustrative and chosen for easy arithmetic. They are not salary benchmarks or recommendations.
The role
A full-cycle account executive who sources part of their own pipeline, receives meetings from SDRs, runs the sales process and closes new-business contracts in a defined territory. Renewals and expansion belong to account management, so they are outside this plan.
Measures
One measure: first-year annual contract value (ACV) of closed-won new business, credited at signature. One measure keeps the plan easy to read and easy to calculate. Definitions written into the plan:
- Multi-year contracts are credited on first-year ACV only.
- Services and one-time fees are excluded.
- A deal is credited to the AE who owns the account in the CRM at signature; splits follow the written split policy.
Pay mix and OTE
| Component | Amount |
|---|---|
| Base salary | $80,000 |
| Variable at target | $80,000 |
| OTE | $160,000 |
| Pay mix | 50/50 |
The equal split is a choice for this illustration: the AE closes deals directly, so a large share of pay moves with results. It is not a claim about what AEs are paid in your market.
Quota and base rate
Annual quota: $800,000 of new-business ACV. Quota is 5× OTE and 10× variable pay, which you can check in the quota-to-OTE ratio calculator.
Base rate = variable target ÷ quota = $80,000 ÷ $800,000 = 10%.
Tiers and accelerators
| Band (share of quota) | Bookings in band | Rate |
|---|---|---|
| 0–100% | $0 to $800,000 | 10% |
| 100–150% | $800,000 to $1,200,000 | 15% (1.5×) |
| Above 150% | Above $1,200,000 | 20% (2×) |
The tiers are marginal: each rate applies only to bookings inside its band, so there is no cliff. There is no threshold, so the plan pays from the first dollar. Try other bands in the accelerator calculator.
Worked payouts
| Attainment | Bookings | Commission calculation | Variable pay | Total cash (with $80,000 base) |
|---|---|---|---|---|
| 50% | $400,000 | $400,000 × 10% | $40,000 | $120,000 |
| 100% | $800,000 | $800,000 × 10% | $80,000 | $160,000 |
| 150% | $1,200,000 | $80,000 + ($400,000 × 15% = $60,000) | $140,000 | $220,000 |
At 150% of quota, variable pay is 175% of the variable target ($140,000 ÷ $80,000), because the last $400,000 of bookings pays one and a half times the base rate.
Clawback
If a customer cancels or fails to pay within the first 12 months, the commission on the unearned part of the contract is recovered from future commission:
recovered = original commission × months not served ÷ 12
Example: a $60,000 ACV deal paid $6,000 at 10%. The customer cancels after 3 months. Recovered: $6,000 × 9 ÷ 12 = $4,500, deducted from the next statements. Model other cases in the commission clawback calculator, and see the clawback policy guide for the clauses to write down.
Payment timing and other rules
- Commission is calculated monthly and paid in the following payroll cycle.
- Tiers are measured on year-to-date bookings, so accelerators apply from the deal that crosses 100%.
- A new hire receives a ramped quota for the first months; size it with the sales ramp calculator.
- Plan changes apply from the start of a period and are announced in writing.
Why these design choices
- No threshold. The plan pays from the first dollar because the quota is set to be achievable and the base salary already covers the floor. If your quota is aggressive or the role has a long ramp, a threshold at 40% or 50% of quota would stop paying full rate on very low results; the pay curve calculator shows the effect.
- Marginal, not retroactive, tiers. Retroactive tiers would re-price every dollar when the AE crosses 100%, creating a large jump for a single deal and a strong incentive to time bookings around the threshold. Marginal bands avoid both.
- A second accelerator above 150%. It keeps top performers selling in the last quarter instead of pushing deals into the next year. The cost is real, so check it on your attainment history before keeping it.
- First-year ACV only. Paying on total contract value would reward long terms at full rate for revenue not yet delivered. If you want to encourage multi-year deals, add a small kicker on committed later years instead; the SaaS commission calculator models it.
Variations to consider
If discounting is a concern, pay part of the variable on gross margin rather than revenue, or reduce the rate on deals above a set discount. If the AE also manages a book of existing customers, add a separate, lower rate on expansion rather than mixing it into the new-business quota. Each variation adds a line to the statement, so add one only if it changes behavior you care about.
What to check before using it
- Is $800,000 achievable in the territory? Compare it with pipeline and win rates using the pipeline coverage calculator.
- What does the whole team cost on a realistic attainment spread? Run it in the commission plan simulator.
- How do commissions hit the income statement? If you capitalize them, read the ASC 606 commissions guide.
For other roles, return to the plan examples by role.
Key takeaways
- One clearly defined measure (first-year new-business ACV) keeps the plan auditable.
- Base rate = variable target ÷ quota: here $80,000 ÷ $800,000 = 10%.
- Marginal accelerators (1.5×, then 2×) reward overperformance without cliffs.
- At 50/100/150% of quota, this plan pays $40,000 / $80,000 / $140,000 of variable.
- A written, pro-rata clawback protects against early cancellations.
Frequently asked questions
Is a 50/50 pay mix right for account executives?
It is the split used in this illustration because it makes the arithmetic easy, not a recommendation. The right mix depends on how much the AE controls the outcome, the length of the sales cycle and your budget. Check any benchmark you rely on for its source and date.
Why does this plan have no cap?
Because a cap removes the incentive to keep selling once it binds and can push reps to delay deals into the next period. Some companies prefer a cap for cost certainty; if you add one, check where it starts to bind with the commission cap calculator.
When is commission earned in this example?
At booking (signed contract), with the clawback covering early cancellation. Some plans earn commission at invoice or at cash collection instead, which reduces the need for clawbacks but delays pay. Whatever you choose, state it in the plan document.
How should a new AE be handled under this plan?
With a ramped quota for the first months rather than a different plan. The sales ramp calculator shows the ramped quota month by month and what any guarantee costs.