If your sales team is the engine driving your company’s growth, then your compensation plan is the fuel that keeps it moving.
Get the fuel right, and your reps will stay motivated, close more deals, and stick around longer.
Get it wrong? You’ll be facing frustration, high turnover, and a serious hit to your bottom line.
Whether you’re building your first sales team or rethinking an old comp plan, creating the right structure is one of the most important moves you'll make.
It’s not just about how much you pay — it’s about rewarding the right behaviors, attracting top talent, and setting your team (and company) up for long-term success.
By the time you finish reading, you'll have a clear roadmap for designing, implementing, and optimizing a sales compensation plan that works for your unique business objectives, sales cycle, and team structure.
Ready to create a compensation strategy that actually motivates your sales reps and drives results?
Let's dive in.
Every successful sales compensation plan combines several key elements that work together to motivate your sales team while aligning with your business goals. Understanding these fundamentals is essential before you can build the right structure for your organization.
Base salary is the steady paycheck your reps can count on, no matter how their month goes.
It gives them breathing room to focus on real customer relationships — not just quick closes.
A good base salary:
Commissions are the "you eat what you kill" part of the plan. They link effort directly to earnings.
Done right, commissions:
Types of commission structures you might consider:
Learn how to calculate sales commissions the right way for each model.
Bonuses reward specific achievements that matter to your company’s bigger goals.
They’re perfect for:
Effective bonuses are clearly defined, substantial enough to motivate action, and directly tied to measurable outcomes that support your organization's goals.
Not sure whether to use bonuses or commissions in your plan?
Learn the difference and strategic use cases in this guide on bonus pay vs commission.
SPIFFs (Sales Performance Incentive Funds) are short-term contests or rewards. They’re like little rocket boosters for your sales numbers when you need a quick push.
Use SPIFFs to:
Best SPIFFs are simple, time-bound, and exciting enough to make reps jump in.
Want reps to think like owners? Give them a real stake.
Equity options or profit sharing can:
Especially for startups or fast-growth companies, offering a slice of the bigger pie can be a game-changer.
The ideal sales compensation plan balances these components according to your specific business needs, sales cycle, and team composition.
Especially if you’re a SaaS business.
Here’s a practical deep dive into how to build a SaaS sales compensation plan from scratch.
Now that you know the pieces, let’s talk about how to actually put them together. There’s no one-size-fits-all structure — your best setup depends on your industry, sales cycle, deal size, and goals.
Here’s a breakdown of popular structures (and when to use them):
A straight salary plan provides maximum stability but may limit motivation for exceptional performance. Companies using this structure often incorporate non-financial recognition programs to drive performance.
Commission-only plans create powerful incentives for performance but can lead to high stress and turnover if market conditions change. They typically require higher commission rates to compensate for the lack of base salary.
This popular structure provides financial security while still rewarding top performers. The ratio between base and commission can be adjusted based on your specific needs—higher base for complex sales, higher commission for more transactional environments.
You can tweak the mix based on deal complexity.
(E.g., bigger base for tough enterprise sales; bigger commissions for quick transactional deals.)
Tiered commission structures reward high achievers while maintaining reasonable compensation costs at standard performance levels. They create natural incentives for sales reps to push beyond comfortable targets.
In short:
It’s a natural way to push reps past "good enough" into "great."
This approach provides income stability while maintaining the motivational aspects of commission-based pay. Draws can be recoverable (must be paid back) or non-recoverable (essentially a minimum guarantee).
Draws can be "recoverable" (you owe it back) or "non-recoverable" (free money if you miss targets — nice!).
Profit-based commissions encourage sales reps to consider the company's bottom line, not just closing the deal at any cost. This structure often leads to healthier client relationships and more sustainable business practices.
Encourages reps to sell smart, not just sell more.
Many successful organizations combine elements from multiple structures to address their specific requirements.
Most companies mix and match. You might use:
The ideal structure aligns with both your business objectives and the motivational needs of your sales team.
For inspiration, explore 10 proven SaaS sales commission structures used by high-performing teams.
A well-designed sales compensation plan does more than just pay your team—it strategically influences behavior, motivates peak performance, and aligns individual efforts with company objectives.
Follow these essential principles to create a plan that truly works. A good sales compensation plan does more than just cut paychecks. It shapes behavior, boosts motivation, and ties your sales team's daily grind to your company’s biggest goals.
Here’s how to design a plan that truly delivers.
Before you touch spreadsheets or commission rates, lock in what you want your sales team to achieve.
Align your comp plan with goals like:
If your comp plan doesn't support your business goals, it’s just noise.
Complicated plans kill motivation. If your reps need a calculator and a decoder ring to figure out their commission, you’ve already lost.
Keep it clean:
A clear, transparent plan builds trust with your team and maximizes the motivational impact of your compensation structure.
Here’s how to avoid sales commission overpayments and set up effective clawbacks.
Individual sales are great. But real company growth often comes from collaboration — sharing leads, co-selling, and helping each other succeed.
Good plans balance:
You want healthy competition, not cutthroat chaos.
Your sales team isn’t operating in a vacuum. They know what they could earn elsewhere.
Make sure your plan:
Fairness isn’t just about being nice — it’s about attracting and keeping the best sales talent.
Markets shift. Products evolve. Sales cycles change. Your comp plan needs to flex, but not in a way that feels sneaky.
Smart flexibility means:
Keep the core of the plan stable. Use flexibility like seasoning — not the main ingredient.
Don’t just “set it and forget it.” Great comp plans are living systems. They evolve with input from the people actually living them every day.
Best practices:
Small tweaks based on real feedback can save you from big problems down the road.
Money’s great. Recognition is magical.
Add layers of celebration:
When you pair financial rewards with visible, public recognition, the motivation sticks longer.
Recognition amplifies the impact of your financial incentives while building a positive, achievement-oriented culture.
Discover more ways on how to motivate and incentivize your sales team.
One-size-fits-all doesn't work when it comes to sales compensation plans. Different sales roles (like SDRs, AEs, and Sales Managers) have different jobs — and they need different kinds of fuel to perform their best.
Here’s how to design role-specific compensation plans that actually drive results.
SDRs are your front-line warriors. They prospect, qualify leads, and keep the sales pipeline full.
What their sales compensation plan should look like:
Key metrics to track:
Since SDR work is high-activity and short-cycle, variable pay should hit frequently — even monthly — to keep energy high.
AEs are your deal-closers. Their compensation plan should reward both closing new deals and growing accounts.
Typical structure:
Focus on metrics like:
For top performers, adding stock options or special bonuses can seriously boost motivation and retention.
Sales Managers lead the sales teams and carry responsibility for the entire group’s success. Their compensation plan should focus less on their own selling and more on the team’s results.
Structure ideas:
Key performance indicators:
Strong sales leaders need a plan that rewards building top sales talent, not just hitting short-term numbers.
CSMs are the secret weapon for protecting your bottom line. Their job is keeping customers happy, renewing, and growing over time.
Best practices for CSM compensation plans:
Focus on sales performance that measures relationship-building, not just revenue.
For partners selling your solution, you need an incentive plan that makes them prioritize your product over others.
Structure to consider:
Make sure the commission structure is simple, transparent, and competitive — otherwise, partners will drift elsewhere.
When implementing role-specific compensation plans:
By tailoring your compensation approach to each specific sales role, you create a cohesive system that drives appropriate behaviors throughout your revenue organization.
A brilliant sales compensation plan can still flop if you fumble the rollout. How you launch it determines whether your sales reps feel energized — or suspicious.
Here’s how to nail your implementation.
Start with why.
Explain how the new compensation plan supports your company’s goals and benefits the sales team.
Be crystal clear on how reps earn, when they earn, and what specific actions drive their payout.
Best practices:
Transparency = trust. And trust = faster adoption.
Timing can make or break your rollout.
Best times to launch:
Avoid surprises during peak selling periods. Give at least a few weeks' notice to help team members understand and prepare.
Even simple sales compensation plans need training.
How to do it right:
Your sales force shouldn’t waste energy guessing how they get paid. Training builds confidence, and confident reps close deals faster.
The right technology infrastructure makes your compensation plan transparent and trustworthy:
Still using spreadsheets?
Here's why replacing Excel for sales commission tracking is worth the switch.
When your team trusts the systems tracking their performance and calculating their compensation, they can focus their energy on selling rather than scorekeeping.
Even the best sales compensation planning sparks a few grumbles. Some reps might fear losing money, missing bonuses, or getting squeezed on commission payments.
Prepare for it:
People don’t resist change — they resist losing. Show them how they can win under the new system.
Don’t set the plan and forget it. The first 30, 60, and 90 days tell you a lot.
Watch for:
If something's off, adjust your plan design fast — before it drags down the quarter.
Last but not least: paperwork.
To protect both your company and your reps:
Solid documentation = fewer headaches later.
Learn how the DocuSign Visdum integration for sales commission streamlines the process.
Good documentation prevents misunderstandings and provides critical reference points for resolving questions or disputes.
If you’re accounting for variable comp, understanding ASC 606 sales commissions is essential.
Even seasoned sales leaders can trip up when building or managing sales compensation plans.
And a few wrong moves can crush motivation, cause high turnover, and hit your bottom line hard.
Let’s walk through the biggest pitfalls — and how you can avoid them.
If your comp plan feels like it needs a lawyer to explain, it’s already in trouble.
Signs your sales compensation structure is too messy:
If your reps are doing the wrong things — it’s often the comp plan’s fault.
Common misfires:
Nothing kills a team's spirit faster than impossible sales quotas.
Watch out for:
Your sales organization knows what’s working — and what’s not.
Ignoring feedback leads to:
The market won’t stay still — and neither should your sales compensation plans.
Risks if you don't adapt:
Lack of transparency kills motivation faster than a bad boss.
If reps don’t trust how their commission payments are calculated, they’ll:
Once your sales compensation plan is stable, it’s time to level up. The best sales leaders don’t just manage — they optimize.
Here’s how to push your compensation strategy into serious performance territory.
Accelerators reward reps for smashing targets. Decelerators protect you from overpaying when deals get too easy or margins get squeezed.
How to set them up:
Quota mistakes destroy trust fast. Smart quota-setting = motivated reps + predictable revenue.
Pro tips:
Remember: quotas should be tough but fair — achievable by at least 65% of your sales force.
Revenue’s important. But it’s not the whole story. Top-performing sales organizations measure:
Multi-dimensional measurement builds healthier selling habits over time.
Your top talent deserves to feel special. Ways to celebrate your high flyers:
Recognizing high performers doesn’t just retain them — it inspires everyone else too.
It’s not always about the dollar signs. Smart incentive plans add:
Non-monetary rewards create emotional loyalty — something cash alone can’t buy.
Move beyond gut feeling. Let data shape your sales compensation planning.
Use analytics to:
When you make data-driven tweaks, you get smarter faster — and your company’s goals stay on track.
It’s not just about motivating reps. It’s about running a sustainable business.
Tips to keep costs under control:
Smart cost management keeps your sales compensation plans powerful — without bleeding your profits dry.
Crafting a winning sales compensation plan isn’t a one-and-done project. It’s a living system — one that grows and adapts as your team, your market, and your business goals evolve.
The most successful sales organizations treat their compensation plans like a product: They test, refine, gather feedback, and constantly look for ways to improve.
Here’s your path forward:
Each small improvement strengthens your engine — driving more deals, better talent retention, and sustainable growth.
Want to sharpen your sales compensation planning even further?
Here’s what you can do starting today:
Even tiny tweaks can have a massive impact over time.
At the end of the day, your sales compensation plan should do three things:
When that happens, you’re not just paying your sales reps — you’re building a machine for long-term success.
Your sales team powers your revenue.
Your compensation plan powers your sales team.
Make it count.
Visdum isn’t just built for tracking commissions. It’s built for alignment—between your GTM strategy, your finance team, and the people closing revenue every day.
If you're tired of Excel chaos, payout disputes, or shadow accounting, it's time to upgrade to a platform designed for modern SaaS comp complexity.
✅ Real-time dashboards
✅ ASC 606 compliance
✅ Scenario modeling
✅ Seamless CRM integration
Let’s show you what great looks like.
👉 Book a Demo and start building a comp engine you can trust.
The best sales compensation plan balances base salary and performance incentives, motivating reps while aligning with business goals. Popular structures include salary plus commission, tiered commissions, and profit-margin-based commissions depending on your sales model.
The three main sales compensation methods are straight salary, commission only, and salary plus commission. Each method suits different sales environments based on deal complexity, sales cycle length, and desired performance incentives.
A sales compensation plan outlines how sales reps are paid based on performance. It combines base salary, commissions, bonuses, and other incentives to drive specific behaviors that align with the company’s overall business goals.
In sales, a 60/40 split means 60% of a rep’s total compensation is fixed base salary, while 40% is variable pay like commissions. This structure offers financial stability with strong motivation to exceed sales targets.
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