Should we pay on booked vs invoiced vs collected?

Booked at contract signature is standard. Invoiced or collected models optimize cash but delay commission payment, which frustrates reps. Middle ground: pay on booked with a clawback if the customer cancels within a defined window (typically 90 days).

What about multi-year deals?

Commission on year 1 ACV standard, with a smaller bonus (25-50% of the year-1 rate) on years 2 and 3 committed at signature. Paying full commission on all years upfront over-rewards a single deal and creates uneven pay years.

Do we clawback on churn?

Yes for early churn (typically <90 days from signature), no for later churn (that's a CSM/product issue, not a sales issue). Long clawback windows destroy trust and are almost always negotiated away in the next hiring cycle.

B2B Sales Compensation Plans: AE, SDR, CSM Structures (2026)

Sales comp plans drive behavior more than any pep talk. Complex plans produce complex behavior.

Sales Compensation Design: Simple Plans Beat Clever Ones, Every Time

A sales compensation plan is the strongest behavioral lever a company controls over its sales team. Reps optimize for what they get paid on, faster and more literally than most leaders expect. This means the plan design is a product decision as much as an HR decision — every quirk of the plan produces a matching quirk in rep behavior within 90 days. Simple plans, aligned to a small number of outcomes, produce better sales results than clever plans with many mechanics.

The 50/50 baseline for AEs

Standard structure: 50% base salary, 50% variable at plan (OTE = base × 2). For a $150K base AE: $300K OTE, quota typically 4-6x OTE ($1.2-1.8M in bookings). Variable paid on bookings (ACV or TCV depending on business model), commissioned monthly with true-up quarterly. Accelerators above 100% (typically 1.5-2x commission rate) and above 150% (2-3x rate). Cap: none for AEs — capped commission plans destroy top-performer motivation and violate the ownership contract.

SDR compensation

Typical: $60-80K base, $80-100K OTE, variable paid on qualified meetings held OR pipeline created (not on closed deals — SDRs can't control conversion). Common structure: $200-400 per qualified meeting, plus a bonus for pipeline sourced that converts to closed-won (measured with a 6-month lag). Quota: 8-15 qualified meetings per month depending on segment. Career path: SDR → SR SDR → AE within 18-24 months, otherwise you lose them.

Customer Success Managers

CSM comp splits into two camps: (a) mostly-base ($120-150K base, small $10-30K variable tied to NRR or logo retention) for retention-focused CSMs, (b) sales-like structure ($100-130K base, $150-200K OTE with variable tied to expansion bookings) for expansion-focused CSMs. Mixing the two produces confused behavior. Companies with a stated 'CSMs own expansion' motion should pay CSMs like AEs; companies where AEs own expansion should keep CSMs on retention-weighted comp.

The 'clever plan' trap

Common failure modes: multipliers stacked on multipliers (reps can't predict their paycheck, distrust the plan), quotas that reset frequently (reps sandbag), SPIFs added mid-quarter (reps chase SPIFs and abandon pipeline), MBOs tied to activities (reps game the activity metric), gross-margin-adjusted commissions on complex deals (reps and finance argue every deal). Rule: if a rep can't explain their comp plan on a napkin in 60 seconds, the plan is too complex.

When to change the plan

Once per year, at the start of the fiscal. Communicated 30-60 days before it takes effect. Explained personally to every rep by their manager. Mid-year changes are corrosive — even good ones tell the team that the deal you made with them last year isn't binding. Exception: catastrophic plan design errors (top rep making 300% of quota with unbalanced pay, or bottom-quartile making 90% due to a bug) may warrant mid-year correction, done publicly with a clear rationale.

Frequently asked questions

Should we pay on booked vs invoiced vs collected?: Booked at contract signature is standard. Invoiced or collected models optimize cash but delay commission payment, which frustrates reps. Middle ground: pay on booked with a clawback if the customer cancels within a defined window (typically 90 days).
What about multi-year deals?: Commission on year 1 ACV standard, with a smaller bonus (25-50% of the year-1 rate) on years 2 and 3 committed at signature. Paying full commission on all years upfront over-rewards a single deal and creates uneven pay years.
Do we clawback on churn?: Yes for early churn (typically <90 days from signature), no for later churn (that's a CSM/product issue, not a sales issue). Long clawback windows destroy trust and are almost always negotiated away in the next hiring cycle.

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