Companies confident in the math behind quotas and targets.
Commission with Accelerators
This tiered commission structure works great when you’re looking to reward over performance. One of the few downsides is that it can be expensive to pay out if everyone on your team over performs.
When to use this plan?
Why use a Commission with Accelerators plan?
Rewards overperformance and is most commonly adopted by SaaS companies.
Customize the Commission with Accelerators Plan
Like this plan? Sign up for QuotaPath for free to add your business inputs and adjust the variables.
Forecast earnings & plan performance
See potential earnings based on your inputs and goal attainment progress.
Check the health of your Quota:OTE ratio
Use the calculator to quickly measure how realistic, attainable, and healthy your OTE to quota ratio is.
Streamline plan management
Assign the plan to your team and automate sales commission calculations. Be confident your team is being paid fairly and accurately.
How to adjust this compensation plan template
To customize this plan, you will input these 7 variables.
On-Target Earnings (OTE)
OTE combines base salary with variable pay and represents the total amount of money your reps can expect to earn if they hit 100% of quota.
Pay Mix
Refers to the percentage of a salesperson’s total compensation, made up of base salary, commission, and other incentives. The most common pay mix in SaaS is 50/50.
Company Revenue
Revenue is the total amount of income that a company generates from its primary operations. In SaaS, annual recurring revenue is one of the most important metrics.
Quota:OTE Ratio
This ratio quantifies how much larger a quota is to a sales rep’s OTE. The most common multiplier in SaaS is a quota 5x that of the OTE, but this will vary based on size and stage of the company.
Annualized Quota
An annualized quota is a sales goal that is set for a year
Average Contract Value
Often abbreviated to ACV, this number represents the average deal size that your company sells.
Quota Period
Your quota period sets the frequency at which your team’s quota resets. In SaaS, the most common quota period is quarterly. However, this number will vary based on your sales cycle.
What should my accelerator multiplier be?
This plan features a 1.5x multiplier rate, meaning that the commission rate above quota is 1.5 times the base rate below quota. The multiplier depends on how much you want to incentivize your reps overachieving. An overly generous multiplier (ex. 3x) can create lumpiness in attainment, meaning one quarter a rep hits 200%, then the following they hit 50%. If you’re hoping for more consistency across quota periods, a lower multiplier (ex. 1.25x) might be right for you.
Should my accelerator be retroactive to the previous tier?
This plan features accelerators that do not apply to the previous tiers. There are two different types of accelerators: those that apply to previous tiers and those that do not apply to previous tiers. If an accelerator applies to previous tiers that means that all revenue closed within the quota period will earn that higher commission rate once that rate is achieved. On the other hand, if an accelerator does not apply to previous tiers that means only the revenue beyond the accelerator threshold earn the higher commission rate.
How many accelerator tiers should I have?
This plan features only 2 tiers: the base rate until quota is achieved and an accelerated rate. Most plans that have accelerators feature 2 to 4 tiers. Any more than 4 tiers can become difficult for reps to remember which starts to lose the effect they were designed to have.
What is an accelerator in sales?
An accelerator rewards reps with a higher commission rate once they’ve passed a percentage toward quota attainment, deal size, or total amount of sales in a month or quarter. You may also hear accelerators referred to as multiple rate commissions.
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Are accelerators necessary?
We think so! Accelerators (and decelerators) are designed to reward overachievement of quota and motivate sales reps. This comp plan mechanic is one of the most common (80% of comp plans use accelerators), and they’re very well understood by sales reps. If you’re hoping to see a lot of reps overachieve, it’s recommended to include accelerators.
Is this plan too complex?
It’s more complex than the Single Rate Commission plan but the payoff is worth it when you have reps continuously striving for above quota. Plus, using a compensation management software like QuotaPath makes it easier to automatically track and calculate accelerators and gives reps visibility into how close they are to hitting it.
In addition to accelerators, what are some other sales compensation best practices?
Make sure you have your business objectives solidified prior to designing or adjusting the commission plan. Then you can build the sales commission structure to steer selling behavior that aligns with those business goals. Other tips include setting fair and realistic quotes (you can use our free Quota:OTE Ratio Calculator to help), communicate plans in a timely manner, and aim for simplicity.
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Commission with Accelerators & Decelerators
This comp plan works best when you’re very confident in your targets. But, if you see a lot of variability or seasonality between quota periods, like ecommerce, this won’t work as well.
Multiple Rate Bonus (Revenue)
Good for high seasonality businesses.
Commission with Accelerators & Milestone Bonus
If you’re looking to incentivize consistency and have higher velocities of sales, then this is the plan for you.
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