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Are your comms paid on MRR rather than annual contract value?

Boss just made claim that agencies and SaaS businesses are no longer paying commission on total annualised contract value, but only rolling comms on actual paid MRR (for up to 12 months)


I wanna call bullshit but gotta check here first


So for us, our average deal is approx 6k per month. Previously if we signed for 12 months that was a 72k deal, with comms paid out incrementally over 5 months.


Now we'll be paid quarterly, for that quarters revenue only, every quarter for the first year. No more clawbacks, nothing is paid in advance of customer paying.


Is anyone still getting paid on full contract value rather than MRR?


💰 Compensation
5
SlinginSoftware
Politicker
+7
Account Executive
I’ve always been ACV, but am going somewhere with MRR. It’s the first time I had heard of that payout structure!
OldDogNewTricks
Opinionated
+5
Sales guy
see thats where i see a flaw - gotta be hard to attract good talent to move from being paid on ACV to MRR. what drew you to make the change?
SlinginSoftware
Politicker
+7
Account Executive
I did it all for the Benjamins…

It has nothing to do with how revenue is counted, it has everything to do with commission structure and quota.

I’m using numbers that are easy to divide, but if my current quota is based on ACV and is 1.2 mill a year, I need to avg 100k a month to hit quota.

This translated to MRR: quota is $8.3k MRR goal per month and 100k MRR goal per year.

The revenue is essentially the same above, just looked at different.

At my last company, my quota was 4.5 mill a year and it was MUCH easier than hitting my current quota of 800k… every thing is relative to how things are structures
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NoSuperhero
Politicker
+7
BDR
I'm in channel sales for UCaaS and CCaaS and yes, the new model is to have partners sell with X amount of times on MRRs depending on deal size and longevity of the contract or commitment.
OldDogNewTricks
Opinionated
+5
Sales guy
thanks @NoSuperhero - just so i can get my head around what you're saying... are comms paid monthly on revenue in? or paid in a lump sum based on longevity of contract? 
NoSuperhero
Politicker
+7
BDR
The specifics I don't remember them right now, but to my understanding we're applying MRRs for our partners, and the X amount of times it receives per month will depend on the seat size and contract/commitment the partner set up with us.

We're a pretty big one, and our hardest competitors apply very similar programs.
Adored
Valued Contributor
+5
Sales Director
I’ve had a similar model before for deals that were billed monthly rather than upfront annually. It’s a bit shit because your commission checks will be that much smaller at the beginning and you can’t really expect huge payouts - but could imagine in 9 months time and after having closed quite a few deals, that even if you have a less than stellar Q it’ll be nice to still have cash flowing in from previous wins. You should ask if it’s different / are there any kickers for closing deals with an annual, upfront payment.
OldDogNewTricks
Opinionated
+5
Sales guy
Yeah you nailed it - its a lean first 6 months or so, then it really compounds and kicks in... We've been through a similar transition in the past where we went from getting a lump sum up front (ie. Paid all of 12 months comms, after client paid month 1 retainer) to our comms being paid over 5 months. 

No kickers for payment up front, but as a service based business (Marketing agency) we rarely if ever get these anyway

So are you paid on ACV up front? What industry are you in?
Adored
Valued Contributor
+5
Sales Director
Ah ok, so that makes sense. I work in SaaS and anytime I’ve billed ACV up front in full, I’ve been paid my commission as one lump sum once payment has been received. In my current business there is also a kicker on this so it’s worth shooting for.
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GDO
Politicker
+7
BDM
I had acv per year. So if I sold 3years. I got my commission payed out over 3years. 
OldDogNewTricks
Opinionated
+5
Sales guy
Paid out over the 3 years - got it. Slower burn in cash flow but would make for sticky staff! 

Cheers @GDO 
4
Average contract value?
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7
ACV:
+31
OldDogNewTricks ,   verbalzzzzzz ,   BCD   and 31 people voted
15
Should the total value of multi-year SaaS deals count towards your current year quota?
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How do clients pay for a multi-year deal?
ak
+56
MinisterOfChaos ,   akap07 ,   desperado   and 56 people voted
9
What kind of base pay can you expect with a 3.5 million dollar annual quota?
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