yeetmeisterflex

Account Executive

CEO wants to base commissions on payment rather than TCV

Hey all - we just had a big upsell deal come in, and my CEO wants to comp me on the payment that the customer is making, instead of the full TCV. Basically the customer subscription started a month before I joined, and I have it in my employment agreement that I get credit on incremental ACV, and on this customer specifically.

I wasn't able to find any resources backing up my claim that reps are always comped on the full ACV amount upfront, regardless of the payment made to the company based on the remainder of the 12 months in the 1 year subscription.

Is anyone able to provide any resources that can help me convince them that they are in the wrong? I've worked for several startups and this has never been an issue.

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22 comments

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braintank

Politicker

Enterprise Account Executive

I don't follow

yeetmeisterflex

Contributor

Account Executive

The subscription before I came in was 100k. I just closed an upsell for 50k. Now instead of giving me credit for the 50k incremental ACV, he wants to give me only credit for 30k, because the customer is only paying 30k (because they are 1/4 of the way through their initial contract. Basically they want to comp me on what the customer is paying, instead of the ARR. If we carried this logic through, I would get paid like 1% of the deal if the upsell closed a few days before their renewal, since their prorated payment would be very small.

braintank

Politicker

Enterprise Account Executive

Thanks for clarification.
All SaaS orgs I've worked at paid out on annualized ACV (like you're suggesting).

The fact that these people aren't shows they're either (1) dumb (2) trying to screw you.

Probably both, unfortunately.

jefe

Arsonist

🍁

This was so confusing before the clarification. Based on the additional explanation, I agree with tank.

CuriousFox

WR Officer

🦊

I think I'm hungover

Beans

Big Shot

Enterprise Account Executive

Wait are you asking for comp on a customer you didn't close?

yeetmeisterflex

Contributor

Account Executive

I closed the upsell, just asking for comp on the full upsell amount, and not the prorated amount that the customer is paying since they are partially through the annual contract.

Beans

Big Shot

Enterprise Account Executive

Okay that makes perfect sense, yes you should be comped for any increase at your full rate.
Can you share the language in your comp plan?

FinanceEngineer

Politicker

Sr Director, sales and partnerships

So you are saying you want credit from revenue that came in before you started?

yeetmeisterflex

Contributor

Account Executive

No, the revenue before I came in was 100k. I just closed an upsell for 50k. Now instead of giving me credit for the 50k incremental ACV, he wants to give me only credit for 30k, because the customer is only paying 30k (because they are 1/4 of the way through their initial contract. Basically they want to comp me on what the customer is paying, instead of the ARR. If we carried this logic through, I would get paid like 1% of the deal if the upsell closed a few days before their renewal, since their prorated payment would be very small.

yeetmeisterflex

Contributor

Account Executive

The TCV is 150k now

FinanceEngineer

Politicker

Sr Director, sales and partnerships

So the upsell is $30k this year, and another $20k next year?

yeetmeisterflex

Contributor

Account Executive

They are paying 30k because they only have 3/4 of their contract left. Its prorated. The upsell ARR is 50k net new. The CEO wants to comp me on payment, not ARR. Which Ive never heard of before.

FinanceEngineer

Politicker

Sr Director, sales and partnerships

How many years is the contract? If it’s a 1-year contract, that makes a lot of sense.

Diablo

Politicker

Sr. AE

We are paid on what cus pays. I am a bit confused here.

yeetmeisterflex

Contributor

Account Executive

SonnyVaccaro

Good Citizen

Growth Lead

This isn't uncommon, especially from a less mature (especially on the cash flow side) businesses. It's a way of keeping the salesperson from not closing a huge deal that claws-back but the person has already left the company. Now, if I'm a sales leader building a comp plan, I'd keep it in as it incentivizes the behaviors that I want - you always hunting to bring in big deals.

Sunbunny31

Arsonist

Sr Sales Executive 🐰

After your clarification, I understand that you have an annualized ARR amount of $50K but your CEO wants to pay you the $30K that the customer will pay (the prorated amount).
Question: Is the customer going to renew on the anniversary date, or is there a chance they won't?
Other question: Will your CEO give you the comp $20K for the rest of the ARR upon renewal/when the remainder is paid?

yeetmeisterflex

Contributor

Account Executive

That's what I don't know yet. There's no way this customer doesn't renew, they are ramping and only have deployed around half of what they plan to within the year. I'm not sure if he plans to comp the other 20k later on. It's just so weird I wanted to get the reaction of the community to see if I was off base and to have ammo for when I argue this.

Sunbunny31

Arsonist

Sr Sales Executive 🐰

I would push for the $20K upon renewal. I can see where the CEO is coming from - if it's an annual contract and there's any chance at all it doesn't renew, then you'd be getting paid on $20K that evaporated. So that should come to you once the next year is signed.

GDO

Politicker

BDM

Isn't it normal how much get paid is linked to what the customer pays?

FoodForSales

Politicker

they are paying you on a deal you didn't close?