HeyJustFollowingUp

Enterprise Sales Manager

Comp on Multi-Year Deal

I know typical practice is to comp on ACV with potential higher commission if the rep signs a 2 or 3 year deal. However, my company's deals are 2 years minimum, we don't do 1 year deals. Should I still comp the rep only for the first year or for both years? Should I pay the commission to the reps up front, or make them wait a year to get the commission for year 2?

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GlenRoss

Politicker

Account Executive

I think they should be compensated for total revenue brought in. If it’s 100k ACV but 200k TCV then they should get paid off the 200k. That being said because it’s your standard it doesn’t need to be equivalent to other companies 2 year deals but should be a better percentage than a typical 1 year deal IMO

CuriousFox

WR Officer

🦊

This seems too easy Glen 🤣

SaaSguy

Tycoon

Account Executive

If you only do two year deals then they get a normal payout for 2 years if they do 3 or more years they get a higher percentage upfront. Do not make reps wait a year for commission thats just wrong. Its your account managers and support team to make sure they stick around for their contract terms not the sales rep.

HeyJustFollowingUp

Member

Enterprise Sales Manager

Agreed. Could potentially do 90% commission if they somehow get backed into a 1 year deal.

Diablo

Politicker

Sr. AE

As a sales rep we hustle everyday to add $ to the topline. It makes sense to expect commish for every dollars we bring to the company (even if its a monthly deal).

GDO

Politicker

BDM

Yeah my previous org let the reps wait. It s a horrible practise. Pay them a % for 2 years and a higher % for 3 years

TheNegotiator

Arsonist

VP of Sales

Depends on the size of the deal.

The previous sales team I managed was comped on a per-unit basis. The units were sold high-volume, low-value on a 2-year contract.

Commission paid up front, so naturally the company was “taking a loss” until subscription revenue caught up.

But the dollar figures were relatively low enough that it didn’t matter.

Now I sell enterprise deals to the F500. Contracts are 2-5 years and TCV can be upward of 5M. There’s no universe I’m going to get paid it all upfront.

Depends on the deal imo.

HeyJustFollowingUp

Member

Enterprise Sales Manager

Makes sense. Deal size for us is $50m/yr so $100k TCV

TheNegotiator

Arsonist

VP of Sales

Sweet holy fuck. I’m assuming you meant 100M TCV? That’s wild.

Idk, I suppose revenue aligns with the scale of these contracts. So if TCV is only 2X ACV, maybe pay commish up front?

HeyJustFollowingUp

Member

Enterprise Sales Manager

Sorry meant 50k/yr, 100k TCV

LordBusiness

Politicker

Chief Revenue Officer

They should be compensated for the full amount they sold, and they should paid when the deal invoices. If it invoices in full up front for the 2 year commit, they get paid on the in full, if it invoices monthly, bi-annually, whatever - they should be compensated then.

HeyJustFollowingUp

Member

Enterprise Sales Manager

Makes sense! If 2 year deals are standard, but the rep ends up being forced to sign a 1 year deal, would you keep the same commission % or lower it?

TheOverTaker

Politicker

Senior Account Executive

Always love that commission when the deal is done

FinanceEngineer

Politicker

Sr Director, sales and partnerships

Yeah, it's extra comp if they do longer than the current min. For me, it's a 25% increase of the Average ACV over the contract period, so we get credit for and backloading or step-ups.

NoSuperhero

Politicker

-1

BDR LEAD

IMHO, this could be done on a quarterly basis. If we're looking at the deals closed and revenue brought in you can compensate us (SDRs) with an extra bonus, it could be a set percentage or just $50 dollars per opportunity closed type of thing. IDK you could get creative with this type of thing.

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HeyJustFollowingUp

Comp on Multi-Year Deal

15 comments

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