ColdCallPro profile picture
ColdCallPro profile picture

ColdCallPro

Account Executive

Valued Contributor
Opinionated
Fire Starter
+2

Curious about your commission

Sold a deal that has built in scaling. 
Starts at 50k year one and will scale to 100k year two. 

My commission structure doesn't have anything built in to pay out for the second year. 
I am only getting paid 10% of the year one, 50k.

Curious if anyone has faced this or how their company pays out for multi year deals or deals with built in scaling. 
🧠 Advice
🍾 Commission
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26 comments

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TennisandSales
Politicker
4
Head Of Sales
this is super common. and it really depends on the company.

One org i was at paid out a percentage of the ARR, and if it was a 2 year deal, the percentage increased over all.

So if the $100K for one year, they got 10%
if it was $100k for 2 years then it would be 14% (idk the exact percentages but you get the point)
antiASKHOLE
Tycoon
2
Bravado's Resident Asshole
I'm confused and would be sus of this honestly. But that's me being ignorant.
Sunbunny31
Politicker
2
Sr Sales Executive 🐰
A lot of tech companies look at ARR as the basis for comp on SaaS or subscription deals. Whether it's year 1 or the out year on a multi-year, the ARR is the number. Others will also add on a % for multiyear, so you get full comp for ARR + some additional % for multiyear deals.

If there are out clauses or term for convenience (which honestly shouldn't be a thing for any SaaS deal), then the comp can get completely hosed - how can the company pay you on an amount that could never happen?

Anyway, all of this is very common.
SADNESSLieutenant
Politicker
1
Officer of ♥️
+1
Maximas
Tycoon
1
Senior Sales Executive
I second this.
punishedlad
Tycoon
3
Business Development Team Lead
Not uncommon at all. First year ARR is a pretty standard arrangement.

Now if you want to talk bullsh**, I used to work for a company that paid out commission on the first month's BILLING CYCLE and then didn't pay out again until the 6 and 12 month billing cycles.
Sunbunny31
Politicker
3
Sr Sales Executive 🐰
Oof, that’s bad.
BlueJays2591
Politicker
1
Federal Business Dev Director
Wow that's ridiculous
punishedlad
Tycoon
1
Business Development Team Lead
And also why I don't work there anymore.
BlueJays2591
Politicker
1
Federal Business Dev Director
What were you selling?
punishedlad
Tycoon
0
Business Development Team Lead
A Cloud Optimization solution. Pretty good product, absolutely terrible CRO. I learned that he got canned pretty recently, actually.
IndianaShep
Politicker
1
Director of Sales and Marketing
Ouch.
Diablo
Politicker
3
Sr. AE
We get paid only for year 1 unless you sign multi year with upfront payment for renewal terms.
Sunbunny31
Politicker
3
Sr Sales Executive 🐰
Right, so it’s on you and your manager to find a way to maximize your comp structure. If you’re only comped on ARR for year 1, but need to scale - you set up the agreement so that they get all the capacity they need from the jump but pay a blended rate and/or you provide a discount to cover it. In your scenario, you could conceivably structure a $75/$75 2 year deal and come out ahead, for example.

Your comp team should be structuring commissions to incentivize the behavior they want to see, so you’d think they’d financially reward you for building growth into a multi year deal, but if they aren’t, then it’s up to you to be creative.
Pachacuti
Politicker
3
They call me Daddy, Sales Daddy
Many SaaS companies don't account for growth in the account and often turn it over to AM's who are incentivized on the account growth. Sucks for the guy who originally sells it.
CuriousFox
WR Officer
3
🦊
Yeah hunters can get screwed. If you want the gainz you gonna have to be an AM a lot of places.
BlueJays2591
Politicker
1
Federal Business Dev Director
Which is backwards in my opinion
coletrain
Politicker
2
Account Executive
That is pretty common, if subsequent years are paid upfront then that does get paid out but much less overall.
Kosta_Konfucius
Politicker
1
Sales Rep
Pretty common, I get the first year ARR not TCV
BlueJays2591
Politicker
1
Federal Business Dev Director
It's not uncommon. Not a fan of the structure though. I've seen tiered commission for the first year and it tapers off for year 2 and 3. That's the best case scenario but not the most common unfortunately
FinanceEngineer
Politicker
1
Sr Director, sales and partnerships
If it’s a multi-year deal, it is based on average annual rev, and there are 25-50% increase in total commission based on the number of years.

Everything past that, it is split with customer success
activity
Politicker
0
VP, Business Development
A lot of orgs will have a renewal commission that is paid out at a lower percentage. I would go to my boss and fight for that at least.
IYNFYL
Politicker
0
Enterprise SaaS AE
All of my sales history you were only paid on year one unless you were in an Account Manager role.
ChickenDinner
Politicker
0
Account Executive
our AE's get paid for first year ACV and renewals go more to the CSM for bonuses
Anker
Opinionated
0
SAE (Senior Account Executive)
Not familiar with tiered pricing in my industry. We get straight percentage of TCV. Typical contract term is 3 years.
Lambda
Tycoon
0
Sales Consultant
totall ARR is what I would get paid out on

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