thebatman

Strategic Partnerships

Good Citizen

Contributor

Fire Starter

How do you feel about commission caps?

I feel like I always post about my commission here but I don't really know who to talk to about it.

My commission has changed quite a few times over the past few months and now the final plan includes a commission cap.

Basically I can only bring home 8K a quarter in commission.

Which is frustrating because Q1 I made the company over 130K in ARR for the company which if I was getting paid on all of it I should be bringing home a 16K commission check. Plus that ARR is almost double my yearly quota

Do any of you have caps? Are they frustrating to you? Am I just being too critical?

🍾 Commission

41 comment

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FoodForSales

Politicker

Caps are awesome! Sales people should completely embrace everything which limits how much $$ they can make. Its all about the company and what Sr Mngt makes, not the sales person who grinds away to make the sale. You should be grateful they are thinking about your overall well being by providing you a way to make less money.

Kosta_Konfucius

Politicker

ERP Sales

Did my boss write this

Pachacuti

Politicker

They call me Daddy, Sales Daddy

Funny

CuriousFox

WR Officer

🦊

Omg excellent satire 🤣

thebatman

Good Citizen

Strategic Partnerships

You have shown me the error of my ways

slaydie

Big Shot

Account Executive

this got me at first, I was like ohh interesting, I'm going to learn a different perspective hahaha.

thebatman

Good Citizen

Strategic Partnerships

First time?!

LambyCorn

Arsonist

A mfkn E

its redarted

jefe

Arsonist

🍁

You got a fuckin' dart in your neck.

thebatman

Good Citizen

Strategic Partnerships

I agree!

Revenue_Rambo

Politicker

Bad MFer

Never understood why companies do this. In my experience this demoralizes reps and doesn’t incentivize them to push boundaries.

What if you hit your max 1 month into a quarter. What reason you would have to close anything else for the next 2 months??

thebatman

Good Citizen

Strategic Partnerships

Yep!! It only rewards the bare minimum.

Revenue_Rambo

Politicker

Bad MFer

I was at a place that put an entry threshold for payout at 50% quota and they also wanted to cap payout at 100%.

They wondered why we couldn’t recruit or retain top talent.

thebatman

Good Citizen

Strategic Partnerships

Yeah sometimes it boggles my mind when leadership is surprised when the answer is yes we want money.

jefe

Arsonist

🍁

"But we're giving you a pizza party!"

thebatman

Good Citizen

Strategic Partnerships

Hahah no joke someone in my company asked when will we have an in person all in and my leadership basically said if you work harder and grow we will give you that as a reward.

jefe

Arsonist

🍁

SO tone deaf, ugh

Revenue_Rambo

Politicker

Bad MFer

Diablo

Politicker

Sr. AE

I have seen it too, doesn’t make sense. But there are companies that act like a miser without thinking long term sustainability about the reps.

thebatman

Good Citizen

Strategic Partnerships

Yeah sometimes it feels like when this happens they want me to go find something else

SaaSsy

Politicker

Lesson 101 in how to demotivate your best reps.

Major Account Executive

Commission caps mean find a new job lol

thebatman

Good Citizen

Strategic Partnerships

Well shoot

Sunbunny31

Arsonist

Sr Sales Executive 🐰

Companies should not be surprised when they get the behavior they’ve incentivized. Caps suck. They’ll lose their best reps to places that pay them when they sell.

jefe

Arsonist

🍁

It's a surefire route to sandbagging to maximize take home.

thebatman

Good Citizen

Strategic Partnerships

What do you mean?

jefe

Arsonist

🍁

Have you not heard that term before?

It refers to holding off on processing/closing a deal until a month/quarter passes. It's usually done to maximize the commission one makes.

If your commission is capped and you've already sold as much as you'll be paid out on in a given month, sandbagging would be making sure that your next deal closes on the first of the next month instead of the end of the previous month.

It's not in the company's best interest as they want to close as much as they can every given month, but it means you'll be paid out on that deal versus getting nothing.

Sunbunny31

Arsonist

Sr Sales Executive 🐰

And as jefe illustrates, putting caps on commissions incentivizes all the wrong behavior. You will lose top reps, and until they leave, most will do their best to game the system and sandbag.
Good companies don't do any of these things - they don't cap commissions, and they (shockingly, I know) will get better results.

dualaces123

Opinionated

Account Executive

Commissions caps are just effort caps.

Justatitle

Tycoon

Account Executive

uhm, Anything that would discourage e from selling is a bad thing so yeah caps are bad

Coffee_is_for_closers

Politicker

Product & Solutions Specialist

Run for the hills!

thebatman

Good Citizen

Strategic Partnerships

Shoot

dwightyouignorantsale

Politicker

Account Executive

caps are ddduuuuummmbbbb

thebatman

Good Citizen

Strategic Partnerships

Agreed but your username is top notch!

TheHypnotist

Executive

Caps are a fantastic way of limiting the performance of your sales team, demotivating your top performers, kindling resentment and encouraging them to look elsewhere.
How anyone in management thinks they are a good idea is beyond me.
Maybe I'm just a "thick-o" though?

thebatman

Good Citizen

Strategic Partnerships

I think you hit the nail on the head for sure

Sunbunny31

Arsonist

Sr Sales Executive 🐰

I just returned to this post and reread your question, and I now have another question for you:
You say: "I made the company over 130K in ARR for the company...Plus that ARR is almost double my yearly quota"
Just to be clear, your annual quota is ~$70K ARR? Is this correct?

thebatman

Good Citizen

Strategic Partnerships

So I need to make 5,285 in MRR per quarter which is like 21K a year in ARR. if you go by 5,285 in MRR per month that is still 68K. So either way I beat the quota in the first quarter.

But my comp is weird. It is basically a copy of the AE’s comp but I am the partnership manager so I am not doing the same work as the AE’s

Sunbunny31

Arsonist

Sr Sales Executive 🐰

I guess where I was puzzled was about the relatively low ARR amount to a proportionately high comp. But you’re not an AE, which explains some of it. It’s just that you are getting comped on a high % of the $ sold, which may not be supportable in the long term, leading to the cap.

I don’t know what your base to commission % is; for an AE it’s typically 50/50, but I suspect yours is different and calculated differently. It may change perception on how your compensation works.

thebatman

Good Citizen

Strategic Partnerships

Yeah our deal sizes are really low. The most you pay with us or at least the most I can claim from a deal is 119 MRR.

Yeah that is a good point and I have thought about that and I argued that because my role never interacts with the individual clients and I am relying on AE’s to close and I am just feeding their pipeline from partner channels that they should just remove my comp and bump up my base a little bit they didn’t want to do that.

I was promoted from an AE to this role and I do have more base but they have not been able to figure out the commission piece and what I make commission from I have no direct control of.

cw95

Politicker

Head of SDR

Commission caps are for boss’s who don’t want people earning more than them, silly things!