CRAG112

Account Executive

Is this commission structure too damned confusing??

$150k OTE ($75k base + $75k commissions on-target). Commissions uncapped.
Annual Quota: $1.5mn total contract value (TCV) (Translates to roughly $500k - $600k ARR)
Commission rate: 5% of total contract value
Accelerated commissions (7.5% of TCV) each quarter once you go past quota.

I'm looking at this and thinking, so wth do I have to sell every year? 500k? 600K? Or 1.5M just to get a 5% commission? Like blegh, I don't know if it's even worth it.

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pirate

Big Shot

🦜☠️ Account Executive

This is how I understood it: You have to sell 1.5M to get 75K commissions on target. Otherwise you will be paid when you hit the quota (7.5%) every target. TCV is better than ACV. For example you close the customer for 3 years and each year is 100K. Instead of them paying you ACV of 100K... you get 300K. Then you will get 5% of every deal you close

Sunbunny31

Politicker

Sr Sales Executive 🐰

Not sure I agree with this explanation exactly, although I agree that if paid out on TCV, a three year contract will pay more.
I read it that he gets 5% regardless of attainment, but has accelerators once he surpasses his target, but that the targets are quarterly on an annual quota leads me to believe we are missing a data point.
My 2 questions:1: Is there a maximum contract length? Can you offer 5 year contracts?2: Did your 1.5M annual quota get broken down into quarterly targets?

pirate

Big Shot

🦜☠️ Account Executive

Good questions there

jefe

Arsonist

🍁

I'm with Bunny's read. I think @pirate got it all aside from the 7.5% being an accelerator

Sunbunny31

Politicker

Sr Sales Executive 🐰

The formatting got hosed, though. Ouch.

jefe

Arsonist

🍁

Formatting is really bad in here… it all just goes into a block.

Double line breaks often help

pirate

Big Shot

🦜☠️ Account Executive

I'm impressed you even managed a space after TCV bit. I do that and it gives me a lot of html code

Founding BDR

This is how I interpreted it as well.

CuriousFox

WR Officer

🦊

Thank you P

punishedlad

Tycoon

Business Development Team Lead

You are correct.

NoToBANT

Catalyst

Senior Account Executive

If you’re OTE is $75k comms - you’re earning 5% on $1.5m. It’s the only way the math works. OTE is based purely on 100% of target with no accelerators, multi-years etc.

This is how the math works:
- quota per quarter: $375,000 TCV
- if you did $475,000 TCV in that quarter (as en example) you would get paid
- 5% for $375,000 = $18,750
- 7.5% for $100,000 = $7,500

Total comp for that Q = $26,250

Hope this live example makes sense

CRAG112

Valued Contributor

Account Executive

Yeah exactly. Great point.

Don’t think it’s worth it. 1.5 sales for a 70K return

vet

Catalyst

Senior SDR

There seems to be some missing info on this.

Whats the average contract value among reps and what industry/sizing are we hitting?

If we are doing SMB we are gonna have to kill the quota with a hundred cuts.
Mid market would be great for this role in my opinion.

Enterprise… well thats going to be tough as you might have 2-5 at bats for the year to make your number.

Excited to see the other comments.

CRAG112

Valued Contributor

Account Executive

Don’t know all of that. It’s just what’s in the JD

Armageddon

Opinionated

Enterprise Account Executive

Doesn’t seem that complex to me. Guess you really need to understand how often they do multi year deals (I assume that’s where the TCV comes in).

To be honest it is a lot more clear then my comp plan. That said, 5% commish rate is a little low

CRAG112

Valued Contributor

Account Executive

Yeah exactly. The biggest issue I have. And seemingly way too complicated concepts towards how you make your sales numbers and how you get paid.

Like just tell me what the total to sell needs to be.
Tell me the percent I get comped or the total I get per sale.

End story. Don’t really care about anything else

medhardwaredr

Opinionated

Director of Sales NA

You’re getting 5% of every sale

GreenSide

Politicker

Sales manager

The math is pretty straight forward. I wouldnt consider it confusing. You get 5% of every dollar you sell. Get paid the same amount on multiyears is something I haven't seen which is pretty sweet (though how often that happens is something I'd question). 50% accelerator once you hit quota.
Whether its attainable is the question I'd want to get answered.

CRAG112

Valued Contributor

Account Executive

Yeah. Seems like they threw in just enough bippity boopity nonsense because people likely aren’t making numbers.

balbazar

Opinionated

Enterprise Account Executive

What are you selling and what are the average deal sizes?

CRAG112

Valued Contributor

Account Executive

So anyways. I looked at this again when my brain was working, and it seems decent, at the very least. I think the commissions could be better. Becoming 7.5 v 5 for accelerators isn’t highly exciting. But they do have 3 AEs hitting goals and at least 2 SDRs per AE.

Would like higher commish, but hey, if there’s technically less work, that’s not a bad thing at all

LeadMachine

Opinionated

Sr. BDR

If you need an attorney to decipher it, then yes.

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CRAG112

Is this commission structure too damned confusing??

22 comments

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