What comp plan would work best for the first sales rep?

Context - the founders have developed the product and have been running sales themselves. Now they see a need for a salesperson to come in, help to standardize the processes, and to run sales. They have a healthy pipeline but the industry has been hit pretty hard last year (property management) so the chances are, sales will be moderately slow this year. ACV - $45,000, SaaS, some inbound but mainly outbound (90%), the product has been on the market for the last 3 years, current ARR ~$500,000.


How would you set up the comp plan to account for that? Keeping in mind that this role is an individual contributor role for now with a shot to scale up the sales department and hire additional sales reps.


1
salesnerd
WR Officer
1
Head of Growth
So usually when setting quotas and comp plans for early-stage startups, I recommend two rules: 
1) Be flexible. If sales are not what you thought they might be, be willing to change quotas and comp plans mid-year (or even mid-quarter). 
2) Be logical. There is an industry standard of setting quotas where you take the OTE and multiply it by some number (more details below) to get the annual quota. This is a good jumping-off point for sure, but remember rule #1. 

So now what multiplier should we use? Well everyone says 5x is the right answer. And it is if you are a fully scaled company. However, for sub $1MM companies, the multiplier is usually closer to 3x. I've seen it as low as 2.5x. 

Once you have a quota, make the commission as simple as possible. Flat rate? Sure. Bonus for hitting specific quarterly targets? Okay! 12 tier accelerator with a different quota each month and a 12 week recoverable draw? Heck no. 
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