How to Comp on Multi-Year Deals

Why paying reps on deal anniversaries is hurting your growth

Multi-year deals are one of the most efficient ways to lock in revenue predictability, reduce churn, and improve CAC payback…but many teams are still getting the compensation piece wrong.

Instead of rewarding reps at the time of the close, we’re seeing a growing number of comp plans that split commissions over the life of the contract. 

Close a 3-year deal? Great. 

You’ll get:

• One-third of your commission now
• One-third on the 12-month anniversary
• The rest the year after that

This kind of structure might seem like a smart way to manage churn or stay conservative with payouts. However, in practice, it’s killing rep motivation and doing the opposite of what you want: discouraging longer-term deals.

And that’s a big miss, because when structured right, multi-year accelerators work.

According to our recent SPIF Benchmark Report, multi-year accelerators showed up in 15% of customer plans, yet drove 25% of total revenue. That’s a massive return for a relatively simple comp lever.

So let’s fix the bad logic and make sure your comp plan actually encourages what you want more of: efficient, durable revenue.

The SPIF Report

Curious how top revenue teams use SPIFs and accelerators to align with key business goals and drive measureable results? Our latest report below dives into our data from $7.3M in sales incentives

View Report

Our latest blog shows why the anniversary payment model is backfiring, and what forward-thinking companies are doing instead.

Enjoy the read.

Why Splitting Over Time is Problematic 

The logic behind spreading payments might seem sound on paper, but it creates three major problems that actually work against your growth goals.

AEs don’t control what happens post-sale. 

You can’t expect a rep to stay engaged with an account for three years when they’ve already moved on to new business. Spreading out their commission over time is essentially withholding earnings for work already done.

It kills motivation. 

Compensation is a behavior engine. If you want more multi-year deals, you need to reward them at close, when the decision is made, not 12-24 months later, when that same rep may no longer be at the company.

As one of our customers put it: “The whole point of having generous incentives is to energize the team. Not have it be mysterious,” said Thomas Egbert, Prefect’s Chief Business Officer. 

Reps Know What’s Up

Beyond the structural issues with delayed payments, there’s a more fundamental problem: your sales team isn’t buying what you’re selling.

Reps aren’t fooled. 

When a multi-year commission is split out over time, many will default to shorter-term deals so they can get paid sooner. And in a sales climate where, just a year ago, 91% of teams were missing quota, adding delays to earnings is the last thing you want.

What To Do Instead

So if splitting commissions over time doesn’t work, what does? Here’s the playbook that high-performing SaaS companies use to drive multi-year deals without sacrificing rep motivation.

1. Pay AEs Upfront, Then Amortize for Accounting

The first principle is simple: separate your accounting practices from your compensation strategy.

Pay your account executives at the time of the deal close. If they close a 3-year deal worth $90K, and your base commission rate is 10%, pay the full $9K commission immediately.

You can amortize the expense on your books (QuotaPath supports ASC 606), but don’t defer their earnings.

Need to protect against churn? Build a clawback clause. Easy.

2. Use Accelerators to Reward Longer Terms

Once you’ve committed to paying upfront, the next step is making longer deals more attractive than shorter ones. Multi-year deals are great for predictability, and reps should be incentivized to go after them.

Example:

• 1-year deal: 8%
• 2-year deal: 10%
• 3-year deal: 12%

Make the upside clear and visible in their comp statement or forecast. Tools like QuotaPath let reps see how pipeline turns into commissions. That’s a proven motivator.

3. Tie GRR/NRR to CS or AM Teams

Finally, address the elephant in the room: what about churn and expansion? 

The answer isn’t withholding AE commissions; it’s better role alignment.

Don’t use AE commissions as a backdoor way to manage churn. 

Instead, tie gross revenue retention (GRR) and net revenue retention (NRR) metrics to your post-sale teams, Customer Success and Account Management.

• If CS is responsible for renewals, comp them on renewal milestones.
• If AMs own expansion, accelerate comp for expansion beyond year one.

This creates clean ownership and ensures that reps are only accountable (and rewarded) for what they control.

Finance, Here’s the Win

For finance teams reading this and thinking ‘this sounds expensive and risky,’ here’s why this approach actually gives you more control, not less.

• You can still keep GAAP compliance and capital efficiency front and center.
• You can still model out the impact of longer-term deals and amortize commissions across years.

But don’t let your AE comp plan bleed into your retention strategy.

TL;DR: What Good Looks Like:

Fix Your Multi-year Comp Strategy

If you’re currently splitting multi-year commissions over time, you’re not alone—but you’re also not stuck with a broken system. The companies getting this right aren’t just paying reps differently; they’re thinking about compensation as a strategic lever for predictable growth.

The math is simple: when reps can see exactly how much they’ll earn from longer deals at the time of close, they sell more of them. When CS and AM teams own retention metrics, they deliver on them. When finance can model and forecast accurately, everyone wins.

Ready to build a comp plan that actually drives the behavior you want?

👉 Book a strategy call – We’ll audit your current multi-year approach and show you exactly where you’re leaving money on the table

👉 Try QuotaPath free – See how transparent earnings forecasting motivates your team to chase longer deals

Because the best commission plan is the one your reps actually understand and get excited about.