5 sales compensation plan examples to get you started

In this blog, QuotaPath‘s Chief of Staff and host of Sales Nerds Live! Graham Collins shares 5 sales compensation plan examples. Read on for a sales manager compensation plan sample, sdr compensation plan, VP of Sales compensation package, sales rep commission, and recruiter commission plan sample.

Designing compensation plans is not an easy task. You have to balance paying your sales rep commission in a fair way. However, you don’t want to overpay them. You also have to consider the goals laid out by the finance team. Not to mention trying to build a compelling VP of Sales compensation package! It can feel like you’re being pulled in 10 different directions.

I wish there was a universal perfect sample compensation plan, I really do. However, with all the different sales roles, business models, industries, and locations, that one perfect plan is impossible. There is no SDR compensation plan that works for everyone. The tiered commission structure that works for one company, may be horrible for another. So, instead of trying to solve all compensation plans for everyone, I thought I’d give you a leg up when designing compensation plans for your company by showing you a few sales compensation plan examples that have worked for companies in the past. 

Below you’ll find an example sales rep compensation plan, an example SDR compensation plan, an example sales manager compensation plan, an example VP of Sales compensation plan, and an example recruiter compensation plan. Don’t forget to check out Compensation Hub, a free resource we created that includes more than 20 adjustable comp plan templates to support comp plan design. 

First I’ll lay out how to think about each of the variable compensation plan examples, then I’ll give a specific example. 

Because the sales manager compensation plan sample is built around the deals their reps close, it allows them to spend their time coaching their sales team to close more deals. 

2. SDR compensation plan

An SDR, or sales development rep, is typically responsible for scheduling meetings for the sales team. Sometimes businesses refer to this role as an MDR (market development rep), BDR (business development rep), or LDR (lead development rep). Regardless of their title, they handle the top of the funnel for a sales team. This could be qualifying marketing leads, running outbound calls and emails, and even holding discovery calls. As for compensation, the three plans below are the most widely implemented SDR comp plans.

• Number of meetings: This SDR compensation plan is the most common for early organizations that want to fill their sales reps’ calendars. For every meeting the SDR sets (that actually happens!) they receive a bonus. This bonus varies wildly based on the company’s ASP (average sales price) and demo-to-close rate. Generally, the bonus falls anywhere between $20 and $300. 
  
• Number of qualified opportunities: This SDR comp plan is better once an organization has a clearly defined ICP (ideal customer profile) and only wants sales reps on the phone with qualified prospects. It’s important to create very clear and concise rules as to what a qualified opportunity is so there is no ambiguity. Once again, this bonus is highly dependent on the company but generally a higher dollar figure than simply paying for demos. 
  
• Percentage of revenue generated: While many organizations think this is the ideal SDR compensation plan, it is only the right option for specific companies. Essentially, in this example comp plan, SDRs get paid a commission on all closed won deals that originated from the opportunity they created. This only works if you have a shorter sales cycle (ideally sub-60 days) because the SDR needs to have control over their income. The SDR commission percentage typically ranges from .5% to 4%. 

With all that being said, the most common SDR compensation plan is actually a combination of 2 or more of these components. See below for an example of this. 

Secondly, their quota tends to change over time as the company grows. That implies that their target might double in Q4 from where it stood in Q1. Because of this, they might earn incentive pay on a “per attainment point” model. This means that they have a set bonus amount and they multiply that bonus number by their quota attainment. See below for an example.

4. Sales rep commission

Because most people who work in sales identify as sales reps, thousands of different sales rep commission plans and commission structures exist.

Where do you start? Well, the easiest thing to do is to start simple and add complexity later as needed. A simple comp plan doesn’t always entail paying a flat rate commission. You might want to add in accelerators/decelerators or you might want to have a bonus. Maybe you want to change the commission rate based on the length of the contract. It will all depend on the specifics of your company and what you’re hoping to accomplish. 

Below, we’ve provided a sample sales rep commission plan that has worked well for organizations we’ve seen in the past. 

For easier-to-fill roles, a recruiting firm might earn only 10% of the candidate’s salary as a recruiting fee. Whereas for more difficult-to-find hires, the recruiting firm might make 50% of that person’s salary. So from there, the recruiter earns a percentage of that revenue based on their revenue target. These commission rates might be as low as 5% and as high as 20%. 

Final thoughts

As you’re building out compensation plans, remember that you always want your plans to fill three core requirements: 

• Simple. The plan has to be easy to understand, otherwise, you won’t get the behavior you’re trying to encourage. 
• Logical. Comp plans should follow your company’s strategy, not the other way around. 
• Fair. It has to be attainable and people have to feel like they can make money off it.

As long as your plans meet all those requirements, you’re already ahead of the game. If you need more advice or sales compensation plan examples, visit Compensation Hub for free, customizable comp plan templates, and QuotaPath’s blog is also a great resource for helpful tips and resources. 

Once you’ve built out your compensation plan, find an easy commission tracker. That’s where QuotaPath comes in. QuotaPath is a commission tracking tool built for transparency, simplicity, and accuracy. If that’s appealing, schedule a full overview today.