Sales Compensation Calculator

Generating sales quotas, commission rates, and on-target earnings can be a chore with different formulas and variables. Figure out how to pay your salespeople with three inputs in this simple-to-use Sales Compensation Calculator.

Sales Compensation Calculator Preview

Definitions to know

Quotas

Quotas are targets set for sales reps. Quotas are most often a revenue goal.

Commission rate

The commission rate is the percent of every closed deal that a salesperson receives.

Variable comp

Variable comp is the total annual commission earned if a salesperson hits their quota.

Base salary

Base salary is a flat rate earned by a salesperson regardless of their performance.

On-target earnings

On-target earnings (OTE) is the total amount a salesperson can expect to earn (base salary + variable comp) if they hit their quota.

Period

Period is used to refer to the duration of time a salesperson has to hit their quota. The most common periods are monthly, quarterly, and yearly.

Tips for setting SaaS sales quotas

Sales reps should pay for themselves

While this may seem very basic, it’s important that salespeople have a quota that is high enough to pay for their base salary, benefits, etc. and produce profit for your company. A generally accepted rule of thumb is that a sales rep’s quota should be somewhere between 3x and 5x their on-target earnings (OTE).

Decide if you want a monthly, quarterly, or yearly quota

Depending on the length of your sales cycle, your average contract value, and your company stage, you’ll want to have a quota that is either monthly, quarterly, or yearly. If your sales cycle is longer than 45 days on average, you should probably use a quarterly quota. If your sales cycle is shorter than a month, you should probably use a monthly quota. If your company sells mainly high dollar, several month-long sales cycles, you can consider a yearly quota.

Make the quota achievable

Nothing is more demoralizing than a salesperson who always misses their quota. While it would be great to have a quota that is 15x OTE, it’s most likely not realistic for the salesperson to hit that number month after month. If your reps can’t hit a quota that’s only 3x OTE, then consider a larger, more sweeping change: pricing, sales methodology, or base salary, to name a few.

Other sales compensation plan components to consider

Not every compensation plan is as simple as a single rate commission. And while simplicity is important when building a comp plan, sometimes you need to add a little complexity. With QuotaPath, you can enter your entire compensation plan and automate your commissions.

Non-revenue targets:

For roles like Sales Development Reps (SDRs) where you’re tasked with setting meetings or making calls, reps are often compensated based on a number, rather than a commission rate.

Accelerators:

Many plans have accelerators, which pay a higher commission rate for overperformance. These can incentivize quota carriers to continue selling once they’ve hit their target and are a useful tool.

Bonuses:

Whether single rate or multiple rate, bonuses are a set amount of money paid to a rep for accomplishing a specific task. For example, a $1000 bonus for hitting a quarterly quota or a $500 bonus for every multi-year deal sold.